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The Energy Efficient Mortgage allows a homebuyer to save future money on utility bills. This is done by financing the cost of adding energy‐efficiency features to a new or existing home as part of an FHA‐insured home purchase. The EEM can be used with both 203(b) and 203(k)

loans. Basic guidelines for EEMs are as follows:

  • The cost of improvements must be determined by a Home Energy Rating System or by an energy consultant. This cost must be less than the anticipated savings from the improvements.
  • One‐ and two‐unit new or existing homes are eligible; condos are not.
  • The improvements financed may be 5% of property value or $4,000, whichever is greater. The total must fall within the FHA loan limit
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