Energy Efficient Mortgages FHA Mortgage Insurance Purpose

In 1992 Congress mandated a pilot demonstration of energy-efficient mortgages (EEMs) in five States. In 1995 the pilot was expanded as a national program. FHA insured 27,150 EEMs in FY2001, 30,331 in FY2002 and 26,600 in FY2003.
EEMs recognize that reduced utility expenses can permit a homeowner to pay a higher mortgage to cover the cost of the energy improvements on top of the approved mortgage. FHA EEMs provide mortgage insurance for a person to purchase or refinance a principal residence and incorporate the cost of energy-efficient improvements into the mortgage. The borrower does not have to qualify for the additional money and does not make a downpayment on it. The mortgage loan is funded by a lending institution, such as a mortgage company, bank, or savings and loan association, and the mortgage is insured by HUD. FHA insures loans. FHA does not provide loans.