September 9, 2015
In a recent blog post we discussed the pending release of HUD 4000.1, which is the new FHA single family home loan policy handbook. Among the changes and updates to take effect on September 14, 2015 when the handbook is launched, there are some guidelines about FHA Energy Efficient Mortgages (EEM) and the financing of non-EEM energy efficient upgrades/improvements.
One area we didn’t cover in our last blog post about the EEM issue is the dollar amount limit for these upgrades. How much does the FHA allow the borrower to finance for such improvements?
According to the FHA official site, which has a FAQ section on the most common questions about new rules and updates that will be part of HUD 4000.1, we learn the following about the dollar amount limits for these improvements:
“The maximum allowable cost (not to exceed actual cost) that can be financed is:
–$2,000 without a separate value determination;
–$3,500 if supported by a value determination made by an approved FHA Roster appraiser or Direct Endorsement (DE)
underwriter; or
no limit if:
-supported by a value determination made by an approved appraiser or underwriter; and
-a separate on-site inspection is made by an FHA-approved fee inspector or DE staff appraiser.”
There is a time limit on how long the borrower has to install the upgrades–the lender is required to enforce the following deadlines:
“Installation of weatherization improvements must be completed within
–30 Days of disbursement; or
–90 Days of disbursement if the improvements are part of an energy package for an EEM.”
Remember, the new policy handbook sets guidelines for both EEM and non-EEM financing of energy efficient improvements to the home for new purchase loans and refinance loans.
Do you work in residential real estate? You should know about the free tool offered by FHA.com, designed especially for real estate websites–a widget that displays FHA loan limits for the counties serviced by those websites.
It’s simple to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today: http://www.fha.com/fha_loan_limits_widget
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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