FHA Energy-Efficient Mortgage - FHA allows borrowers to finance the cost of adding energy-efficient improvements to new or existing homes as part of their FHA-insured purchase or refinancing mortgage. - Energy-efficient improvement costs of $4,000 or 5 percent of the property value (up to $8,000), whichever is greater, can be financed.
- The FHA maximum mortgage limit for an area may be exceeded by the cost of the improvements.
- No additional down payment is required.
- No requalifying is necessary.
- No new appraisal is needed.
- Up to $200 of the cost of a home energy rating may be included in the mortgage.
This EEM can be used in conjunction with several other FHA-insured mortgages, including the 203(k) rehabilitation mortgage insurance described below.
FHA Section 203(k) Rehabilitation Mortgage Insurance - FHA Section 203(k) rehabilitation mortgage insurance provides a borrower with a single loan that covers both the purchase or refinancing and the cost of major home improvements, including those that save energy. The program allows borrowers to complete improvements after the loan closes. The funds are placed in an escrow account and released as improvements are made.
Total cost of improvements must exceed $5,000. The total property value must still fall within the FHA mortgage limit for the area. (The property value is determined by whichever is less: the value before the rehabilitation plus the cost of the rehabilitation or 110 percent of the appraised value after rehabilitation.) FHA Energy-Efficient Home Mortgage - When purchasing an energy-efficient home, an FHA-approved lender can stretch the borrower's debt-to-income ratio by 2 percent.
FHA Mortgage Increase for Solar Thermal Systems - The maximum loan limit under FHA's standard 203(b) or 203(k) property rehabilitation mortgage insurance can be exceeded by 20 percent if the home has or will have a passive or active solar heating system. The home must also have a 100 percent operational, conventional backup system.
FHA Title I Property Improvement Loan Insurance - FHA also insures home improvement loans, including those that will make a home more energy-efficient, for homeowners with FHA-insured mortgages. It features: - Loans up to $25,000 for a single-family home
- Loans insured up to 20 years
- No required home energy rating reports.
U.S. Department of Veterans Affairs
The U.S. Department of Veterans Affairs (VA) guarantees mortgage loans for veterans with active duty service and qualified reservists. Its EEM can be used to purchase or refinance a home along with the cost of making energy-efficient improvements. To cover the cost of the improvements, the loan amount can be increased: - Up to $3,000 based solely on documented costs
- Up to $6,000 if the increase in the mortgage payment is offset by the expected reduction in utility costs.
- More than $6,000 based on a value determination by VA.
A VA refinancing loan may not exceed 90 percent of the home's appraised value plus the costs of the improvements.
|
Related Articles
Related Tips
Related Videos
