The FHA 203k Renovation Loan Is The Real “Green Home Loan” As Energy-Efficient Improvments And Non-Toxic Building Materials Can Be Combined To Into One Renovation Transaction

7 06 2011
  • A “Green Home” conserves energy and uses of non-toxic building materials
  • The conservation of energy saves on heating and cooling costs
  • The of non-toxic materials is very important for health and environmental reasons
  • Energy inefficient homes increase the overall monthly costs of a home
  • The use of toxic materials can damage health and actually create serious health problems like asthma, allergies, skin issues, headaches, eye irritation and dizziness
  • The FHA 203k Rehabilitation mortgage allows a borrower to purchase or refinance a home while financing the costs of renovation to the property
  • A home renovation can utilize non-toxic building materials such as non-VOC (volatile organic compounds) paints; sealants that contain polyether rather than urethane or silicone bases; plywood that is free of formaldehyde; and natural clay plaster for walls instead of drywall (gypsum board)
  • This turns a “K” into a “Green K”, helping a borrower create a much healthier environment for the family living in the property
  • The FHA 203k can significantly reduce the time required to purge the market of real estate-owned (REO) and bank-owned stock
  • The REO stock move faster and the banks could sell their REOs for higher prices
  • Because the condition of a typical REO property is often quite poor, an owner-occupied homebuyer won’t have the cash to fix it up
  • The bank would have to drop the price drasticly to attract investors with the cash to renovate it
  • But the homebuyer who uses an FHA 203k Renovation loan can pay a higher price and have the money to renovate

For more:


Green Home Renovation: FHA 203k Renovation Loan Can Be Combined With FHA “Energy Efficient Mortgages” For Maximum Energy Efficient Improvements

20 12 2010

Energy Efficient Mortgage Program

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 Information by State
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Return to EEM Home

FHA’s Energy Efficient Mortgage program (EEM) helps homebuyers or homeowners save money on utility bills by enabling them to finance the cost of adding energy efficiency features to new or existing housing as part of their FHA insured home purchase or refinancing mortgage.


In 1992, Congress mandated a pilot demonstration of Energy Efficient Mortgages (EEMs) in five states. In 1995, the pilot was expanded as a national program.

EEMs recognize that reduced utility expenses can permit a homeowner to pay a higher mortgage to cover the cost of the energy improvements on top of the approved mortgage. FHA EEMs provide mortgage insurance for a person to purchase or refinance a principal residence and incorporate the cost of energy efficient improvements into the mortgage. The borrower does not have to qualify for the additional money and does not make a downpayment on it. The mortgage loan is funded by a lending institution, such as a mortgage company, bank, or savings and loan association, and the mortgage is insured by HUD. FHA insures loans. FHA does not provide loans.


Type of Mortgage:

EEM is one of many FHA programs that insure mortgage loans–and thus encourage lenders to make mortgage credit available to borrowers who would not otherwise qualify for conventional loans on affordable terms (such as first time homebuyers) and to residents of disadvantaged neighborhoods (where mortgages may be hard to get). Borrowers who obtain FHA’s popular Section 203(b) Mortgage Insurance for one to four family homes are eligible for approximately 96.5 percent financing, and are able to fold closing costs and the upfront mortgage insurance premium into the mortgage. The borrower must also pay an annual premium.

EEM can also be used with the FHA Section 203(k) rehabilitation program and generally follows that program’s financing guidelines. For energy efficient housing rehabilitation activities that do not also require buying or refinancing the property, borrowers may also consider HUD’s Title I Home Improvement Loan program.

How to Get a EEM:

To apply for an FHA insured energy efficient mortgage, contact an FHA approved lender.

Eligible Customers:

All persons who meet the income requirements for FHA’s standard Section 203(b) insurance and can make the monthly mortgage payments are eligible to apply. The cost of the energy improvements and estimate of the energy savings must be determined by a home energy rating system (HERS) or an energy consultant. The cost of an energy inspection report and related fees may be included in the mortgage. Cooperative units are not eligible.

EEM can also be used with FHA’s Section 203(h) program for mortgages made to victims of presidentially declared disasters. The mortgage must comply with both Section 203(h) requirements, as well as those for EEM. However, the program is limited to one unit detached houses.

Eligible Activities: EEM can be used to make energy efficient improvements in one to four existing and new homes. The improvements can be included in a borrower’s mortgage only if their total cost is less than the total dollar value of the energy that will be saved during their useful life. Other eligibility requirements may be found in the Homeowner’s Guide.

