Example of FHA Energy Mortgage

Sales Price:  $60,000
Interest Rate:  8%
Closing Costs:  $1,200
   
Improvements Recommended by Home Energy Rating:  $3,000
Average Life of Measures Calculated by Rating:  10 years
Monthly Energy Savings Calculated by Rating: $40

Standard Underwriting

$60,000 Sales Price $60,000 Appraised Value
+ $1,200 Closing Costs 97.75% Maximum Loan to Value
$61,200 Mortgage Basis $58,650 Maximum Loan
X 97.95% Maximum Loan to Value Ratio  
$58,640 Loan Amount  

Energy Mortgage Calculation

$58,640 Loan Amount
$3,000 Energy Improvements
10 years Average Life of Improvements
$40 Monthly Energy Savings
$480  Annual Savings
$3,220  Energy Premium
(6.710 present value from chart on page 6-33 X $480 annual savings)

New Loan Amount

$58,640  Standard Loan Calculation
$ 3,000 Energy Mortgage
$61,640 New Loan Amount


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