Energy Efficient Mortgage Program

Having an energy efficient mortgage can help you make improvements on your new home related to energy efficiency, which can help you to save money on utility bills and lower your overall monthly expenses. The Energy Efficient Mortgage Program can be combined with several other FHA-approved loans, including the Section 203k Rehabilitation Mortgage Insurance Program.



To obtain an EEM mortgage, a home must meet eligibility requirements, and a home energy assessment must be completed by a qualified energy home rater or assessor. Therefore, if you are interested in obtaining financing for energy-efficient home improvements, you are strongly encouraged to review the eligibility requirements that a home must meet, the potential benefits for which you may qualify, home assessment requirements an how you can apply for the mortgage program. With a bit of knowhow, you can better prepare yourself for the application process, as well as know what to expect, in terms of benefits and payments.

What is an FHA Energy Efficient Mortgage?

An FHA Energy Efficient Mortgage (EEM) provides the necessary finances needed to make improvements to a home that will better the home’s energy efficiency. Therefore, this mortgage program can help homeowners lower the overall operating costs of a home by reducing monthly and annual expenses related to energy use.

The Energy Efficient Mortgage Program was initialized in 1922 by the Department of Housing and Urban Development in just five states. However, by 1995, this program was available in every state within the United States. Under this program, the Federal Housing Administration (FHA) insures the borrower’s mortgage when purchasing or refinancing a residence, as well as the cost of energy-efficient improvements that the borrower would like to be made to the home.

As with all FHA loans and mortgages, mortgages are not provided by the FHA. However, by insuring the borrower’s mortgage and finding an approved lending institution, it is likelier you will be granted a loan, as the lender is protected against the risk of default. This can, in turn, provide borrowers with better interest rates, loan terms and approval rates, when comparing FHAs to conventional loans.

FHA EEM Home Energy Assessments

Before you can be approved for an Energy Efficient Mortgage, you must have a home energy assessment performed on the home that you wish to purchase or refinance. The purpose of this assessment is to identify the ways that a home’s energy efficiency can be improved, as well as identify whether or not these improvements are cost-efficient. Home energy assessments can only be completed by a qualified energy rater, auditor or assessor. This individual must use whole-home assessment standards, procedures and protocols in order for the assessment to be considered valid.

For the Energy Efficient Mortgage Program, an assessor, auditor or energy rater will only be considered qualified if trained and certified as one of the following:

  • A Building Performance Institute Building Analyst Professional.
  • A Building Performance Institute Home Energy Professional Energy Auditor.
  • A Residential Energy Services Network Home Energy Rater.

What is an energy efficient mortgage energy package?

When applying for an FHA EEM, one term that you will often hear is “energy package.” After the home that you intend to refinance or purchase has had an analysis performed by a qualifying home energy assessor, that assessor will make recommendations on improvements that can be made on the home, in order to increase energy efficiency.

These measures may include a variety of improvements, such as energy-saving equipment, repairs and wind and solar technologies. The assessments and recommendations made through the home energy assessment will make up the energy package. The package will also include the projected material and labor costs.

How much of the FHA EEM energy package can be financed?

The Energy Efficient Mortgage Program offers substantial financing, so long as improvements are considered cost-effective, and do not exceed maximum financing limits. Improvements made can be repairs to the home, weatherization items, solar and wind technology and the addition of energy-efficient equipment. Maximum finance amounts are based upon a percentage of the home’s value, the medium area price of a single-family dwelling or the national conforming mortgage limit, whichever is less.

You can learn more about EEM mortgage financing maximums by reviewing our informative guide. This guide will provide you a more in-depth look at these values, in order to better prepare you for your application process and help you to make an informed decision.

EEM Mortgage Energy Efficient Improvement Requirements

For an Energy Efficient Mortgage to be granted, your energy package must be considered cost-effective. To be considered cost-effective, the cost of the improvements must be equal to or less than the money that is estimated to be saved on energy from the improvements. When it comes to newly constructed homes, the improvements are considered cost-effective if they exceed the standards set by the most recent International Energy Conservation Code (IECC). For existing homes, improvements will only be considered cost effective if the expenses will pay for themselves over their expected life spans through the amount of money saved in energy costs.

With what other FHA loans can the Energy Efficient Mortgage Program be combined?

The Energy Efficient Mortgage Program can be combined with any FHA title II mortgage. This includes a number of different mortgage programs that are available to borrowers, including the Section 203k Rehabilitation Mortgage Insurance Program, which allows borrowers to finance a variety of repairs, modernization projects and home improvement projects.

How to Apply for an Energy Efficient Mortgage

To apply for an EEM mortgage, you will need to learn how to locate an FHA-approved lender. As stated previously, the Federal Housing Administration (FHA) does not provide mortgages or loans directly. Instead, FHA loans are provided through FHA-approved private lenders.

When submitting an application, it is important to know that you will need to meet that specific lender’s eligibility requirements, such as meeting a minimum credit score and debt-to-income ratio. However, as stated previously, an FHA insured mortgage protects lenders from the financial cost and risk of defaults. Therefore, these minimum requirements are far lower than conventional mortgages.

To find a complete list of EEM mortgage lenders, download and view our comprehensive guide, which will provide you with a list of lenders that can be found in your area, as well as provide a more detailed look at the program – as a whole.

What Are FHA Loans?

The Federal Housing Authority (FHA) insures mortgages and approved lenders to offer mortgages to eligible borrowers. Although available to all home buyers, the requirements of the loan make it attractive for first-time buyers. FHA-approved mortgages typically allow buyers to provide a smaller down payment and apply with a lower credit score than standard home loans. FHA loans covers many needs, including energy efficiency repairs and mobile home financing. Find out about FHA loan benefits in our guide.

Who Is Eligible For An FHA Loan?

If you are interested in getting a home loan through an FHA-approved lender, you must meet program requirements. The most important factor is choosing a mortgage provider approved by the FHA. Employment history is another crucial eligibility factor, as lenders will require proof of employment for the previous two years. Lenders will review your potential expenses, lending histories and your current debts to determine if you can pay your mortgage. Find out more about FHA loan eligibility by downloading our guide today.