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Energy Efficient FHA Mortgage Insurance

Program Overview

Energy Efficient FHA Mortgage Insurance is a is a no down payment FHA program for energy efficient homes. This program seeks to help achieve national energy-efficiency goals, reduce pollution and provide better housing for people who might not otherwise be able to afford it. The program provides mortgage insurance for a person to purchase or refinance a principal residence and incorporate the costs of the energy efficient improvements into the mortgage. The loan is funded by a participating FHA-approved lending institution. FHA does not provide loans. This program is available in any county in Montana.

Who is eligible for this program?

Borrower must be approved for an FHA loan through a participating FHA-approved mortgage lender. The borrower must make a 3.5% cash investment in the property, which is based on the sales price of the property. Closing costs are not included in the 3.5% calculation. Upfront mortgage insurance can be financed as a part of the mortgage. The buyer must be approved for an FHA loan and use FHA income guidelines, which are available at: www.huduser.org/datasets/il/il08/index.html. The Energy Efficient Mortgage Loan program is available to anyone who meets the income requirements for FHA's Section 203(b) and is able to make the monthly mortgage payments. Purchase of eligible 1-4 unit existing and new construction homes. Is this program for first time buyers only? No

Property Eligibility Requirements

There are no location limitations. Allowable property types: 1- to 4-family units existing and new construction. Cooperative units are not eligible. Individual condominium units may be insured if they are not in projects that have been approved by FHA or the Department of Veterans Affairs, or they meet certain Fannie Mae guidelines.

Benefit Details

The cost of the energy improvements that may be eligible for financing into the mortgage is the greater of 5% of the property's value (not to exceed $8,000) or $4,000. To be eligible for inclusion in this mortgage, the energy efficient improvements must be cost effective, meaning that the total cost of the improvements is less than the total present value of the energy saved over the useful life of the energy improvement. The cost of the energy improvements and estimate of energy savings must be determined by a home energy rating report, which is done by a home energy rating system or consultant. Benefit: Tax credits may be used to offset income tax liability. Owner Occupancy Required: Yes Other Program Comments: Maximum mortgage amount for a single family home in Montana ranges from $271,050 to $386,250, plus the cost of the eligible energy-efficient improvements. (Limits vary by county.)

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