I have an FHA-insured mortgage – can I use the PACE program or other alternative programs to make energy efficient improvements?

Utilizing PACE programs to make energy improvements will result in the property not being eligible for FHA insurance where the PACE obligation will remain after closing.  There are a variety of other options available to finance energy efficient improvements including Home Equity Lines of Credit, leasing, or other programs.

Many states and lenders offer financing options for energy efficient improvements. It is very important that consumers take the time to become informed and select the best financing option.

Each borrower should talk to his or her lender and compare the terms and costs of the various financing options to determine what is best for his or her situation and needs.

For additional information see Mortgagee Letter (ML) 2017-18 at https://www.hud.gov/program_offices/administration/hudclips/letters/mortgagee  
 

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-03509