Eligible borrowers:
Anyone qualifying for certain FHA, EEM and Title I Loans

Eligible systems:
Solar Thermal space and water heating; PV

Loan Amount:
HUD area limits

Terms:
15 and 30 years

Collateral:
To 120% loan-to-value, depending on loan type

Interest rate:
Fixed or variable

For more Info:

Phoenix: 602-379-4461

Tucson: 520-670-6237

The broad mission of the US Department of Housing and Urban Development is "to help create communities of opportunity." HUD's principal community building goals are to develop affordable housing and increase ownership opportunities for low- and moderate-income families.

Community Development Block Grant Program-HUD's primary neighborhood support program provides more than $4.5 billion a year to local governments. More than one-third goes for property rehabilitation, often financed in cooperation with private interest and capital buy- downs. Programs that promote energy efficiency and renewable energy are encouraged.

HOME  Investment Partnership Program-This program can be used for housing rehabilitation that includes energy conservation. HOME also supports new construction that meets the Council of American Building Officials (CABO) Model Energy Code standards. More than $ 1 billion a year is provided to applicant state and local governments for investment in long-term affordable housing for lower income families. Joint ventures by state and local governments, public utility companies, and nonprofit providers are encouraged.

HOPE VI-Hope VI is a special public housing program providing $2 billion over several years to permit local housing authorities to demolish high-rise public housing buildings and replace them with new garden apartments for occupants of mixed income levels. This new construction, built to CABO Model Energy Code standards, should also provide opportunities to demonstrate solar energy systems.

FHA- Insured Lending Programs- Lenders can obtain the HUD/Federal Housing Administration (FHA) Use of Materials (UM) 300 Bulletin from HUD. It explains the technical requirements that a solar water heating system must meet to qualify for an FHA-insured loan. A UM 200 Bulletin for PV systems should be available in early 1999.

Several HUD programs can help with financing solar energy systems. For example, FHA mortgage insurance is available for solar energy systems in the following three ways:

1. The Energy Efficient Mortgage Program-In 1995, following a two-year demonstration, FHA announced its version of the energy-efficient mortgage (EEM) program. An EEM recognizes that the improved energy efficiency of a house can increase its afford ability by reducing operating costs.

Eligible properties include new and existing 1- to 4- unit properties. Energy improvements must be identified with a home energy rating. The resulting cost-effective improvements may not be valued at more than 5% of the property value, up to $8,000, to qualify the borrower for a higher mortgage. The FHA maximum mortgage limit for an area may be exceeded by the amount of the improvements. An EEM can be used in conjunction with FHA Section 203 (b), 203(k), 221(d)(2), 234(c), and 203(h) loans for both purchases and refinances.

2. Mortgage Increase for Solar Systems- In 1978 Congress authorized FHA to exceed by 20% the maximum loan limit under Section 203(b) home ownership and 203(k) property rehabilitation, and other mortgage insurance sections to allow for the installation of solar heating and domestic hot water systems. There also must be 100% operational conventional backup systems. Initially provided for passive and active solar hot water systems, this authorization is being adjusted to cover photovoltaic systems.

3. Title I Property Improvement Mortgage Insurance- Title I insurance enables lenders to make property improvement loans to creditworthy borrowers with little or no equity in their homes. For single family homes, the maximum loan $25,000. These second mortgages do not require energy efficiency calculations. Borrowers can piggyback Title I on Title 11 to help finance solar improvements that otherwise would not be eligible under the first mortgage.


Information Provided by the U.S. Department of Energy

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