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(EEMs)Energy Efficient Mortgages
A HERS rating system is used when obtaining an Energy Efficient Mortgage (EEM).
This is a special type of mortgage that allows a purchaser to stretch his debt-to-income ratio from 28% to 30%.
Under normal mortgage guide-lines a borrower is allowed to spend 28% of their gross income for a mortgage payment include- ing loan principal, interest, real estate taxes and insurance (PITI). This number was arrived at by taking the average families bud-get and calculating the amount spent for such things as food, clothing, utilities, car payments, savings, vacations and other day to day expenses. The amount left over for a mortgage payment gives a 28% debt to income ratio.
Approximately 14% of the budget is allocated to utilities for heating, cooling and lighting. When a home is built to be energy efficient, less is spent on utilities. This money saved on utilities is then available for other things.
Because you're sending less money to your utility company, lenders will allow you larger loans. So now you can afford that house of your dreams or get the things you want, like the extra fireplace in the dining room .
Even by taking out a larger loan, with an EEM your total monthly outlay will be less. Energy Efficiency Mortgages are available through almost all lending sources such as FHA,VA and conventional mortgages which allow additional loan limits based on the energy savings a qualifying home offers.
See our Lender page and the following links for more information.
More EEM Information
HUD EEM Program
Fannie Mae EEM
Freddie Mac EEM
Energy Efficiency Mortgages are available through almost all lending sources such as FHA,VA and conventional mortgages which allow additional loan limits based on the energy savings a qualifying home offers.
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