November 3, 2015
In 2016, FHA borrowers looking to add Energy Efficient Mortgage loans to their transaction will have some new standards to use related to the energy efficient improvements they wish to add.
Thanks to a new partnership between the FHA, HUD, and the Department of Energy, certain ratios will be increased in 2016, according to a press release found at the FHA official site.
“FHAs existing EEH policy allows stretch ratios for homes that are built or retrofitted to the 2000 International Energy Conservation Code (IECC). For standard FHA loans, debt-to-income (DTI) ratios are limited to 31 percent (front-end) and 43 percent (back-end).”
“Under FHA policy for the EEH mortgage, these DTI ratios can be increased to 33 percent and 45 percent respectively. To increase opportunities for homeowners to achieve and benefit from an energy efficient home, FHA is adding a new threshold for existing construction homes based on the Home Energy Score scale” available from the U.S. Department of Energy.
The press release adds,”The DOE developed the Home Energy Score as a low cost and reliable method for estimating the energy use of a home and providing a corresponding score to rate the relative energy efficiency of the home based on area location. The Home Energy Score uses a systematic approach to provide a reliable and scientifically-based analysis of a homes energy characteristics and overall energy efficiency.”
The DOE scale takes into account factors including local climate conditions, and, “applies standard assumptions regarding occupant behavior, and provides a consistent, national, standardized approach” the FHA says would allow a more realistic comparison of homes. The calculations are, according to the press release, based on the Lawrence Berkeley National Laboratorys DOE-2 model, “which provides a detailed, hourly, whole-building energy analysis” used as an “industry standard”.
We will examine the FHA’s new EEM energy standards more closely in a future blog post.
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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