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ENERGY STAR for Lenders
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Energy Efficient Mortgage
for ENERGY STAR Manufactured Homes
ENERGY STAR® manufactured homes are eligible for the Federal
Housing Authority's (FHA) Energy Efficient Mortgage (EEM) program.
The Department of Housing and Urban Development has approved the
Systems Building Research Alliance (SBRA) as a home energy rater
for purposes of the EEM. This means that ENERGY STAR manufactured
homes will have their energy savings calculated by SBRA and will
not be subject to an on-site home energy rating in order for a homebuyer
to qualify for an EEM.
The EEM program recognizes that the improved energy efficiency
of a house can increase its affordability by reducing its operating
costs. Cost-effective energy improvements result in lower utility
bills, conserve energy and, thus, make more income available for
the mortgage payment.
As outlined in FHA's
Mortgagee Letter 2005-21, the EEM program allows a borrower
to finance 100% of the expense of a cost-effective "energy
package," the features and improvements that make the house
more energy efficient, and any soft costs related to demonstrating
the home meets ENERGY STAR requirements. A cost-effective energy
package is one where the cost of the improvements, including maintenance,
is less than the present value of the energy saved over the useful
life of those improvements. The borrower does not need to qualify
for the additional financing or provide additional down payment.
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Applying for the FHA
EEM
The process for qualifying for the EEM is simple. Once it is determined
that both the borrower and the property are eligible for an FHA
mortgage and the buyer selects an ENERGY STAR home design, the home
retailer completes the application forms (see below) and submits
them to SBRA. SBRA determines the allowable increase in the mortgage
amount, and will provide that information directly to the retailer
and lender for completing the loan application.
To apply for FHA's EEM for manufactured homes, follow the steps
below:
Step 1 Complete the Request
to Provide FHA EEM Energy Report Agreement.
Step 2 Complete a Manufactured
Home Energy Report for each home to be evaluated.
Step 3 Complete a Manufactured
Home Specification Sheet for each home to be evaluated.
Step 4 Submit the completed agreement, the Energy Report(s)
and the Home Specification Sheet(s) to:
Systems Building Research Alliance
1776 Broadway, Suite 1250
New York, NY 10019
Fax: (212) 496-5389
Attn: Gwynne Koch
E-mail: gkoch@research-alliance.org
SBRA will estimate the energy costs of the home built with
and without the ENERGY STAR package, determine the present
value of the energy savings that results from installation of the
ENERGY STAR package, and determine the allowable increase in the
mortgage amount.
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Features and Benefits
of the FHA EEM
The EEM enables the buyer to put the value of the energy savings
back into the home. Features of the FHA EEM include the following:
- Any FHA-approved lender can approve the EEM.
- The EEM is initially underwritten as if the ENERGY STAR package
did not exist. When qualifying a homebuyer, the cost of the energy
improvements is subtracted from the sales price of the home.
- The homebuyer qualifies for a 2% increase in their qualifying
income ratios, and these ratios are calculated on the cost of
the home before the energy improvements.
- Up to $8,000 can be added to the loan amount, based on a calculation
that takes the expected energy savings into account. The borrower
does not have to qualify for the additional financing or make
a higher down payment.
- The calculation for the private mortgage insurance premium is
based on the cost of the home before the energy improvements.
- The home is not subject to an on-site home energy rating in
order for a homebuyer to qualify for an EEM.
For more information, contact Gwynne Koch at gkoch@research-alliance.org
or 212-496-0900 x120.
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Essential Documents
and Forms
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Additional information
• Back to the ENERGY STAR for Manufactured
Homes main page
• ENERGY STAR for Home Manufacturers
• ENERGY STAR
for Modular Builders
• ENERGY STAR for Retailers and Installers
• ENERGY STAR for HUD-code Plant Certifiers
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