FHA Energy Efficient Mortgage

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The FHA's Energy Efficient Mortgage (EEM) program enables borrowers to finance green upgrades to their homes. The program first began in 1992 in only 5 participating states. In 1995, however, the program was expanded to include the entire 50 states.

How Does It Work?

FHA EEMs are mortgages that a borrower can use to buy or refinance a house with the cost of green upgrades included in the loan amount. The government sponsored this program believing that paying less monthly for utility expenses will help homeowners to pay their mortgages with more ease. There is no qualification for the additional loan amount for home upgrades, nor is there a down payment for it.


The normal procedure to qualify for an FHA loan applies. Contact a lender who is FHA approved. FHA loans are only government insured. Loans are awarded by banks. Those hard hit by recent hurricanes, flash floods or tornadoes also qualify for this mortgage program if their homes are in presidentially declared disaster areas.

Energy Consultant

The house you are buying or refinancing must be inspected by an energy consultant using the home energy rating system (HERS) to give you an estimate of the cost to install upgrades and the savings they will yield. Inspection fees can be folded into the whole loan amount.

Qualifying for an EEM

An EEM can be attached to your regular FHA loan if the total cost of improvement plus inspection is less than 5 percent of the property value or is less than 115 percent of the median area price of a single family house or less than 150 percent of the Freddie Mac limit. The program will take the best value of any possibility and apply it to your mortgage amount.