How can FHA assist me in lowering my energy costs?

The Energy Efficient Mortgage (EEM) program allows FHA-approved lenders to offer financing for cost-effective energy efficient improvements to an existing property at the time of purchase or refinancing, or for upgrades above the established residential building code for New Construction.


The EEM may be used with:

• New Construction properties (one- to four-units);

• Existing Construction properties (one- to four-units);

• Condominiums (one unit); or

• Manufactured Housing.


The energy package is the set of improvements agreed to by the Borrower based on recommendations and analysis performed by a qualified home energy rater. The improvements can include energy-saving equipment, and active and passive solar, and wind technologies. The energy package can include materials, labor, inspections, and the home energy assessment by a qualified energy rater. If the Borrower desires, labor may include the cost of an EEM Facilitator (project manager).


The financed portion of an energy package must be cost-effective. A cost-effective energy package is one where the cost of the improvements, including maintenance and repair, is less than the value of the energy saved over the estimated useful life of those improvements.


The maximum amount of the energy package that can be added to the Base Loan Amount is the lesser of:

• the dollar amount of a cost-effective energy package as determined by the home energy audit; or

• the lesser of 5 percent of:

  • the Adjusted Value;
  • 115 percent of the median area price of a Single Family dwelling; or
  • 150 percent of the national conforming mortgage limit.


Please visit the Energy Efficient Mortgage Program web page at: 

To locate an FHA-approved lender please go to:

For additional information see Handbook 4000.1 Section II.A.8.c. available at:

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.

Topic Number: KA-03455