Energy Efficient Mortgage Pilot Program (EEM)

FHA EEM Pilot Program allows a borrower to finance into the mortgage 100% of the cost of eligible energy efficient improvements. It 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.

Section 513 of the Housing and Community Development Act of 1992 requires the U.S. Department of Housing and Urban Development (HUD) through the Federal Housing Administration (FHA) to establish a pilot program to provide mortgage insurance for Energy Efficient Mortgages. The property you are purchasing or refinancing may be eligible for this pilot program. The law requires that you be informed of this program and that you acknowledge by signing this statement that you understand the benefits of the program.

An Energy Efficient Mortgage, or EEM, recognizes the energy savings of a home. It allows the homebuyer (or homeowner if it is a refinance) to qualify for a larger mortgage to finance the construction or installation of improvements to a home that will increase the home's energy efficiency. Because the home will be more energy efficient after installation of the energy saving improvements, the family can devote more of its income to the mortgage payment.

How To Apply

When you apply for your mortgage loan, tell your lender that you are interested in an EEM. You or the lender must then have the home inspected and rated by a home energy rating organization. Many utility companies and other organization perform these inspections and ratings. The home energy rating organization will determine the energy use of the home and recommend the improvements that may save energy.

For example, the inspection may show that adding additional insulation, replacing an old furnace or other similar improvements will increase the energy efficiency of the home. If these improvements will save you more money than it costs to install them, then the costs of the improvements (up to certain dollar limits) may be financed into your mortgage.

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