Make your mortgage energy efficient

It’s not often that I tell buyers who are getting an FHA loan that they are lucky to be doing so. No, there’s nothing wrong with FHA loans at all, but they can be time-consuming and the upfront costs can be high.

But here’s a cool — or warm — thing to keep in mind if you’re buying with an FHA loan: you can get what’s called an energy-efficient mortgage through FHA. Nope, that doesn’t mean that it’ll get good gas mileage or run on a hybrid battery. What it means is that you can increase your loan amount to cover the costs of energy upgrades to your new-to-you digs, essentially rolling into your mortgage the cost of the purchase and installation of new equipment that will lower your utility bills.

The maximum amount that can be financed through this program is $8,000. Actually, it’s technically 5% of the purchase price, not to exceed $8,000. So, if you’re buying a place that costs more than $160,000, the maximum is $8,000. If you’re buying a place that costs less than $160,000, you’re going to make me cry.

Back to the loan program. Energy efficiency improvements can include dual-pane windows, a heater upgrade (it’s also available for air conditioning, but c’mon, I’m writing this from San Francisco), a hot water heater upgrade, wall and ceiling insulation, and replacing doors and/or windows.

To get started, an energy auditor inspects the property and produces a list of suggested improvements, along with the projected cost savings in utility bills. Funds for the improvements are placed in an escrow account at closing, and are paid for as the work is done after the close of escrow.

There is more information on the Housing and Urban Development website about this loan program.

The Veterans Administration offers similar loans to military personnel, veterans and reservists.