The CalHFA Energy Efficient Mortgage Program
Did you know that the state of California has a special grant program designed to help homebuyers finance a primary residence while simultaneously allowing energy efficient grant that lets you “green up” the home? If you’re a first-time homebuyer or even if you’re not, and have enough funds for a 3.5% down payment plus some available for closing costs, this energy efficient mortgage program is designed not only to help you save on your monthly utility bills but with a nod toward protecting the environment. How does it work?
How it Works
The first mortgage is a standard FHA loan. FHA loans, like other government-backed mortgages are designed to finance a primary residence and not used to buy investment property. The energy efficient mortgage grant is then provided to make energy efficient improvements.
There are some basic borrower requirements but most anyone can meet them. Besides financing the property as a primary residence, it must also be a single-family home. Condominiums do not qualify, for example. There is a minimum credit score requirement of 640 and the property must also meet the predetermined sales price limits for the country in which the home is located. These limits are set by the California Housing Finance Agency. And, if you are in fact a first time homebuyer, you will be asked to take and complete an approved Homebuyer Education Course. We have the course information for you as there are several providers in the area.
The home will first be inspected for an energy rating before any green improvements have been made. This report is referred to as the Home Energy Rating System, or HERS. Following the results of the report, specific energy-efficient improvements can be recommended. The improvements are specific, but there are several of them.
What Improvements are Approved as Energy Efficient?
Updated or additional attic insulation is an approved project. Or, if there is a crawlspace underneath the property, this too is acceptable. Want a new kitchen? Many homebuyers update the kitchen soon after buying but if the kitchen appliances have an energy-efficient designation, they can be included in the Energy Efficient Mortgage grant. Solar panels? Those too can be financed. If the heating and cooling system is outdated, the grant can be used for a brand new HVAC system in addition to sealing windows, doors or new, energy-efficient windows and doors. The amount of the grant cannot exceed 4.0% of the amount of your first mortgage. If your mortgage is $350,000, then you can get a grant in the amount of $14,000.
Find out if Your Home Qualifies
Compared to traditional mortgage programs, the CalHFA and Energy Efficient Grant program are both relatively new and not all lenders are familiar with this program but we are. If you want more information on how you can save on your utility bills and help preserve the environment at the same time, let’s take a closer look at how you can not only get a competitive mortgage but finance green improvements as well. We know this program inside and out, so call us today!