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FHA Increases Finance Limits for Added Energy Efficiency
Taking a major step forward, the Federal Housing Administration recently increased its limits for financing improvements to the energy efficiency of a home.
Mortgagee Letter 2009-18 has announced changes to calculating the amount an FHA-insured energy-efficient mortgage (EEM) can be increased to account for the cost of energy improvements.
This add-on was capped previously at $8,000, but was raised by the Housing and Economic Recovery Act (HERA), which was signed into law about a year ago.
According to ML 2009-18, the new maximum amount of the portion of an energy efficient mortgage allowed for energy improvements is now the lesser of 5% of:
- The value of the property
- 115% of the median area price of a single-family dwelling
- 150% of the Freddie Mac conforming loan limit, or $625,500
Under these changes, the maximum increase in an FHA-insured mortgage for energy improvements could be as much as $31,275 in high-cost areas.
Unfortunately, resulting from errors in drafting HERA, the FHA was not able to fully implement all of the benefits to its EEM program that were included in the legislation. Specifically, the law intended to provide an add-on to the loan limit for EEMs defined as the greater of:
- 5% of the property value (up to the area loan limit)
- 2% of the national maximum high-cost limit (the national ceiling)
An incorrect cross-reference in HERA to the National Housing Act prevented the FHA from including the latter provision, which would have provided higher EEM limits in lower-cost areas.
NAHB is supporting H.R. 3146 to correct this error and has learned that the FHA is planning to implement additional improvements to the EEM program that could be included in this legislation.
More guidance on the FHA’s energy-efficient mortgage program is available in Mortgagee Letter 2005-21.
To read H.R. 3146, click here and enter the bill number in the box at the center of the page.
For further information, e-mail Bill Renner at NAHB, or call him at 800-368-5242 x8597.
 Tax Credit Web Site Looks at Opportunity of a Lifetime
Builders and other industry professionals can help spur home sales by referring prospective first-time home buyers to www.federalhousingtaxcredit.com. The NAHB Web site provides detailed information on the $8,000 federal tax credit for first-time home buyers included in the economic stimulus legislation signed into law by President Obama.
Consumers can use the Web site to find information on the tax credit — including a detailed question and answer section. It also includes information about other housing-related and small business measures in the legislation and a number of home-buying resources for consumers.
Spanish Version Also Available Online
A Spanish version of this increasingly popular Web site is also available to provide detailed information on the tax credit to Spanish-speaking first-time home buyers.
Industry professionals are encouraged to highlight either tax credit Web site when marketing to their potential first-time home buyer market.
 Want to Know the Housing Starts Through 2017?
Find out in HousingEconomics.com's Long-Term Forecast.
Subscribe and get downloadable Excel tables that feature the housing starts forecast, gross domestic product (GDP), demographics and more.
To learn more, visit www.housingeconomics.com.
 Plan to Attend Construction Forecast Conference
Plan to attend or watch the 2009 Fall NAHB Construction Forecast Conference & Webcast on Oct. 21 in Washington, D.C. to get the latest facts, insights and analysis of the housing industry.
Panels of nationally recognized experts at the day-long conference will discuss economic trends, government policies, developments in the housing industry and the results from NAHB's recent surveys.
For more information and to register, visit www.nahb.org/cfc.
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