IS there a thing called Green Loans?

FHA Energy Efficient Mortgage (EEM)

Ok Here is what I have hear.. From

Karen Jones

Senior Loan Officer

Phone:  480.339.1577

EFax:      480-339.1627


15111 N. Pima Rd  Suite #110

Scottsdale,  AZ  85260



FHA provides the Energy Efficient Mortgage (EEM).  The program will assist homebuyers and homeowners save money on their utility bills by allowing them to finance the expenses of installing energy efficient features to their new home purchase. 


Congress developed this program in 1992, first as a pilot program and then expanded the program nationwide in 1995.  The borrower is eligible for the maximum FHA insured loan following standard underwriting guidelines.  The borrower is required to make their 3.5% investment in the purchase of their new home.  However, the borrower will not need to increase the down payment due to the higher loan amount when financing the energy efficient improvements.


Eligible properties are 1-4 unit for existing and new construction.   Loan amount can include the costs for adding the energy efficient improvements, plus the cost of reports and inspections. 

The cost of the energy efficient improvements that may be eligible for financing into the mortgage is the lesser of A or B as follows:


A. The dollar amount of cost-effective energy improvements, plus cost of report and inspections, or

B. The lesser of 5% of:

  • The value of the property, or
  • 115% of the median area price of a single family dwelling, or
  • 150% of the conforming Freddie Mac limit.


The energy improvements are installed after the loan closes. The lender will place the money in an escrow account. The money will be released to the borrower after an inspection verifies that the improvements are installed and the energy savings will be achieved.