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FHA Energy Efficient Mortgages (EEM)
The FHA Energy Efficient Mortgage, while not as powerful as the conventional EEM, still accomplishes the same things while getting the benefits of FHA financing. It is again, still a good mortgage if you are buying or refinancing a home and you are thinking about renovating or updating it as you do so. It also enables you to do ANY energy efficient upgrades without touching the equity or the down-payment on your home.
What should I know about the FHA EEM?
- ANYTHING that contributes to the energy efficiency of your home is covered by the FHA Energy Efficient Mortgage. If you have something specific you'd like to do to your home, call us and we'll let you know if you can do it.
- You can borrow up to 5% of the home's appraised value or $4,000 which ever is greater. The total amount borrowed cannot to exceed $8,000. For a $150,000 home, you could spend up to $7,500 on energy upgrades.
- You do not need to have as much income to qualify for a FHA Energy Efficient Mortgage as you do for a regular FHA mortgage. The Energy Efficient Mortgage takes into consideration the fact that your home is more affordable and rewards you accordingly.
- One positive side effect of an energy efficient home (other than lower utility bills) is that it has a good impact on the environment. The average home that goes through an Energy Efficient Mortgage will reduce greenhouse gas emissions by 2-4 TONS per year.
- The FHA Energy Efficient Mortgage can be combined with both fixed-rate and adjustable-rate mortgages.
The FHA Efficient Mortgage at work
|
Non-Energy
Efficient Home |
Energy
Efficient Home |
| Purchase Price |
$130,000 |
$130,000 |
| Down Payment |
$3,900 |
$3,900 |
| Loan Amount |
$127,075 |
$133,428 |
| Interest Rate* |
6% |
6% |
| Monthly PITI** |
$1,081 |
$1,119 |
| Average Utility Bill |
$204 |
$102 |
| Total Expenses |
$1,285 |
$1,221 |
| Qualifying Income*** |
$44,731 |
$43,316 |
| Monthly Savings |
$0 |
$64 |
| Annual Savings |
$0 |
$768 |
* The interest rate of 6% is only being used to help illustrate this example of the EEM at work. Actual rates may vary from the rate used here. If you'd like to know what markets are doing today, please call us for a customized quote for your scenario.
** PITI stands for Principal, Interest, Taxes and Insurance. The taxes and insurance have been estimated for this example and may vary from where you live. If you would like a customized comparison for your home, contact us and we'll put one together for you.
*** What you qualify for is ultimately determined by a calculation of your debts plus your housing expenses. While the Energy Efficient Mortgage is more forgiving in this area, each client of ours comes with a different financial profile. Please call us or apply online to see if you qualify.
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