Energy Efficient Mortgages
EEM Eligibility requirements
l The borrower is eligible for maximum FHA financing, using standard underwriting procedures. The borrower must make a 3-percent cash investment in the property based on the sales price. Closing costs are not included in the 3- percent calculation but may be used to satisfy the requirement. Any upfront mortgage insurance premium can be financed as part of the mortgage.
l Eligible properties are one- to four-unit existing and new construction.
l The cost of the energy-efficient improvements that may be eligible for financing into the mortgage is the greater of 5 percent of the property’s value (not to exceed $8,000), or $4,000.
l To be eligible for inclusion in this mortgage, the energy-efficient improvements must be cost effective, meaning that the total cost of the improvements is less than the total present value of the energy saved over the useful life of the energy improvement.
l The maximum mortgage amount for a single-family unit depends on its location and it is adjusted annually. The cost of the eligible energy-efficient improvements is added to the mortgage amount. The final loan amount can exceed the maximum mortgage limit by the amount of the energy-efficient improvements.