FHA energy efficient mortgages are special loans that are backed by the Federal Housing Administration to encourage the construction and purchase of homes that utilize less energy in day-to-day functioning.
The purpose of energy efficient mortgages
FHA energy efficient mortgages are designed to do several things. These include:
* Enable the purchase of energy efficient homes — FHA energy efficient mortgages are available for those who are in the market to buy energy efficient homes or make such improvements to them at the time of purchase.
* Refinance homes to make improvements — FHA energy efficient mortgages can also be used to refinance existing home loans so energy efficient improvements can be made to a property.
Who funds FHA energy efficient mortgages?
FHA energy efficient mortgages work like other government-backed loans. This means a borrower must go through an approved mortgage lender who will underwrite the loan. The FHA simply insures it.
Qualifications for FHA energy efficient mortgages
There are a number of qualifications that must come into play for people to be eligible for FHA energy efficient mortgages. They include:
* Regular qualifications — Buyers must qualify for standard FHA-backed loans to obtain this type of mortgage.
* Cost effectiveness of the improvements — FHA energy efficient mortgages are designed to make minor to moderate improvements. The cost of improvements cannot exceed 5 percent of the property’s value.
* Size of the property — FHA energy efficient mortgages are available for properties that are one to four units in size.
FHA Energy Efficient Mortgages
By Mortgage101
