FHA Solar & Wind
Finance Solar & Wind Energy with an FHA Loan
Planning to install solar panels or a residential wind energy system? Eligible FHA borrowers may be able to include the cost of qualified renewable energy improvements in their primary home purchase or refinance.
Overview
What is an FHA Solar & Wind Loan?
An FHA Solar & Wind Loan, available through the FHA Energy Efficient Mortgage (EEM) program, allows eligible home buyers and homeowners to finance qualifying renewable energy improvements as part of their FHA mortgage. Instead of paying the full cost of solar panels, wind energy systems, or other approved energy-efficient upgrades upfront, eligible borrowers can roll those costs into their mortgage. By financing renewable energy improvements through an FHA-backed loan, you can make your home more energy efficient while potentially lowering monthly utility bills and reducing your long-term energy costs. Whether you're purchasing a home or refinancing your existing FHA mortgage, this program helps make clean energy upgrades more accessible without requiring a separate loan.
Highlights
FHA Solar & Wind features
Higher loan limits
Can exceed FHA Loan limits by 20% to accommodate energy improvements
Eligibility
What you need to qualify
- Minimum credit score: 580
- Max loan amount: 20% above FHA Loan limits
- Minimum down payment: 3.5%
- Must be an owner-occupied primary residence or HUD-approved secondary residence
- Must be a 1-4 family dweling, PUD, townhomes, row homes, modular, HUD-approved condos
pros and cons
Things to consider before getting an FHA Solar & Wind loan
While a FHA Wind & Solar loan can be a great option for many borrowers, it might not be right for everyone. Here are some things to be aware of before you get your loan.
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Mortgage insurance (MIP) is required. Most FHA loans require both an upfront and annual mortgage insurance premium, which increases the overall cost of the loan.
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The cost of the improvements is added to your mortgage. While you avoid a large upfront expense, you'll repay the improvements over the life of the loan.
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Your monthly mortgage payment may increase because you're financing both the home and the eligible energy improvements.
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Energy savings aren't guaranteed. Actual savings depend on factors like your energy usage, utility rates, climate, and the performance of the system.
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Renewable energy systems require maintenance. Although generally low-maintenance, repairs or equipment replacement may be needed over time.
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Not every home is a good fit. Roof condition, available sunlight, wind exposure, local regulations, and HOA restrictions can all impact whether renewable energy improvements are practical.
WHo could benefit
An FHA Solar & Wind Loan may be a great fit if you...
- Want to lower your long-term utility costs by investing in energy-efficient systems that may reduce monthly energy expenses.
- Would rather finance improvements over time through your mortgage instead of using savings, credit cards, or a separate home improvement loan.
- Are looking for a more energy-efficient home with renewable energy features that can improve comfort and reduce your environmental impact.
- Qualify for FHA financing but don't have a large down payment, making it easier to invest in renewable energy while purchasing or refinancing your home.
- Live in an area that's well-suited for solar or wind energy, where your home can take full advantage of renewable energy systems.
Getting started
How it works
1. Apply for a purchase or refinance with an FHA Loan: Work with your lender to determine if an FHA Energy Efficient Mortgage (EEM) is the right fit for your home purchase or refinance.
2. Identify eligble improvements: Work with us to identify qualifying renewable energy upgrades, such as solar panels or wind energy systems, that meet FHA program requirements.
3. Complete the required assessment: An approved energy assessment or supporting documentation helps verify that the planned improvements meet FHA guidelines and are expected to provide energy savings.
4. Close on loan: The cost of eligible upgrades is added to your FHA mortgage, allowing you to finance the improvements over time rather than paying the full amount upfront.
5. Install updates: Once installation is complete, you can begin benefiting from renewable energy while potentially lowering utility costs and improving your home's overall efficiency.
FAQ
Frequently Asked Questions
We’re here to help! Find answers to your everyday banking questions.
The FHA Solar & Wind program allows eligible borrowers to finance the purchase and installation of qualified solar or wind energy systems through an FHA-insured mortgage.
Eligible improvements include qualified active and passive solar systems, photovoltaic (solar panel) systems, and residential wind energy systems that meet FHA requirements.
Yes. Eligible borrowers may finance renewable energy improvements when purchasing a home.
Yes. The program is available for eligible FHA rate and term refinances and simple refinances.
Eligible properties include one- to four-unit homes and single-unit manufactured homes. Condominiums are not eligible.
Potentially. The base loan amount may exceed the local FHA mortgage limit by up to 20% when financing qualified solar or wind improvements.
Yes. Because this is an FHA mortgage, standard FHA down payment requirements apply. Qualified borrowers may be eligible to purchase a home with as little as 3.5% down.
Yes. Like most FHA loans, FHA Solar & Wind Loans require mortgage insurance premiums (MIP), including an upfront premium and annual mortgage insurance, depending on your loan.
In many cases, yes. An energy assessment or supporting documentation may be required to verify that the planned improvements meet FHA Energy Efficient Mortgage guidelines and are expected to improve the home's energy efficiency.
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