Energy Efficient Mortgage


What is an Energy Efficient Mortgage?

FHA's Energy Efficient Mortgage program (EEM) helps homebuyers or homeowners save money on utility bills by enabling them to finance the cost of adding energy efficiency features to new or existing housing as part of their FHA insured home purchase or refinancing mortgage.


In 1992, Congress mandated a pilot demonstration of Energy Efficient Mortgages (EEMs) in five states. In 1995, the pilot was expanded as a national program.

EEMs recognize that reduced utility expenses can permit a homeowner to pay a higher mortgage to cover the cost of the energy improvements on top of the approved mortgage. FHA EEMs provide mortgage insurance for a person to purchase or refinance a principal residence and incorporate the cost of energy efficient improvements into the mortgage. The borrower does not have to qualify for the additional money and does not make a downpayment on it. The mortgage loan is funded by a lending institution, such as a mortgage company, bank, or savings and loan association, and the mortgage is insured by HUD. FHA insures loans. FHA does not provide loans.

Source: www.hud.gov

Example of a regular mortgage vs. an Energy Efficient Mortgage

Energy Efficient Mortgage

Purchase Price $100,000 $100,000
Loan amount $80,000 $84,000( with $4000 in Energy Improvements)
Interest 5.25% 5.25%
Monthly payment (P&I) $441.76 $463.85
Taxes and Insurance $332.00 $332.00
Total avg. monthly utility bills $245.00 $150.00
Total Monthly Expenses $1018.76 $945.85
Monthly savings   $72.91
Totally yearly savings   $874.92

You could apply your monthly savings to your mortgage and pay it OFF 7 YEARS EARLY!

How to Get a EEM:

To apply for an FHA insured energy efficient mortgage, contact an FHA approved lender.

Eligible Customers:

All persons who meet the income requirements for FHA's standard Section 203(b) insurance and can make the monthly mortgage payments are eligible to apply. The cost of the energy improvements and estimate of the energy savings must be determined by a home energy rating system (HERS) or an energy consultant. The cost of an energy inspection report and related fees may be included in the mortgage. Cooperative units are not eligible.

Source: www.hud.gov

Call today to learn about this money saving option that is available to home buyers.