Eligibility Requirements

 -   The borrower is eligible for a maximum FHA insured loan, using standard underwriting procedures. The borrower must make a 3.5 percent downpayment. This 3.5 percent downpayment is based on the sales price or appraised value. Any upfront mortgage insurance premium can be financed as part of the mortgage.
 -   Eligible properties are one to four unit existing and new construction. EEMs may be added to some other loan types, including streamline refinances.
 -   The cost of the energy efficient improvements that may be eligible for financing into the mortgage is the lesser of A or B as follows:A. The dollar amount of cost-effective energy improvements, plus cost of report and inspections, orB. The lesser of 5% of:

  • The value of the property, or
  • 115% of the median area price of a single family dwelling, or
  • 150% of the conforming Freddie Mac limit.
 -   To be eligible for inclusion in the mortgage, the energy efficient improvements must be cost effective, meaning that the total cost of the improvements is less than the total present value of the energy saved over the useful life of the energy improvement.
 -   The cost of the energy improvements and estimate of the energy savings must be determined by a home energy rating report that is prepared by an energy consultant using a Home Energy Rating System (HERS). The cost of the energy rating report and inspections may be financed as part of the cost effective energy package.
 -   The energy improvements are installed after the loan closes. The lender will place the money in an escrow account. The money will be released to the borrower after an inspection verifies that the improvements are installed and the energy savings will be achieved.
 -   The maximum mortgage limit for a single family unit depends on its location, and it is adjusted annually. To find FHA maximum mortgage limits for any county in the country. The cost of the eligible energy efficient improvements is added to the mortgage amount. The final loan amount can exceed the maximum mortgage limit by the amount of the energy efficient improvements.

Technical Guidance:

EEM is authorized under Section 513 of the Housing and Community Development Act of 1992. Program regulations are listed on the EEM mortgagee letter web page.

FundMyRemodel “Green Homes”: 1950’s Palm Springs Home Is Renovated Using Sustainable Materials And Energy-Efficient Design (Video)

8 11 2010

A look at a mid-century green remodel of a modern home in Palm Springs by architect Eric Corey Freed and contractors Green Guys Construction.

Prepared for the 3rd Annual Palm Springs Sustainability Summit.

SOURCE: KPSP News 2 – Eye on the Desert
DATE: November 2, 2010 Home Improvment: Lowe’s Is Honored By Environmental Protection Agency (EPA) For Its “Build Your Savings” Program On Educating Homeowners On Energy-, Water-, And Money-Saving Products

14 10 2010

The EPA announced its annual WaterSense Partners of the Year, which recognize companies for excellence in promoting water efficiency and WaterSense-labeled products. 

And Lowe’s was honored:

  • Lowe’s: An honoree for the second straight year, the big box retailer’s “Build Your Savings” program educated consumers on energy-, water-, and money-saving products. 

Step 1:
Use the Home Audit Tool to uncover hidden savings in your home.

Step 2:
Purchase qualified items at Lowe’s and install in your home between January 1, 2009 and December 31, 2010.

View all eligible product categories

Step 3:
Keep your receipts and other documentation to provide to your tax advisor. Be sure to consult with a qualified tax advisor to discuss your ability to claim and qualify for benefits under the programs.

You may need to provide a Manufacturer’s Certification and/or product labels containing U-factor/Solar Heat Gain Coefficient if applicable.

Look for this sign in your Lowe’s store to identify which products qualify for tax credits.

Use your Lowe’s Consumer Credit Card and we’ll send you a year-end summary of “Tax Credit Eligible” purchases.**

On February 17, 2009, the American Recovery and Reinvestment Act of 2009 was signed into law. The act includes payroll tax cuts, the First Time Homebuyer credit, provisions for state rebate programs for the purchase of energy-efficient appliances and tax credits for energy-efficient improvements to existing homes. The information provided herein is provided for reference purposes only and should not be interpreted or relied upon as tax advice. Consult with a qualified tax advisor to discuss your ability to claim and qualify for benefits under the programs.

What Is the Energy-Efficient Tax Credit for Existing Homes?

Beginning January 1, 2009 through December 31, 2010, when you purchase qualifying energy-efficient items from categories such as doors, windows, skylights and insulation, you may be eligible to claim a tax credit of up to 30% off the purchase price on your 2009 or 2010 tax return (up to $1,500). A qualified tax advisor should be consulted to determine eligibility.

What Items Qualify?

Products from among the following categories may qualify* :

  • Exterior windows and skylights
  • Storm windows
  • Exterior doors
  • Storm doors
  • Metal roofs
  • Asphalt roofs
  • Insulation
  • Natural gas, oil, and propane water heaters
  • Pellet stoves

View All Eligible Products

*See for more information about qualified products. Not all ENERGY STAR® products qualify for a tax credit. Qualifying products may cost much more than standard products.

