FHA Energy Efficiency Mortgage (EEM) Program

The FHA Energy Efficiency Mortgage (EEM) program allows a borrower to finance up to 100% of the expense of a cost-effective “energy package” based on analysis and recommendations by a qualified, third-party home energy rater.  The energy improvements are installed after the loan closes.  Total dollar amount of improvements aren't clear upfront (maybe $5-20K, depending on price of home), but limited by guidelines for lenders at http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/eem/eemlette

Standards for completing of the HERS audit, and for the auditors eligible to conduct a HERS audit, are most commonly established by either:

• US State agencies having authority to prescribe specific requirements and standards for residential energy ratings and rater qualifications, or;

• The national Residential Energy Services Network (RESNET), a non-profit organization founded by the National Association of State Energy Officials and Energy Rated Homes of America, has set standards for energy efficiency assessments in the U.S..

Individual US state requirements must be satisfied when completing an EEM transaction in states with specific requirements governing the scope of the energy analysis/rating or the qualifications or licensing of the energy auditor/rater. In states with certification and licensing requirements for energy raters, it is recommended that lenders request the HERS rater license number or evidence of certification, when underwriting an EEM.

 

Please be sure to visit the EEM Website Home page which provides a number of resources including: (1) a sample EEM worksheet, which helps lenders calculate the maximum EEM loan amount, and (2) a Cross Reference Tips sheet, which consolidates many of the EEM rules by category.  

 

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.The required home energy audit must be conducted using a tool known as the Home Energy Rating Systems (HERS).