Today, FHA announced anticipated guidelines for two new initiatives that will support borrowers seeking to make energy efficient improvements to their homes, including guidance that will allow borrowers to use Single Family FHA financing for properties with existing Property Assessed Clean Energy (PACE) loans that meet certain conditions. FHA also announced its new partnership with the Department of Energy (DOE) helping borrowers using Single Family FHA’s Energy Efficient Home (EEH) program to take advantage of energy cost savings when measured by DOE’s Home Energy Score.

PACE programs have the potential to increase the accessibility and affordability of energy saving measures, consequently lowering energy bills to residents and reducing the environmental footprints of participating localities.

Single Family FHA supports responsibly expanding access to clean energy financing options for creditworthy borrowers. Single Family FHA PACE guidance has the potential to allow homeowners to benefit from energy cost savings while preserving the marketability of properties with PACE loans.

In finalizing guidance, FHA will work with the Consumer Financial Protection Bureau, DOE, Treasury and other industry stakeholders to advocate for strong consumer protections. New Standards for FHA Single Family Energy Efficient Home –Incorporating DOE’s Home Energy Score FHA has partnered with DOE on an initiative that allows consumers to qualify for a higher loan amount due to cost savings associated with energy efficient improvements.

Under the new FHA and DOE partnership, FHA will provide flexible underwriting to recognize the reduced costs of utilities when those costs are established with the Department of Energy’s (DOE) Home Energy Score in areas where the Home Energy Score is available. DOE’s new Home Energy Score is a low cost, reliable method for estimating the energy use of a home.

The score is the equivalent of an easily-understood “miles per gallon” label for homes. The score measures the energy efficiency of homes on a scale of 1–10. Homebuyers or homeowners who want to obtain an FHA-insured purchase or refinance mortgage for a single family home that receives a Home Energy Score of 6 or higher will be eligible to increase their income qualifying ratio by 2 percentage points above the standard Single Family FHA limit. This means that FHA borrowers will be able to borrow slightly more when they buy or refinance a more energy-efficient home through FHA’s EEH program.

Through this partnership, FHA is supporting efforts to provide potential homeowners with an easy way to measure the energy efficiency of their homes and to identify the combination of investments that will help make their homes more energy efficient.

For more information:  http://portal.hud.gov/hudportal/documents/huddoc?id=FTDO.pdf