FHA Energy Efficient Mortgages can lower utility costs

Owners of newly constructed and older homes can both benefit from Federal Housing Administration’s (FHA) Energy Efficient Mortgages (EEM), according to Dave McCarraher, senior account liaison with FHA’s Philadelphia office.

The mortgage benefits homebuyers who want to make their houses more energy efficient, sellers who may own a home that doesn’t have up-to-date energy-saving features and remodelers who get paid to make the home improvements, McCarraher said.

Few Pennsylvanians are aware of this program, he noted. Last year, the FHA financed 83,000 mortgages in the commonwealth, approximately 60 percent of which were for home purchases. However, only 202 Energy Efficient Mortgages were approved.

“People aren’t aware of this great benefit,” McCarraher said. “It could save them hundreds of dollars on their utility bills each year.”

In order to qualify for an EEM, an approved provider must conduct an energy audit. “If the auditor calls for certain repairs, then they have to be done in that order,” he explained. An energy audit evaluates heat loss from a home as well as energy costs for appliances.

“Eighty percent of homes need to be properly sealed,” McCarraher added. “And according to the US Department of Energy, old refrigerators are often the worst offenders in wasting electricity.”

The Energy Efficient Mortgages:

• Have higher qualifying ratios for new construction
• Don’t require requalification and additional appraisals for existing FHA loans
• Allow for a minimum of $4,000 of energy saving improvements
• Help get improvements financed without affecting approval ratios
• Create green jobs
• Save energy costs for homeowners.

For more information about the Energy Efficient Mortgages, visit the FHA website.