Yesterday the Federal Housing Administration (FHA) announced that it is introducing a new mortgage product called the FHA PowerSaver designed to encourage people to purchase and invest in greener, more energy efficient houses. David H. Stevens, Assistant Secretary for the FHA, released the following statement:
“Improving American homes to make them more energy efficient presents an excellent opportunity to simultaneously reduce homeowners’ utility bills, expand the number of green jobs, and allow more homeowners to live in greener, healthier homes. But several barriers, including a lack of financing options for energy-efficient retrofits, have prevented a self-sustaining retrofit market from forming.
This administration has placed a priority on enabling more homeowners to improve their homes’ energy efficiency, and FHA is bolstering that priority with a new mortgage insurance product.”
Some of the details of the new program are :
- In order to qualify, borrowers must have a FICO score of at least 660, a debt-to-income ratio of less than 45 percent, and loan-to-value ratios of no more than 100 percent (inclusive of the PowerSaver loan).
- FHA insurance covers up to 90 percent of the mortgage, and participating lenders cover the remaining amount (in order to encourage responsible lending).
- Borrowers may borrow up to $25,000 under the FHA PowerSaver program over a term of no more than 20 years.
- Mortgage rates are expected to be between 5 and 7 percent.
- Loans are limited to owner-occupied, detached single family houses.
- The loan has to be used to make “proven cost-effective, energy-saving improvements”, (e.g. insulation, duct sealing, doors and windows, energy-efficient HVAC, water-heaters, solar panels, and geothermal heat systems). I imagine a more comprehensive list will be provided by the FHA once the program gets off the ground.
The FHA is going to provide $25 million in grants to participating lenders in order to offset some of the transaction costs to lenders associated with these smaller loans. It appears that participating lenders have yet to be chosen, as the program is so new. For more information, you can check HUD’s website here. When more information emerges, I will do my best to share it with you. Click the following link to learn more about FHA mortgages from Total Mortgage.
Loading ...
RSS feed for comments on this post.
Leave a comment