Mortgage Professional

While EEM loans, Energy Efficient Mortgages, have been around for a long time. An Energy Efficient Mortgage (EEM) is allowed on most government loan. It can be used with a purchase or refinance. There was an $8,000 cap. No more

Big 5 Energy Upgrades:

1. Central Heating and Air-Conditioning
2. Dual-pane Windows.Insulation
3. Insulation
4. Water Heaters
5. Infiltration (weather-stripping/caulking)

In a nutshell, a borrower may finance 100% of total cost of improvements into the mortgage if energy savings exceeds the cost. No qualifying for additional financing and no appraisal of improvements is required. This is determined by a certified HERS rater.  

FHA EEM Limits:

Use 5% of the Lesser of:

1. The Appraised Value
2. 115% of the median sales price (see HUD published sales price figures)
3. 150% of the Freddie Mac Conforming Limit ($625,500)

Example:

A home with Appraised Value of $680,000 in Contra Costa County could finance up to $31,275 in energy upgrades! 

VA Loan Limits:

$6,000 regardless of appraised value.

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