What is An FHA-insured Energy Efficient Mortgage and How Does it Work?

Home / Blog / What is An FHA-insured Energy Efficient Mortgage and How Does it Work?

What is An FHA-insured Energy Efficient Mortgage and How Does it Work?

Throughout California, interest in energy efficiency remains high. The state has a more than four-decade history of programs and initiatives that have reduced greenhouse gases and emissions, saved money and improved the environment. The following information outlines some residential energy efficiency benefits and gives you a comprehensive introduction to finding and securing an energy efficient mortgage.

Cal-EEM Energy Efficient Mortgage

The Cal-EEM energy efficient mortgage is made available through Cal-HFA, the California Housing Finance Agency. It is usually combined with an additional Cal-EEM grant for making energy efficient improvements in the home. This particular energy efficient mortgage is insured by the Federal Housing Administration (FHA).

Insured mortgages allow lending institutions more freedom in making mortgage loans. They typically have lower interest rates and require lower down payments than other types of mortgages. Persons with lower credit scores or other issues that could prevent them from getting a conventional mortgage loan are likely to have more success getting an FHA-insured loan.

Extra Credit Teacher Program

The Cal-EEM + Grant Program energy efficient mortgage can be combined with the Extra Credit Teacher Program (ECTP) to provide home purchasers with assistance making the down payment. Teachers, administrators, school staff members and school district employees in any California K-12 public school, including Charter Schools and county/continuation schools, may qualify for this program.

Basic Cal-EEM Energy Efficient Mortgage Requirements

Borrowers seeking a Cal-EEM + Grant Program loan must meet some basic requirements.

  • The borrower must occupy the property as a primary residence.
  • The borrower must participate in a course of homebuyer education and obtain a certificate showing completion of the education program.
  • The borrower must meet Cal-HFA income limits established for the program.

The property itself is also subject to certain limitations and requirements.

  • The property must be a single-family, one-unit residence (including condominiums and PUDs).
  • The price of the property cannot exceed Cal-HFA’s sale price limits for the county in which the property is located.
  • Manufactured homes must be on a permanent foundation.

If there are conflicting guidelines for either borrowers or the property, the lender is required to follow the more restrictive guidelines.

Mortgage seekers should also be aware of some additional property guidelines that must be followed.

  • There is a five-acre maximum on the size of the property.
  • Leaseholds/land trusts and co-ops are not permitted.
  • Condominiums must meet the guidelines of the first mortgage.
  • Property must meet the requirements of the mortgage guarantor/broker.
  • Property must follow the relevant FHA-EEM guidlines.
  • Property must be subject to a Home Energy Rating System (HERS) report. This report provides a detailed analysis of a home's energy efficiency and a score based on the Home Energy Rating System (HERS) Index, a national standard for measuring energy performance.

Your Übermortage loan officer can tell you about the full range of requirements for both borrowers and the property itself.

Characteristics of an Energy Efficient Home

Once you have secured an energy efficient mortgage to purchase your new home, what can you expect to find in an energy efficient residence? Residential energy efficiency is most often represented by:

  • A tight envelope. The envelope is the external walls and shell of the home that creates the barrier between the outdoors and the indoor living spaces. A tight envelope means that there will be very few cracks, gaps and other openings that allow air leaks and energy loss.
  • Energy efficient appliances. High-efficiency appliances, such as refrigerators, ovens and microwaves, play a large role in energy savings. When buying appliances, look for the Energy Guide label that contains energy efficiency information.
  • Energy efficient heating and cooling systems. High-efficiency furnaces, air conditioners and other HVAC systems are major contributors to overall home energy efficiency. Look for Energy Guide labels on these pieces of equipment with information on efficiency ratings and energy usage.

Benefits of an Energy Efficient Home

  • Reduced greenhouse gas emissions. An energy efficient home can significantly reduce greenhouse gas emissions. This type of energy efficiency has long been a goal for California, and an energy efficient home can make a contribution.
  • Reduced energy usage. Energy efficient appliances, HVAC systems, and household equipment, along with tight home envelopes, will substantially decrease monthly energy usage. This will reduce stress on local electricity producers and contribute to an improved environment in your neighborhood.
  • Dramatic monthly cash savings. An energy efficient home can save you thousands of dollars per year in heating, cooling and electricity costs. For example, high-efficiency HVAC systems can slash monthly heating and cooling costs by 30 to 50 percent or more.

If you want your new home to be as energy efficient as possible, contact Übermortage for help with an insured Cal-EEM + Grant Program loan for an energy efficient mortgage. We can help you get the best possible terms while taking advantage of additional benefits such as energy efficiency grants.

ee4216e3 e433 4b6b bcb7 76a6ce64751b d6bc98bc 5c97 4ad0 91bd 4954170f1059 295991e5 b016 416d 88e8 94eb14fe764d 6c2306cd 384e 463c 8884 f2d88b5c90f0 24b19d56 cc6e 4918 8847 51e2dd966c0e 8e3d95a4 111e 4338 bbfe ec8735b18899 3e50d3e5 ad76 4150 88c7 28b9c43901b0 49dd3fdf 6514 4d73 ba02 5c55c7d6842e 8623a48e 5454 432a 818a 940ec293e459 240b5ba5 cab6 46c4 8112 a869b83468f3 4620d0c1 4b94 446a ac5a 1ca7517bf00a 9e6d69ec 8402 45f8 9835 640c59a3d916 36fee642 fd44 4ffb a41d 368cebff4c47 d269806b f75e 41e4 9f54 53ccf1dfb28e e835a4b7 a60a 419e 8481 e9c3e16bf596 fce9e66d d022 4469 98a1 65a412629c9a 301d41f7 141e 43d9 bd4b ac154b3a75c1 d6938031 b3d0 4e35 bf5a 7b318d1b8fce dcaae632 1e6c 4531 817d b1c5cdd8c8b1 02345b1f 5ee4 416b a346 2409700928cf 74b20dcc 9103 4f82 9b09 0eb9e1c7584d 92b0a5bd 878f 43c5 bc3f 0f952a6445f7 e437cac5 2807 46e6 b44c 33589b052931