The Mortgage Mashup Blog
|Posted on October 17, 2018 at 10:55 AM|
FHA and VA Energy Efficient Mortgages
The Energy Efficient Mortgage can be utilized in conjunction with the FHA, FHA 203(k) and 203(h) and VA loan programs and allows borrowers to roll up the cost of certain energy saving improvements into their mortgage with a single closing. Environmentally conscious homeowners can dramatically reduce their monthly energy bill and may even be eligible for local and federal tax advantages*.
• 100% of the qualifying improvements, such as Energy StarTM appliances, furnace/cooling systems, weatherization or replacing doors and windows can be financed up to the allowable limits.**
• Lower monthly utility bills usually offset the increased monthly mortgage payment.
• Potential greater resale value
• Potential federal and local tax advantages*
*Borrowers should consult their tax professionals.
**Cost-effectiveness of the energy improvement using Home Energy Rating System (HERS) guidelines is required. Cost effectiveness refers to the costs of the energy efficiency improvements that are less than the present value of the energy saved over the estimated useful life of those improvements.
VA Energy Efficient Mortgages can cover up to:
• $3000 in improvements based solely on the documented costs. OR
• Up to $6,000 provided the increase in monthly mortgage payment does not exceed the likely reduction in monthly utility cost. OR
• Amounts larger than $6,000 are subject to a value determination by VA. FHA Energy Efficient Mortgages can cover improvements that are the lesser of:
• The dollar amount of a cost-effective energy package (includes materials, labor, inspections, etc.) as determined
• 5% of: the value of: FHA appraised value of the property as indicated on the Direct Endorsement of Appraised Value; 150% of the national conforming loan limit; or 115% of the median area price of a single family dwelling as provided by FHA Connection
Categories: Programs and Guidelines