Energy Efficiency Mortgages
Updated: Jun 19, 2019
Recognizing the energy savings and overall health benefits of these Zero Energy Ready Homes & Energy Star Homes, the US Department of Housing (HUD) provides an option that not many people are aware of when they begin their home search.
"The Federal Housing Authority's (FHA) Energy Efficient Mortgage program (EEM) helps families save money on their utility bills by enabling them to finance energy efficient improvements with their FHA-insured mortgage. The EEM program recognizes that an energy-efficient home will have lower operating costs, making it more affordable for the homeowners. Cost-effective energy improvements can lower utility bills and make more income available for the mortgage payment"
Alternatives to New Construction
Zero Energy Ready Homes
For current home owners who just can't give up their home (neighborhood, schools, family, work, location), using an EEM Mortgage to remodel or upgrade your home is a wonderful option. Insight Property Services provides current home owners who are looking to remodel their homes with a Home Performance Audit (Energy Audit). These audits analyze a current home from the outside-in to determine the cause of common problems in older homes such as poor air quality, cold rooms/hot rooms, drafts, air leakage, moisture infiltration, high utility bills, and overall integrity of the homes using a variety of high tech tools, such as infrared imaging & blower door testing. Identifying these opportunities for improvement is the first step in developing a true home improvement plan and a requirement of the EEM process.
Within 48 hours you will receive a customized report of your homes current condition. The report includes a written plan that you can then give to contractors, eliminating any "guess" work when multiple contractors are working together (insulators, HVAC, window installers, etc). This plan prioritizes what improvements you should make to your home, and in what order to make them.
You wouldn't want to spend $20,000 on replacing windows, only to find out, come winter, that you're still experiencing drafts and high utility bills.
We're not bashing the window sales guy, after all their job is to sell windows, but they're basing their recommendation solely off of what you are telling them and not with diagnostic testing. Your old windows may be in good shape, but drafty due to improper installation, or lack of surrounding insulation. After the work is complete, Insight will come out to perform a second Home Performance Audit to make sure that the contractors did the work correctly. This gives the home owners peace of mind and holds contractors accountable. Having a Home Performance Audit done prior to remodeling saves current home owners time, money, and frustration by identifying deficiencies that are not always obvious and are often expensive.
Are Zero Energy Ready Homes Affordable?
EEM Mortgages are not just for those who are remodeling their homes, you can use an EEM for New Construction Energy Efficient homes as well - and your your mortgage limits can be increased due to the monthly energy savings these homes provide.
For newly constructed homes, the improvements are cost effective when they exceed the standards set by the most recent International Energy Conservation Code (IECC) that has been adopted by HUD for new construction properties. A qualified home energy assessment will determine which improvements exceed the IECC standards.
By customizing your Zero Energy Ready Home, you find the balance between efficient function and desirable finishes. Maybe insulating your basement floor during construction would be best done during initial construction, while installing crown molding or quartz counter tops could be done in a few years. How to Get an EEM
To apply for an FHA insured energy efficient mortgage, contact an FHA approved lender.
For More Information visit the FHA Resource Center to search the FAQs, ask a question or send an email.
Whether you want to build a new construction home and have debating if you should invest in a Zero Energy Ready Home or you are a current homeowner looking to improve comfort, air quality, and efficiency, the first step is to be an educated consumer.