- the value of the property, or
- 115% of the median area price of a single family dwelling, or
- 150% of the conforming Freddie Mac limit.
- The Environmental Protection agency has a listing of ENERGY STAR Homes lenders that will under write energy efficiency mortgages.
To get an EEM a borrower typically has to have a home energy rater
conduct a home energy rating before financing is approved. This rating
verifies for the lender that the home is energy-efficient.
EEMs are typically used to purchase a new home that is already energy
efficient such as an ENERGY STAR qualified home. The term EEM is
commonly used to refer to all types of energy mortgages including Energy
Improvement Mortgages (EIMs), which are used to purchase existing homes
that will have energy efficiency improvements made to them. EIMs allow
borrowers to include the cost of energy-efficiency improvements to an
existing home in the mortgage without increasing the down payment. EIMs
allow the borrower to use the money saved in utility bills to finance
energy improvements. Both EEMs and EIMs typically require a home energy
rating to provide the lender with the estimated monthly energy savings
and the value of the energy efficiency measures — known as the Energy
EEMs (and EIMs) are sponsored by federally insured mortgage programs
(FHA and VA) and the conventional secondary mortgage market (Fannie Mae
and Freddie Mac). Lenders can offer conventional EEMs, FHA EEMs, or VA
Conventional Energy Efficient Mortgages
Conventional EEMs can be offered by lenders who sell their loans to
Fannie Mae and Freddie Mac. Conventional EEMs increase the purchasing
power of buying an energy efficient home by allowing the lender to
increase the borrower’s income by a dollar amount equal to the estimated
energy savings. The Fannie Mae loan also adjusts the value of the home
to reflect the value of the energy efficiency measures. For more
information about Fannie Mae’s EEM you can call 1-800-7FANNIE
(732-6643). Visit Fannie Mae to find a Fannie Mae-approved lender in your state. A PowerPoint presentation, Freddie Mac Energy Efficient Mortgages , is available with more information.
FHA Energy Efficient Mortgages
The mortgage loan amount for an FHA EEM can be increased by the cost
of effective energy improvements. The maximum amount of the portion of
the EEM for energy efficient improvements is the lesser of 5% of:
For more information on FHA EEM loan limits refer to FHA Mortgagee Letter 2009-18 .
No additional down payment is required, and the FHA loan limits won’t
interfere with the process of obtaining the EEM. FHA EEMs are available
for site-built as well as for manufactured homes. Applications for an
FHA EEM may be submitted to the local HUD Field Office through an
FHA-approved lending institution. HUD has a searchable list of approved lenders . Information about the FHA EEM can be found on FHA’s web site . Additional information is available from HUD’s Office of Single Family Housing by calling (800) 569-4287. There is also a fact sheet about FHA’s EEM (70KB). The Systems Building Research Alliance has information about FHA EEMs for ENERGY STAR qualified manufactured homes.
VA Energy Efficient Mortgages
The Veteran’s Administration (VA) EEM is available to qualified
military personnel, reservists and veterans for energy improvements when
purchasing an existing home. The VA EEM caps energy improvements at
$3,000–$6,000. Borrowers should ask their lender about a VA EEM at the
beginning of the lending process. More information about VA EEMs can be
obtained from the Web site for the U.S. Department of Veteran’s Affairs or by calling (800) 827-1000. Chapter 7 of VA Pamphlet 26-7 (Revised) (1.5MB) contains lender guidance on the VA EEM.
To learn more about EEMs contact Fannie Mae, Freddie Mac, the FHA or
the VA. Additional information about writing energy-efficient mortgages
can be found on the Web sites for the U.S. Department of Housing and Urban Development (HUD) and the Residential Energy Services Network