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The best part of the FHA's Energy Efficient Mortgage is that the borrower isn't required to qualify for the extra money needed to include the energy upgrades, and there is no down payment required for the extra amount.

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June 28, 2017
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What About FHA Loan Guidelines? (part two)

FHA Common Question #26

In addition to the other types of FHA loan guidelines that pertain to specific types of purchases such as a fixer-upper home or a mobile home, there is also a special kind of FHA guideline pertaining to loans for energy efficient homes. This kind of FHA loan is called the Energy Efficient Mortgage, also known as EEM. It provides mortgage insurance for the borrower to buy or refinance a residence and include the cost of energy-saving upgrades in the amount.

The best part of the FHA's Energy Efficient Mortgage is that the borrower isn't required to qualify for the extra money needed to include the energy upgrades, and there is no down payment required for the extra amount. The rationale behind this kind of FHA loan is that by saving money on utilities, the borrower can afford to make higher payments, or get a larger loan based on those savings. Anyone concerned about the environment, saving money or just getting the most efficient home they can afford should seriously consider the EEM.

While the FHA has these programs, most FHA lenders either choose not to participate in them or have additional qualifying overlays which are more stringent than the FHA. It is not mandatory for an FHA lender to offer certain products and you should contact each lender to see if they offer the product you need.

NEXT:  How Do I Get an Energy Efficient Mortgage?

FHA Loan Articles and Mortgage News

Read About FHA Requirements, Updates, and Guidelines
When the Seller Wants to Help Pay Your FHA Closing Costs

June 12, 2017 - FHA loan rules in the FHA Handbook limit the contributions of an interested party, who may be the seller or any other person or party who wants to contribute to closing costs. These contributions are limited to a maximum of six percent of the sale price of the home.

Are FHA Loans Allowed When One Family Member Buys a Home From Another?

May 29, 2017 - FHA loan rules have special requirements for home loan transactions that may be termed “identity of interest”. These transactions, which are sometimes allowed, are between parties with an existing business relationship or between family members.

Is it Possible to Apply for Another FHA Mortgage?

May 22, 2017 - Some borrowers experience some confusion over the rules for FHA loans in cases where a homeowner wants to think about applying for an FHA mortgage to buy a second home. What are the FHA loan rules that apply in such circumstances? 

Verifying Alimony and/or Child Support for FHA Loans

May 16, 2017 - The FHA Loan Handbook states that a borrower may use alimony/child support income to qualify for an FHA home loan if it can be verified and meets FHA requirements. How does your FHA lender may consider alimony and child support as part of a borrower’s effective income? 

How FICO Scores Affect Your FHA Home Loan

May 12, 2017 - The FHA Handbook instructs lenders that a borrower is technically qualified for maximum financing  at the required minimum 3.5% down payment when the applicant has a FICO score at 580 or higher.