Did you know that the federal government supports Energy efficient mortgages (EEMs) by insuring them through FHA or VA programs? These EEM mortgages can be used by homeowners to finance a variety of energy efficiency measures, including renewable energy technologies in a new or existing home. The EEM FHA/VA mortgages allow borrowers to get financing to make energy efficient improvements while having the financing be secured against loan default by the government.
Federal Housing Authority (FHA) Energy Efficient Mortgages
The
FHA allows lenders to add up to 100% of energy efficient improvements to an existing
mortgage loan by insuring a loan of up to 5% of a home's appraised value or $4,000, whichever is greater, not to exceed $8,000.
FHA mortgage limits vary by county/state and the number of units in a dwelling.
Loan amounts cannot be greater than the projected savings of the energy efficient improvements. Homebuyers must submit a Home Energy Rating (HER), contractor bids, and a
FHA B Worksheet. Up to $200 of the cost of the HER can be included in the
mortgage, and borrowers can include closing costs and the up-front mortgage insurance premium in the total cost of the
loan. Go to the
HUD FHA website to learn more about this program.
Department of Veterans Affairs (VA) Energy Efficient Mortgages
The
VA insures EEMs to be used in along with VA loans for either the purchase of existing home or
refinancing loans secured by the home. Homebuyers can borrow up to
- $3,000:
- if only improvement cost documentation is submitted, or
- if only contractor bids are submitted. Or up to
- $6,000: if the projected energy savings are greater than the increase in mortgage payments.
Loans may exceed these amounts at the discretion of the VA. I know all you veterans are hands on but you cannot include the cost of your own labor in the total amount. No additional home appraisal is needed but you must submit a Home Energy Rating (HER), contractor bids, and other documentation. The VA insures 50% of the loan if taken by itself, but it may insure less if the total value of the mortgage exceeds a certain amount.
The VA EEM mortgage is available to qualified military personnel, reservists and veterans. All applicants should secure a "Certificate of Eligibility" from their local lending office and submit it to a VA-approved private lender. If the loan is approved, the VA guarantees the loan when it is closed.
Note: Not all lenders offer all FHA Programs. My Bank does not offer this program.
More Information for the FHA Home Buyer Or First Time Home Buyers
You can find AJ Nisen on Active Rain at Contra Costa California Mortgages. Call AJ to talk about your Mortgage, Mortgage Rates, Free Credit Report or visit AJ's website to use his mortgage calculator.
Alan 'AJ' Nisen
Mortgage Loan Officer
Email: aj.nisen@bankofamerica.com
http://mortgage.bankofamerica.com/ajnisen
http://www.activerain.com/ajn
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This is exactly why I tell my customers I am NOT a lender. There are so many programs to keep up with. Good work!