Can solar and wind technologies and other energy efficient improvements be financed using a 203(k)?

A  203(k) Rehabilitation Mortgage Insurance Program mortgage may be used in conjunction with 
•     Section 203(h) Mortgage Insurance for Disaster Victims
•     Energy Efficient Mortgages (EEM)
•     Solar and Wind Technologies  Any costs for EEMs and Solar Energy Systems must not be included in financeable repair and improvement costs. 

The mortgagee must calculate the maximum mortgage amount without factoring in the cost of EEM items, weatherization items, and solar energy systems. The mortgagee may then add the cost of these improvements to determine the base loan amount. The base loan amount may not exceed 110 percent of the after improved value of the property (100 percent for condominiums).  

For Limited 203(k) transactions, the costs for energy improvements can be in addition to the $35,000 limit on total rehabilitation cost. 

For additional information see Handbook 4000.1 II.A.8.a.i.(B); II.A.8.a.vi.(D); II.A.8.a.vii.(D); II.A.8.a.xi. at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh

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-04877