FHA Energy-Efficient Mortgages

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In today’s housing market, potential homebuyers are constantly on the lookout for financing options that not only meet their homeownership goals but also contribute to environmental sustainability. FHA Energy-Efficient Mortgages (EEMs) are one such option. Designed to help buyers afford properties that are energy efficient or can be upgraded to become so, these loans are supported by the Federal Housing Administration (FHA) and provide an avenue for reduced energy costs and an eco-friendly lifestyle.

What Are FHA Energy-Efficient Mortgages?

FHA Energy-Efficient Mortgages are a type of loan that allows homebuyers to finance both the purchase of a home and upgrades that will improve its energy efficiency, all under a single mortgage. This kind of loan is especially attractive for those looking to buy older homes that could benefit from energy-saving upgrades.

Benefits of FHA EEMs

Energy Cost Savings

Homeowners can enjoy substantial savings on their energy bills. The energy-efficient upgrades funded by this mortgage type lead to reduced energy consumption, resulting in lower monthly bills.

Increased Home Value

Energy-efficient upgrades can significantly increase the property’s value. EEMs enable homeowners to make these improvements at the outset, a perk that becomes profitable if they decide to sell the property.

Environmentally Friendly

By reducing energy consumption, homeowners contribute to a reduction in greenhouse gas emissions, playing a part in the global effort to combat climate change.

Eligibility and Application Process

Qualification Criteria

The qualification criteria for an FHA EEM are similar to those for standard FHA loans. Applicants must have a reliable income, a reasonable credit score, and a down payment. The home in question must also be the applicant’s primary residence.

Energy Assessment

An energy assessment by a qualified assessor is required to determine the cost-effective, energy-saving opportunities for the property. The assessment informs the extent of funding allocated for improvements.

Loan Limits

The FHA EEM caps the energy-efficient improvement portion of the loan. It’s generally the lesser of 5% of the property’s value, 115% of the median area price of a single-family dwelling, or 150% of the conforming Freddie Mac limit.


FHA Energy-Efficient Mortgages present an invaluable opportunity for homebuyers to merge the quest for homeownership and energy efficiency. By understanding the ins and outs of these loans, including the benefits and application process, prospective homeowners can make informed decisions that align with both their financial and environmental stewardship goals. Make the move today and step into a home that epitomizes comfort, affordability, and sustainability.


An FHA EEM allows borrowers to include the costs of energy-efficient improvements in their mortgage, without needing a larger down payment.

Borrowers first have an energy assessment conducted to determine which improvements are cost-effective. The cost of these improvements is then added to the mortgage amount.

Most types of properties are eligible, including single-family homes, multifamily units, and manufactured homes, as long as they meet FHA guidelines.

Yes, there are limits. The maximum amount that can be added to the mortgage for energy-efficient improvements is the lesser of 5% of the property’s value, 115% of the median area price of a single-family home, or 150% of the conforming Freddie Mac limit.

No, the down payment requirements for an FHA loan with EEM are the same as a standard FHA loan.

Eligible improvements include, but are not limited to, weatherization, high-efficiency heating and cooling systems, solar panels, and thermal windows.

In addition to the standard FHA loan application requirements, borrowers must provide a Home Energy Assessment Report, which outlines the cost-effective energy improvements and their expected savings.

Yes, FHA EEMs are available for both purchase and refinance transactions.

Benefits include lower utility bills, improved home comfort, and potentially increased home value. Additionally, the cost of the improvements is spread out over the life of the mortgage, making them more affordable.

Yes, contractors must be licensed and insured, and the improvements must be completed within 90 days of the loan closing.

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