The FHA EEM Loan makes it easier for homeowners who would like to make their current or new home more energy efficient by eliminating the need to get an additional mortgage loan to cover the cost of improvements. Homeowners can access EEM loans through an Arizona FHA mortgage lender either when they purchase a new home or by refinancing the mortgage on their current home. According to the Joint Center for Housing Studies, over 250,000 more homeowners could qualify for a home loan if the amount of savings on utility bills is considered when deciding on the amount of the mortgage.

How an FHA Energy Efficient Mortgage Loan Works
Like any other FHA mortgage loan, the EEM Loan helps people who may not have qualified for a home loan under conventional underwriting guidelines. The FHA insures loans made by qualified lenders to qualifying borrowers on properties that include single family homes, manufactured homes and some multi-family properties.

FHA EEM loans are available to borrowers who qualify for a fixed rate mortgage loan under the FHA 203(b) mortgage loan and are able to make monthly mortgage payments. The program allows home buyers to roll closing costs and other costs into the total loan amount. In addition, the cost of adding energy efficient features and an estimate of energy savings are determined by an energy consultant. The cost of the energy inspection report can be included in the mortgage amount. Finally, a lender may take energy savings costs into account when determining the size of a mortgage for which the buyer qualifies.

What Can Be Covered Under an Energy Efficient Mortgage Loan
A homeowner can use an Arizona FHA EEM loan to make changes and repairs that improve the energy efficiency of a home as long as the total cost of those improvements is less than the total dollar value of the energy that will be saved during their useful life. There is a limit of either 5% of the property’s value up to $8,000 or $4,000, whichever is greater. So if your property is valued at $100,000, the limit of the financing allowed is $5,000 since 5% of the property value is greater than the $4,000 limit.

In addition, an EEM can be used to allow a home buyer to qualify for a larger mortgage if the property meets certain energy efficiency standards because the lender can offset energy savings against traditional mortgage costs.

Who qualifies for an FHA EEM?
Any buyer who qualifies for a FHA home loan qualifies for an EEM. The Energy Efficient Mortgage is meant to give a buyer additional benefits on top of a traditional mortgage deal. It can be used with an FHA loan, an FHA 203(k) loan, a VA loan or any conventional loan.