Opening Doors to Opportunity

Energy Efficient Mortgages

What is an Energy Efficient Mortgage (EEM)?

As the single largest housing expense after a mortgage payment, utility costs can have a direct impact on how large of a mortgage a homebuyer can afford. Buyers can save money on the cost of utilities by making energy efficient improvements to the home they are purchasing. New homebuyers or current homeowners can use FHA’s Energy Efficient Mortgage (EEM) to finance the cost of these improvements. FHA offers the Energy Efficient Mortgage Program to allow homebuyers to finance the purchase of a home—or refinance a homeowner’s current mortgage—and include the cost of the energy-saving, cost-effective improvements through a single mortgage. FHA’s EEM program recognizes the monthly utility cost savings when homebuyers make energy efficient improvements. Borrowers may use the EEM program to finance the cost of energy efficient improvements into their new mortgages, without the need to qualify for additional financing, because cost-effective energy improvements result in lower utility bills making more funds available for their mortgage payments.

Features & Benefits of EEMs for Home Owners and Home Buyers:

While EEMs have the potential to benefit the greater community through the overall economic impact and the conservation of resources, home owners and home buyers will realize direct and immediate benefits as well. Several of the features and benefits are outlined below:

  • No additional qualifying or down payment
  • No appraisal needed
  • Lower monthly payments
  • Cash back from rebates and tax incentives
  • New construction or existing homes
  • New purchase or refinance

How the EEM Loan Works:

A Home Energy Rating System provider will complete a measurement of the home’s energy efficiency and provide a report listing recommended cost effective energy improvements, an estimated cost of the energy improvements, and estimated energy savings to the buyers and their lender. Buyers may finance the cost of the energy inspection report as part of the mortgage if the entire package, including these fees, is cost-effective. The amount of the energy efficient improvements is placed in an escrow account and released after an inspection verifies that the improvements are installed and the energy savings will be achieved. Buyers can begin making energy improvements after the loan’s closing, and the work must be completed within 90 days. 


Almost anyone who has satisfactory credit, enough cash to close the loan, and sufficient steady income to make monthly mortgage payments can be approved for a FHA-insured EEM loan. There is no upper age limit and no certain income level required. The following types of properties are eligible under the EEM program, including new construction or existing one- to four-unit single-family residences:

• Detached houses
• Townhouses
• Condominiums (certain restrictions apply) 

Energy improvements that are available under an EEM loan:

  • Windows and doors
  • Furnaces, Air conditioners, and Heat Pumps
  • Insulation: attics, walls, floors, and crawlspaces
  • Water heaters
  • Air infiltration sealing
  • Air duct sealing
  • Lighting retrofits
  • Fixing or replacing a chimney
  • Installing active and passive solar technologies
  • Installing a programmable thermostat
  • Installing energy monitors
  • And more!!!