The FHA Energy Efficient Mortgage Program (EEM) allows borrowers to finance the entire cost of eligible efficient improvements, up to a certain dollar amount. Ideal for borrowers looking to use a streamline 203k because it increases the amount you can spend on improvements, while taking advantage of the lower costs of a streamline loan. This could mean stretching the $35,000 limit to include a new heater, double pane windows, etc.

Energy improvements need to be cost effective; meaning the total cost of the improvements must be less than the cost of the energy saved. The dollar limit set for improvements is $4000, or 5% of the property value up to $8000, whichever is greater. The cost of the energy saved can be evaluated by an energy consultant or a home energy rating system (HERS), and the cost of the evaluation can be written into the mortgage as well.

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