FHA Green Loans Help Improve Home Efficiency, Sustainability

Real Estate Agent with Keller Williams Denver Central
Looking for a loan to help you live green? FHA offers a loan for owner occupied dwellings that allows borrower to qualify for extra capital to make improvements on the home. Its called the FHA 203(k) Rehabilitation loan. These loans make excellent ‘green’ loans, meaning a homebuyer may use the FHA 203(k) to fund energy efficiency improvements and to purchase sustainable and eco-friendly products for the home. Initially the borrower will carry a higher loan amount and have higher monthly payments, yet they save more money monthly on their utility bills. Buyers can also qualify for any available rebates and tax deductions and may even choose to achieve certification for compliance with either Energy Star or LEED. The loan allows for 1-4 unit buildings which makes it great for investors who are looking to purchase a duplex or 4 plex, live in one unit and rent the other three.

Borrowers who are interested in the FHA 203(k) must have an energy inspection done on the property they are looking to buy. The energy inspection, or audit, will determine the efficiencies and inefficiencies of the home and will influence the amount the borrower may qualify for. This can be done for about $450 in the Denver area. In most cases, the buyer will need to have two energy inspections on the home; one to determine the areas of improvement and two after the repairs to see how much the property has been improved.

The FHA 203(k) comes in a Streamline version, which allows up to $35,000 for rehabilitation of the home. The borrower is limited to 3 contractors, and must be doing at least $5,000 in repairs. This streamline version of the 203(k) allows for a possible single energy audit on the home; the borrower would receive half of the cost of repairs up front and half when the work is done.

Highlights of the 203(k) Streamline:
Finance up to additional $35,000 for energy improvements
Loan amount based on appraisal value after repairs resulting in extra capital for improvements
Requires 3% down
Interest rate .25-1% higher than normal loan
May be used for owner occupied 1-4 unit residences
Requires at least $5,000 in improvements
Allows up to 3 contractors

The focus of using these loans to make the home energy efficient and sustainable is that the new owner will benefit from lower monthly utility bills and live a more comfortable, healthy, and happy life. There is value in reducing your impact on the environment. Use this federally backed loan to improve your home and restore our neighborhoods and our planet.

Andrew Cepeda is an Ecobroker in the Littleton, Centennial, CO area.
If you would like to talk, please contact me at 720.216.7617 or email me at

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Stay true to yourself and your planet,

Andrew Cepeda

Keller Williams Denver Central