Keep Comfortable Air Inside
Insulation and air-sealing improvements may help address drafts and heat loss. Energy-efficient windows or doors may be considered when the assessment supports their cost-effectiveness.
FHA Energy Efficient Mortgages
A Home You Love. More Comfort in Every Season.
Picture a cozier winter, a cooler summer, and a home that uses energy more efficiently. An FHA Energy Efficient Mortgage may let you include approved energy-saving improvements in your home purchase or refinance. Let's explore what could make a difference for your home.
One home loan, a plan for better efficiency
What Is an Energy Efficient Mortgage?
An FHA Energy Efficient Mortgage, or EEM, combines an eligible FHA home loan with financing for a cost-effective package of energy improvements. You repay the improvement costs as part of your mortgage. It is financing, not a grant or a promise of a lower utility bill.
You can explore an EEM when purchasing a primary home or completing an eligible rate-and-term refinance. FHA's standard home-loan requirements still apply. Start with our FHA loan overview if you are getting familiar with the basics.
The assessment helps us build a plan around your home rather than a list of upgrades that might not qualify. Actual savings depend on the home, installation, energy prices, and how you use it.
What Could Make Your Home More Comfortable?
Improve Heating and Cooling
Eligible heating, cooling, and other energy-saving equipment may be part of the plan. The assessor evaluates the home as a system and identifies which changes make sense together.
The approved package can include materials, professional labor, inspections, and the energy assessment. Certain solar or wind technologies may also qualify after review. An EEM does not automatically finance every upgrade a contractor recommends.
Planning a kitchen remodel, structural repairs, or a larger renovation? Explore FHA 203(k) renovation financing. Interested specifically in solar with down payment assistance? Our Solar + Down Payment Assistance program is a separate option with its own requirements.
Understand the numbers before choosing the work
How Much Can You Finance?
The maximum energy package is the smaller of the cost-effective package identified by the assessment or 5% of the lowest of these three amounts:
- The property's FHA adjusted value.
- 115% of the area's median single-family home price.
- 150% of the national conforming mortgage limit.
This is not automatically 5% of your purchase price. We'll calculate the limit for your transaction using FHA's EEM calculator. The approved energy package may be added above the applicable FHA base mortgage limit. See HUD's EEM calculation guidance.
How Does Qualifying Work?
Under the EEM rules, you qualify for the initial mortgage plus upfront mortgage insurance before the approved energy package is added. That can make room for qualifying improvements, but you still repay the larger final mortgage. We'll review the final payment and the assessment's savings estimates together.
Your Home and Credit
The home must be your primary residence. Eligible property types can include one-to-four-unit homes, FHA-approved condos, and qualifying manufactured homes. Property-specific rules apply.
For eligible purchases, loanDepot guidelines allow up to 96.5% financing at credit scores of 580 or above. Certain purchases with scores of 520-579 are limited to 90% financing and have additional restrictions. Single-width manufactured homes require at least 620 under these guidelines. A score alone does not establish eligibility.
Your Complete Spending Plan
Income, debts, credit history, the property, and underwriting all matter. There is no single debt-to-income maximum for every EEM file; automated or manual underwriting rules apply. Single-width manufactured homes have a 50% maximum under these guidelines.
FHA upfront and annual mortgage insurance still apply. Closing costs and any costs outside the approved package also need a plan. Ask us to compare the final loan balance, payment, and cash needed before you commit.
From Your First Question to Finished Improvements
- Tell us about the home and your goals. We'll review your purchase or refinance and explain which loan options fit.
- Arrange a qualified home energy assessment. The report identifies recommended work, estimated savings, and cost-effectiveness. The required report must be no more than 120 days old.
- Review the approved package and financing. We'll coordinate the assessment, project costs, appraisal, and loan review before closing.
- Complete the improvements and final inspection. When approved work remains after closing on an existing home, funds are held in an escrow account and released under the loan's completion requirements.
Bring a listing or your home's address to our conversation. Our pre-approval guide and refinance overview can help you prepare.
Benefits and Trade-Offs to Consider
What an EEM May Help You Do
- Include approved improvements in a purchase or refinance.
- Plan upgrades around a professional energy assessment.
- Improve comfort and potentially reduce energy use.
- Finance eligible project costs instead of paying all of them upfront.
What to Plan For
- A larger loan balance and mortgage payment.
- Interest on the financed improvement costs over the loan's term.
- Assessment, contractor, escrow, and inspection requirements.
- Limits on eligible work and firm completion deadlines.
- Estimated savings that may differ from your actual bills.
We'll compare the costs with your goals and how long you expect to own the home. You deserve a plan that feels comfortable after move-in, too.
Keep learning with Amy
Explore the Possibilities for Your Home
Watch: Energy Efficient Mortgages Explained
Hear Amy walk through FHA and VA EEM options, then bring your questions about the home and improvements you have in mind.
Your Energy Efficient Mortgage Questions, Answered
Is an EEM a separate loan for improvements?
The FHA EEM adds an approved energy package to your eligible FHA mortgage. You repay it through the home loan; it is not a grant or cash rebate.
Can I use an EEM when refinancing?
An eligible rate-and-term refinance may include an FHA EEM package. The refinance, property, and improvements must meet the applicable requirements. This program does not provide cash back for you to spend freely.
Do I need an energy assessment?
Yes. A qualified assessor must identify recommended improvements and document estimated savings and cost-effectiveness. A contractor's estimate alone does not replace the required home energy report.
Can I choose any windows, heating system, or solar equipment?
The improvements must be part of the approved, cost-effective energy package and fit the financing limit. We'll review the assessment and project before you commit to equipment or a contractor.
Will my mortgage payment go up?
Adding financed improvements increases the final loan balance and generally increases the mortgage payment compared with the same loan without them. The assessment estimates energy savings, but those savings are not guaranteed. We'll help you evaluate both sides.
Can I do the work myself?
The lender's EEM escrow rules do not allow payment for work or labor performed by the borrower. Plan the approved work and completion arrangements with our team before closing.
Can an EEM be combined with an FHA 203(k) loan?
It may be combined with an eligible FHA 203(k) transaction, subject to both programs' requirements. The energy package remains subject to its assessment, cost-effectiveness test, financing cap, and completion rules.
Is this the same as the solar down payment assistance program?
No. An FHA EEM finances approved energy improvements and is not itself down payment assistance. The Solar + Down Payment Assistance program has separate terms, eligibility, and solar requirements. For a planning estimate before that conversation, use the solar calculator.
A guide to keep by your side
Your Energy Efficient Mortgage Guide
Energy Efficient Mortgages: FHA vs VA
Download Amy's guide to compare the two programs, learn about energy improvements, and prepare your questions. Save it for later or share it with someone planning their next home.
Free PDF · 10 pages
Download Your EEM GuideThe guide covers FHA and VA. This page explains the FHA offering; VA follows separate rules. Program details can change, so confirm current requirements with Amy before choosing your loan or improvements.
Amy DeBusk | Mortgage Made Easy
Let's Make a Plan for a Home That Works for You.
You may have a house in mind, a drafty room you'd like to improve, or just a few questions. Start there. Amy and our team will help you understand the options, costs, and next steps.
Start With a ConversationOr call or text (916) 705-2557. Visit our First-Time Home Buyer Hub for more guidance.
Based on loanDepot FHA EEM guidelines dated May 8, 2026 and HUD program guidance, reviewed September 27, 2026. Requirements and availability may change. All loans and improvements are subject to approval.