By Tony Capitelli
OCR GOVERNMENT AFFAIRS DIRECTOR
Many programs are available to help finance energy-efficient home improvements. Ten of these programs are described below.
- Energy Efficient Mortgage (EEM): This loan program allows borrowers to finance cost-effective, energy-saving improvements as part of a single mortgage. These mortgages make it possible for property owners to borrow above the appraised value and stretch debt-to-income qualifying ratios. To ensure the effectiveness of EEMs and to make certain proper upgrades are performed, these loans require an energy audit. EEMs are a Federal Housing Administration (FHA) product, but the Veterans Administration (VA) has its own version.
- Federal Housing Administration PowerSaver Loans: This loan program offers three financing options for home owners to make energy-efficient and renewable energy upgrades to their homes.
- PowerSaver Home Energy Upgrade (Up to $7,500): This program can be used by home owners with manageable debt and a credit score of 660 or higher for smaller projects, such as insulation, air and duct sealing, water heating, and upgrading or replacing heating and cooling equipment. Loans of this kind do not require a home appraisal or lien on the property and are insured by FHA.
- PowerSaver Second Mortgage (Up to $25,000): This program is for larger retrofit projects, including energy efficiency, solar photovoltaic, solar hot water, geothermal, or other renewable energy projects. A home appraisal and sufficient equity are generally required, and borrowers will likely not qualify if they already have a second lien or second mortgage on the property.
- PowerSaver Energy Rehab (203(k) First Mortgage up to FHA Loan Limits): This program is for the purchase or refinance of a home. At least $3,500 of the home improvements must consist of eligible PowerSaver measures. FHA insures the mortgage with the improvement project.
- HomeStyle® Energy Mortgage: This Fannie Mae program allows borrowers to make energy-efficient or utility-cost-reducing upgrades within the mortgage when purchasing or refinancing a home. This program also offers $3,500 for certain types of weatherization and water-saving improvements.
Note: Fannie Mae allows those with a PACE loan to finance with this program.
- HomeStyle® Renovation Mortgage: This Fannie Mae program allows borrowers to make renovations, repairs, and improvements totaling up to 50 percent of the as-completed appraised value of the property with a first mortgage.
- Freddie Mac Renovation Mortgage: This program allows borrowers to repair, restore, rehabilitate, or renovate their existing site-built homes within a Freddie Mac mortgage.
- The Southern California Gas Company Home Energy Upgrade Financing (HEUF) Program: This program offers loans ranging from $2,500 to $20,000 for the purchase and installation of energy-efficient upgrades. Eligible technologies include water heaters, refrigerated air conditioners, evaporative coolers, double-pane windows, building and equipment insulation, roofing, spa/ pool heaters, insulated plantation shutters, and permanently installed natural gas barbecues.
- The California Housing Partnership Corporation Ratepayer Integrated On-Bill Payment Program (RIOPP): This relatively new kind of financing is tailored to low-income multifamily rental properties and allows retrofit costs to be included in a tenant’s energy bill.