Federal Housing Administration (FHA) through its PowerSaver loan program offers three financing options for homeowners to make energy efficiency and renewable energy upgrades in their residences. For all three PowerSaver products, borrowers must select from a list of approved PowerSaver lenders. Please check the HUD website to find a list of participating FHA approved lender for the program. PowerSaver products are not currently offered in all states, so all potential applicants are encouraged to first check the program website to ensure product availability in their location.
Homeowners must have following requirements to be eligible for the program:
- Minimum credit score of 660
- Maximum total debt to income ratio of 45% (monthly income divided by monthly debt payments)
- Maximum combined loan-to-value: 100%
- Property type: One-unit, owner-occupied, principal residence properties only
- Appraisal requirement: exterior-only inspection appraisal or other FHA method of valuation
- PowerSaver insures lien position in the first place, or second place, and also insures loans without lien, as long as the loan amount is less than $7,500.
Eligible home energy upgrades include, but are not necessarily limited to, the following:
- A whole home upgrade through Home Performance with ENERGY STAR
- Insulation and air sealing
- Replacing doors and windows
- Upgrading heating, ventilation, and air-conditioning systems and hot water systems
- Home automations systems and controls (e.g., smart thermostats)
- Installing solar photovoltaic (PV) systems, solar thermal hot water systems, small wind power, or geothermal heat pumps
PowerSaver Home Energy Upgrade—Up to $7,500
This unsecured consumer loan is intended for smaller projects (e.g., insulation, air and duct sealing, water heating, replacing heating and cooling equipment, etc.). It does not require a home appraisal or lien on the property. Single-family homeowners may qualify for the loan if they have manageable debt and a credit score of 660 or higher. Interest rates vary, but typically range from 4.99% to 7.75%. PowerSaver participating lenders, markets, and contact information is available here.
PowerSaver Second Mortgage (Title I)—Up to $25,000
This Title I loan is intended for financing larger retrofit projects, including energy efficiency, PV, solar hot water, geothermal, or other renewable energy projects. A home appraisal or equity is generally not required, but PowerSaver lenders may request it if required by their investor. Borrowers cannot currently have an existing home equity loan, a second lien, or second mortgage to qualify for this product. Interest rates vary but typically range from 4.99% to 9.99%, and the maximum loan term is 20 years. PowerSaver Title I participating lenders, markets, and contact information is available here.
PowerSaver Energy Rehab (203(k))—First mortgage up to FHA loan limits
This 203(k) loan is for home purchase or refinance, targeting either home buyers wishing to combine home improvements with a home purchases or to homeowners wishing to include home improvements when refinancing an existing mortgage. It is FHA-insured up to 100% for a home purchase or refinance, plus the cost of a home improvement project. Current loan limits for a single-unit property vary by area from $217,500 to $625,000 (higher amounts are permitted for two-, three- and four-unit properties); specific loan limits for an area can be found at this website. In order to qualify as a 203(k) PowerSaver loan, at least $3,500 of the home improvements must consist of eligible PowerSaver measures. PowerSaver 203(k) participating lenders, markets, and contact information is available here.
The two types of PowerSaver 203(k) loans are Standard and Streamlined. Standard 203(k) loans are for major improvements, where a home improvement project costs at least $5,000 and includes $3,500 in energy upgrades. The Streamlined 203(k) loans are for minor home improvements, where the home improvement project cost must not exceed $35,000. A HUD consultant is only required for oversight of home improvements for Standard 203(k) loans.