December 8, 2015
Did you know that in certain cases, FHA single-family home loan rules in HUD 4000.1 permit the borrower to add funds to weatherize an existing construction home being purchased with an FHA mortgage? According to HUD 4000.1:
“The weatherization product permits the Borrower to finance the cost of eligible energy-related weatherization improvements, in conjunction with a purchase or refinance.”
This is separate from an FHA Energy Efficient Mortgage (EEM) though that can also be included in the loan for qualified borrowers. From HUD 4000.1:
“Weatherization improvements may be financed in conjunction with the following:
–Section 203(b) purchase transaction (or) no cash-out refinance transaction
–Section 203(h) Mortgage Insurance for Disaster Victims
–Energy Efficient Mortgages (EEM)”
The loan rules for this type of FHA mortgage or refinance includes a list of eligible properties:
“Weatherization improvements may be used on the following property types:
–existing Properties (one- to four-units)
–condominiums (one unit)
–Manufactured Housing (single unit)”
Then there’s the list of approved weatherization items, which includes air sealing measures, insulation, duct sealing, smart thermostats, and low-flow water fixtures.
How much can be applied for under this program? According to HUD 4000.1, in some cases up to $3500, but in other cases there may be no actual limit (restricted to the actual cost of the upgrades/improvements) if the weatherization plan meets certain criteria. Speak to a loan officer to see what may be possible with your home.
For this type of mortgage no cash out can go back to the borrower–any cash back that might potentially be available is required to be applied to the principal balance of the loan.
Do you work in residential real estate? You should know about the free tool offered by FHA.com. It is designed especially for real estate websites; a widget that displays FHA loan limits for the counties serviced by those sites. It is 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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