Energy Efficient Mortgage by FHA assists homeowners with utility bills

FHA Energy Efficient Mortgage, or EEM, has been available for years but hasn't really caught on that well. Not yet anyway. Washington is just now tooling up a national campaign to highlight the importance of energy conservation in housing. It's allocating a lot of resources to it. As a result the EEM is for sure going to get more media exposure in the coming months and could even be enhanced with some additional incentives.

FHA EEM basically works now like this. The borrower would purchase or refinance a principal residence, going through a standard FHA home loan approval process, and then can add the cost of energy efficient improvements on top of the mortgage. He doesn't need to qualify for the extra money nor is it part of the down payment calculations. One- to four-unit existing and new properties are the real thing.

The cost of improvements that may be eligible under FHA EEM is the lesser of the two below:

- The actual total of cost-effective energy improvements, as well as the cost of the report and inspections, or
- The lesser of 5% of:
- The value of the home, or
- 115% of the median area value of a single-family home, or
- 150% of the conforming Freddie Mac limit. Kind of complicated right here.

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