FHA Home Loans For Existing Properties: Weatherization

Did you know that in certain cases, FHA single-family home loan rules in HUD 4000.1 permit the borrower to add funds to weatherize an existing construction home being purchased with an FHA mortgage? According to HUD 4000.1:

“The weatherization product permits the Borrower to finance the cost of eligible energy-related weatherization improvements, in conjunction with a purchase or refinance.”

This is separate from an FHA Energy Efficient Mortgage (EEM) though that can also be included in the loan for qualified borrowers. From HUD 4000.1:

“Weatherization improvements may be financed in conjunction with the following:

–Section 203(b) purchase transaction (or) no cash-out refinance transaction
–Section 203(h) Mortgage Insurance for Disaster Victims
–Energy Efficient Mortgages (EEM)”

The loan rules for this type of FHA mortgage or refinance includes a list of eligible properties:

“Weatherization improvements may be used on the following property types:
–existing Properties (one- to four-units)
–condominiums (one unit)
–Manufactured Housing (single unit)”

Then there’s the list of approved weatherization items, which includes air sealing measures, insulation, duct sealing, smart thermostats, and low-flow water fixtures.

How much can be applied for under this program? According to HUD 4000.1, in some cases up to $3500, but in other cases there may be no actual limit (restricted to the actual cost of the upgrades/improvements) if the weatherization plan meets certain criteria. Speak to a loan officer to see what may be possible with your home.

For this type of mortgage no cash out can go back to the borrower–any cash back that might potentially be available is required to be applied to the principal balance of the loan.