As a homeowner, you can improve your home and get an FHA loan to pay for it! Making your home more environmentally friendly is both good for the environment and your pocket book. You can decrease your electric and water bills by making some simple improvements. A major barrier to homeowners making these beneficial changes is the costs involved. Saving money is appealing but paying more money to do it is a major obstacle for many families. Fortunately there is an FHA home loan that can help.
The FHA offers several loan programs including low down payment purchase loans, FHA streamline refinance loans, ARM loans, and fixed rate mortgages. The FHA also offers a mortgage loan program called the Energy Efficient Mortgage Loan.
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What Is The Energy Efficient Mortgage Loan?
This is an FHA home loan program that will finance energy efficient improvements you make to your home. The benefits of this program are that you can:
What Are The Details Of The FHA Energy Efficient Home Loan?
• Lower your monthly utility bills by making your home more energy efficient
• Use on a home purchase or on an FHA refinance
• The utility bill savings will be evaluated by an FHA underwriter to help lower your debt to income ratio so you can qualify for a higher loan amount
• Can be used in conjunction with an FHA rehab loan
• An energy inspection is required,and up to $200 of the cost can be included in the loan.
• Single family homes and duplexes are eligible.
• The cost that is included in the home loan must be equal to or less than the amount a homeowner will save over the life of the loan. For example if it costs $6,000 to purchase new windows a homeowner would need to save that much in energy cost over the life of their home loan (typically 30 years) in order to finance that amount. If the overall savings is less you can only finance that portion. This is why an energy audit or evaluation is required.
• Homeowners can only finance up to 5% of the homes value for energy efficient upgrades.
Does This Program Work With An FHA Streamline Refinance?
No, the FHA streamline refinance program does not allow for the balance of the mortgage loan to increase above the allowable closing cost. This program gives cash out to pay for energy efficient upgrades, thereby increasing the total loan amount.
What Is The Interest Rate?
The interest rate for your FHA home loan will be determined by several factors including your credit score and loan to value. An FHA approved mortgage lender will be able to give you an exact quote and show you how much you can save by refinancing. Remember that you can also use this FHA mortgage program when buying a home.
