US HUD launches new program to offer low cost home energy efficiency loans

Credit-worthy borrowers to be offered low-cost energy efficiency loans.

The US Housing and Urban Development (HUD) has launched a new pilot program in collaboration with the Federal Housing Administration (FHA) to offer credit-worthy borrowers low-cost loans to make energy-saving improvements to their homes.

Homeowners can receive up to $25,000 under the FHA PowerSaver loans program to make energy-efficient improvements of their choice, including the installation of insulation, duct sealing, doors and windows, HVAC systems, water heaters, solar panels, and geothermal systems.

This new 18-month-long program is a part of the Recovery Through Retrofit initiative launched in May 2009 to develop federal actions that would expand green job opportunities in the US and boost energy savings by improving home energy efficiency.

HUD is seeking mortgage lenders to participate in the two-year pilot program that is slated to begin in early 2011 and will offer PowerSaver loans along with FHA mortgage insurance to cover up to 90 per cent of the loan amount in the event of default.

In addition, FHA will offer incentive grant payments to lenders to enhance benefits to borrowers who must have good credit, manageable overall debt and at least some equity in their home (maximum 100 per cent combined loan to value) to qualify for the PowerSaver loans .

HUD secretary Shaun Donovan said that HUD and FHA are committed to lowering the cost and expanding the availability of affordable financing for home energy retrofits, while creating jobs for contractors, installers and energy auditors across the country.