What is an FHA EEM loan?

The Federal Housing Authority (FHA) Energy Efficient Mortgages Program (EEM) is designed to help achieve national energy-efficiency goals (and reduce pollution), and to provide better housing for people who might not otherwise be able to afford it. To achieve this goal, the FHA EEM Program helps current or potential homeowners significantly lower their monthly utility bills.  This is done by incorporating the cost of the energy efficiency improvements to their new home (or existing house) into their mortgage.

Lenders may add up to 100% of the energy efficiency improvement costs to the existing mortgage. The FHA will insure the loan for 5% of a home’s appraised value or $4000, whichever is greater, but not to exceed $8,000. These limits vary by county/state and the number of units in a dwelling. These loans may be combined with FHA 203 (h) mortgages available to victims of Presidentially declared disasters and with financing offered through the FHA 203 (K) rehabilitation program.

Home buyers must submit a Home Energy Rating (HER), contractor bids, and an FHA B Worksheet. Up to $200 of the cost of the HER can be included in the mortgage, as well as closing costs and the mortgage insurance premium. Anyone who meets the income requirements for the FHA’s Section 203 (b) is eligible for this loan, provided they can make the monthly mortgage payments. New and existing owner-occupied homes of up to 2 units qualify for this loan. Home-buyers can submit applications to their local HUD Field Office through and FHA approved lending institution.