A new pilot program was implemented in fiscal year 2011, which offers borrowers low-cost loans to make energy-saving improvements to their homes. Backed by the Federal Housing Administration (FHA), these new FHA PowerSaver loans offer homeowners up to $25,000 to make energy-efficient improvements of their choice, including the installation of insulation, duct sealing, doors and windows, HVAC systems, water heaters, solar panels, and geothermal systems.
PowerSaver began as a nationwide two-year pilot program, launching in 2011. FHA has selected lenders to take part in the program, who are required to target market areas that have already taken strong steps to expand home energy improvements, such as educating consumers about the benefits of home energy improvements and ensuring qualified contractors are available to do the work.
PowerSaver loans are available to homeowners who desire to make energy improvements to their home, and will qualify for the loan. Key loan requirements include the following:
- Minimum credit score: 660
- Maximum total debt to income ratio: 45 percent (monthly income divided by monthly debt payments)
- Maximum combined loan-to-value (market value of the home divided by first mortgage loan balance and PowerSaver): 100 percent (Note: this requirement is not applicable in certain conditions).
- Property type: One- unit, owner-occupied, principal residence properties only.
- Appraisal requirement: Exterior-only inspection residential appraisal or other FHA accepted method of property valuation.
- PowerSaver insures a lien positioned in first place, or second place, and also insures loans without a lien, as long as the loan amount is less than $7,500.
To obtain an FHA PowerSaver loan, contact an FHA-approved lender who is participating in this pilot program: