FHA Energy Efficient Mortgages

FHA energy efficient mortgages are special loans that are backed by the Federal Housing Administration to encourage the construction and purchase of homes that utilize less energy in day-to-day functioning.

 The purpose of energy efficient mortgages

 FHA energy efficient mortgages are designed to do several things. These include:

  • Enable the purchase of energy efficient homes -- FHA energy efficient mortgages are available for those who are in the market to buy energy efficient homes or make such improvements to them at the time of purchase.

  • Refinance homes to make improvements -- FHA energy efficient mortgages can also be used to refinance existing home loans so energy efficient improvements can be made to a property.

Who funds FHA energy efficient mortgages?

FHA energy efficient mortgages work like other government-backed loans. This means a borrower must go through an approved mortgage lender who will underwrite the loan. The FHA simply insures it.

Qualifications for FHA energy efficient mortgages

There are a number of qualifications that must come into play for people to be eligible for FHA energy efficient mortgages. They include:

  • Regular qualifications -- Buyers must qualify for standard FHA-backed loans to obtain this type of mortgage.

  • Cost effectiveness of the improvements -- FHA energy efficient mortgages are designed to make minor to moderate improvements. The cost of improvements cannot exceed 5 percent of the property’s value.

  • Size of the property -- FHA energy efficient mortgages are available for properties that are one to four units in size.

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