Blog Post

As the green movement continues to sweep the nation, many people are looking at their homes to find ways to become more energy and cost efficient. If you have been looking for a way to make your home more green by improving its energy efficiency, Fannie Mae and FHA may have the solution. Two little known lending programs can now help to finance the cost of improving your home’s energy usage.

The first program introduced by the FHA will allow eligible homeowners to borrow up to $25,000 at fixed rates between 5% and 7% to be used for upgrading heating and ventilating systems, installing high efficiency windows and doors, solar panels, insulation & duct sealing, geothermal, and other energy upgrades. The largest benefit to this program is the long term (20 year max) low fixed interest rates. Eligible borrowers must meet the FHA requirements including, solid credit and an income to debt ratio that does not exceed 45%. In addition, the home must be your principle residence and must not have any negative equity. While the program is still considered a pilot, it may soon become a major national program with total loans reaching into the millions of dollars.

The Fannie Mae energy program is set up differently than the FHA program in that the cost of improvements is included in the mortgage amount and is capped at 10% of the home’s estimated market value. The program allows buyers to purchase a home and improve its energy efficiency with one mortgage. Most single family properties will be eligible for this program.

Posted 5th May 2011 by Sally Forster Jones