Insurance Programs for Mortgages and Home Improvements

The following U.S. Department of Housing and Urban Development (HUD) programs insure guaranteed mortgages for purchase of single- or multifamily homes with energy efficient or renewable energy features. Other HUD programs insure home improvement measures, such as installing renewable energy systems and increasing energy efficiency. Single-Family and Small Multifamily Housing:

• HUD can insure mortgages for homes with renewable energy systems or energy efficiency measures for up to $155,250 (one-family home), $198,550 (two-family home), $240,000 (three-family home), and $298,350 (four-family home). Purchasers of homes with solar energy systems may qualify for higher amounts. Purchasers of four-family homes with solar energy systems may qualify for mortgage insurance for up to $349,920. The actual amount depends on the cost of the system or design and may be higher in HUD-designated high cost of living areas.
• The above program is part of the National Housing Act. A separate program under the same Act provides guarantees for new homes in rural areas with energy-efficient and/or renewable energy features. HUD limits these insured mortgages to 75% of the amount allocated for single-family homes above. The limits for this program depend upon the funds available for homes in the above-mentioned program.
• The Energy-Efficient Mortgage (EEM) Program that is available through HUD has been expanded nationwide. An EEM considers the energy savings of a home with cost-effective energy saving improvements. Because the home is energy efficient, the family will save on utility costs and can afford to devote more of its income to the monthly mortgage payment. With this plan, a family can qualify for a larger loan amount than otherwise would have been possible. Under the EEM Pilot Program, a borrower can add to the mortgage 100% of the cost of the eligible energy-efficient improvements-subject to certain dollar limitations-without an appraisal, and without qualifying for the increased loan amount. This program has the same mortgage limits as those mentioned above.
• Home improvement insurance is also available under Title 1 of HUD. Title 1 insures loans for single-family home improvements that may include improving the home's energy efficiency, and installing solar energy systems. Loans for improving home energy efficiency are insured for as much as $17,500. HUD may also insure loans up to $20,000 to install solar energy systems.

Large Multi-family Housing:

• Under another section of the National Housing Act, owners of proposed rental housing with at least five units are eligible for HUD mortgage insurance. Purchasers of rental housing with solar and wind systems may also qualify for this program. HUD may insure mortgages on structures for as much as $32,701 for no bedroom (efficiency) units, $37,487 for one bedroom units, $45,583 for two bedroom units, $58,968 for three bedroom units, and $64,730 for four bedroom units.
• Insurance is available for owners of multifamily rental projects who install energy-saving measures, solar energy systems, or individual utility meters. The amount of the loan may not exceed 90% of the value of the improvements made.

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