HUD Announces Green Housing Initiatives
That program was created to encourage public housing providers to take steps to reduce utility costs beyond what may already be required by state law. But what does that have to do with FHA home loans or buying a single-family home with one?
RRI supports the HUD Climate Action Plan, designed to foster “climate resiliency, reduce greenhouse emissions, and pursue environmental justice in housing” according to HUD.gov.
What does this plan do? In part it encourages public housing agencies to negotiate special rates with utility companies, or purchase energy through a third-party broker. It also encourages arrangements between utility companies and clients that make energy efficient upgrades to the property.
Again, a legitimate question is raised--what does a public housing initiative have to do with buying a single-family home?
The FHA Energy-Efficient Mortgage Option
The answer is that there are borrower-friendly versions of these options already available to you above and beyond the HUD program discussed above. There are consumer resources for the equivalents of the current HUD climate-friendly program you should know about.
If you need to upgrade your home to be more energy efficient, one of the first things to do is to review the federal government’s Weatherization Assistance Program, which offers guidelines, resources, and support for weatherization and climate-friendly upgrades to your home.
But once you have done the research and have committed to your upgrades, you still need a way to finance and pay for them. That’s where the FHA Energy Efficient Mortgage (FHA EEM) program comes in.
An Add-On, Not a Separate Loan
Available as an add-on to FHA purchase loans and refinance loans alike, the FHA Energy Efficient Mortgage adds extra funds to your loan for approved energy-saving additions to the property.
An FHA EEM is not a separate loan--you can’t apply for one as a standalone. You can use an EEM with an FHA 203(k) Rehabilitation mortgage, too. In fact, most FHA mortgages come with the option to add EEM funds.
The Green Housing measures HUD is working on aren’t for single-family homes; it’s intended for multi-family housing. But house hunters can take advantage of existing, consumer-level programs that offer similar results--an upgraded and more energy-efficient property.
It doesn’t hurt to compare your options. Ask a participating FHA lender to show you how an EEM could work for you when buying or refinancing.
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