State-Specific Appliance Rebates

Check with your local utility company or click to visit the ENERGY STAR Rebate Finder website to find out if you qualify for a rebate on your ENERGY STAR appliances.

For more information on any of the topics above, consult with a qualified tax advisor. He or she can help you determine your eligibility for any of the credits or rebates, as well as how much you may receive. You may also visit the ENERGY STAR website for more information.

**Receive a year-end summary of items purchased on your Lowe’s Consumer Credit Card that Lowe’s identifies as “Tax Credit Eligible.” The year-end summary is not intended as tax advice. The year-end summary may not include eligible Special Order purchases. You should retain and review all of your receipts. Visit for a list of eligible products and additional Energy Tax Credit Program information. GE Money Bank and its affiliates do not provide tax, accounting or legal advice to third parties. Accordingly, any discussion of U.S. tax matters contained herein is not intended or written to be used, and cannot be used, for the purpose of avoiding U.S. tax-related penalties. Accordingly, parties should seek advice based on their own particular circumstances from an independent tax advisor.


For more: “Green Mortgage” Update: The FHA 203k Is The Only Real “Energy And Green Improvement” Mortgage As Few Lenders Bother To Understand And Offer “Energy Efficient Mortgages” (EEM) And “Energy Improvement Mortgages” (EIM)

22 09 2010

These programs are not new; they have been around very a long time, 15 to 20 years. Lenders are not offering them because they don’t know enough about them and they don’t think they are necessary. They are not required to even discuss them.

What is on the horizon for green mortgages?
Short of a true green mortgage (which does not exist), the closest program is the FHA 203(k). This program can allow you to add both energy and green improvements to a home. There’s a lot more noise about them right now. I believe we will see some changes to the programs in the months to come but I encourage everyone in the industry to ask that their lender learn about these programs and start offering them.

What are EEMs and EIMs?
These are loans that credit a home’s energy efficiency in the mortgage itself, giving borrowers the opportunity to finance cost-effective, energy-saving measures as part of a single mortgage. They allow borrowers to stretch their debt-to-income qualifying ratio in order to qualify for a larger loan amount and a better, more energy-efficient home.

An energy efficient mortgage (EEM) is typically used to purchase a new home that is already verified by a third party as energy efficient, such as an Energy Star-qualified home. An energy audit, performed by a certified energy rater, is required to prove efficiency and report expected monthly savings.

Energy improvement mortgages (EIMs) are for existing homes that need an energy retrofit. An energy audit identifies items that will make the home more energy efficient, and the costs of these improvements are added to the mortgage loan. EIMs are available for either a purchase or refinance of an existing home.

EEM and EIM guidelines are different depending upon the type of loan, so be sure the lender you are working with understands the details. FHA, VA, Fannie Mae, and Freddie Mac all have EEM and EIM programs.

The market for these types of mortgages should be very popular considering the fact that out of 128 million existing homes in this country, 95 million need some type of energy retrofit. The average American home is about 35 years old. Insulation wasn’t required until the mid ’70s. Energy efficiency wasn’t really considered until the 1990s. Look at all these homes that need energy retrofits and then look at all the refinances we’ve had recently: How many of the owners of those homes were offered an EIM? Not many, and getting an accurate count has been near impossible. It’s a crime.

For more: Green Homes: UNLV Center For Energy Research (CER), Pulte Homes And NV Energy In Collaboration To Develop Advanced Energy-Saving Technology In Homes (Video)

11 09 2010

Robert Boehm, Ph.D., the director of the UNLV Center for Energy Research (CER), describes the Villa Trieste project — a collaborative effort between UNLV, Pulte Homes and NV Energy to produce residential homes incorporating advanced energy- and cost-saving technologies. CER researchers are monitoring the real-world energy usage to help design the next generation of residential energy systems.

Green Home Appliances Update: Miele Introduces “Smart Washing Machine And Tumble Dryer” That “Start Automatically” When Electricity Is Cheapest

3 09 2010

 The first two appliances featuring smart-grid functionality will be a washing machine and a tumble dryer. The models can also be fitted with Miele’s gateway communication module, providing access to the appliances through a PC and the ability to monitor electricity rates.

Miele has announced its new smart grid ready domestic appliances at IFA 2010. These appliances have been designed to start automatically when electricity is cheapest, offering consumers energy savings.

After adding tariff data, the consumer can activate the Smart Start function in the appliance display – once the earliest starting time and the latest finishing time have been programmed in. Once installation is complete, the appliances will automatically run when electricity is cheapest. “Over the coming years, we are likely to see considerable variance in electricity rates in Germany,” says Peter Hübinger, Managing Director of Electronic Production at Miele. “With smart grid ready appliances, Miele is offering a highly relevant and future-proof solution.”

For more: