New Low-Cost Green Home Improvement Loan: The Smartest $25,000 You'll Ever Get

By: Matt Grocoff , Contributing Writer
In: Old Houses, Home Improvement Tips, Green Renovations, Technology, In The News, Old House Blogger Contest, Historic Preservation

We all know that investing in energy-saving home improvements will make our home more comfortable, will save us money and improve the home’s market value.  But, for most of us getting that up front cash can keep us from doing something we know is smart.

PowerSaver loan enables homeowners to borrow up to $25,000 for terms as long as 20 years to make energy improvements

PowerSaver loan enables homeowners to borrow up to $25,000 for terms as long as 20 years to make energy improvements

That’s why I was ecstatic to see the FHA finally announce the pilot program for the insanely affordable, easy-to-get PowerSaver loan.  I can’t overstate how great this loan is for many homeowners, especially those who can’t get a home equity loan or find an affordable consumer loan.

What is PowerSaver loan?

PowerSaver lets you make the energy improvements of your choice by allowing you to borrow up to $25,000 for up to 20 years for any eligible improvements.

The FHA is backing this low-cost financing to help you make the important energy saving improvements you’ve been putting off.  Eighteen national, regional and local lenders are partnering with the FHA two-year pilot program.  Check out the list of participating lenders below.

I recommend getting a home energy audit to determine which improvements will give you the biggest bang for the buck.  If you’re smart and combine this loan with other incentives like rebates and tax credits, the 20-year loan term could make your monthly payment actually less than your energy savings.  It’s like free money.

No matter what, you’ll still have the coziest house on the block and you won’t be stealing energy from your children’s future.

What can you use the PowerSaver loan for?

Examples of eligible improvements include insulation, duct sealing, energy efficient doors and windows, energy efficient HVAC systems and water heaters, solar panels and geothermal systems.  If you were hesitating on replacing that old furnace with a geothermal heat pump, now’s the time to jump on it.

So what’s the deal?

The loan is available to anyone with a 660 credit score or higher and a debt to income ratio up to 45%.  The interest rate is between 5% - 7%.  It’d be tough for you to find a better deal than this.

One challenge is that the combined loan-to-value ratio for all loans on a home, including the PowerSaver loan, cannot exceed 100 percent.  Which means that you’ll need $25,000 equity in your home.  That will put this loan out of reach for folks whose homes are under water.

Remember, this is a pilot program and rates are currently low.  If you qualify, you should grab this opportunity before it’s too late.

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Read the FHA PowerSaver fact sheet.

FHA PowerSaver Approved Lenders

  1. Admirals Bank
  2. AFC First Financial Corporation
  3. Bank of Colorado
  4. City of Boise, Idaho
  5. Energy Finance Solutions
  6. Enterprise Cascadia
  7. HomeStreet Bank
  8. Neighbor’s Financial Corporation
  9. Paramount Equity Mortgage, Inc.
  10. Quicken Loans
  11. SOFCU Community Credit Union
  12. Stonegate Mortgage Corporation
  13. Sun West Mortgage Company, Inc.
  14. The Bank at Broadmoor
  15. University of Virginia Community Credit Union, Inc.
  16. Viewtech Financial Services, Inc.
  17. WinTrust Mortgage
  18. W. J. Bradley Mortgage Capital Corporation

Matt Grocoff is host of Greenovation.TV, a contributor to The Environment Report on Public Radio and the green renovation expert for Old House Web. His home was honored as one of USA Today’s “Best Green Homes of 2010″.  He has been featured in hundreds of publications and news shows including USA TODAY, Washington Post, Detroit Free Press, Miami Herald, Preservation Magazine, Solar Today, Fox Business News, Huffington Post and more.  Join him on Twitter and Facebook

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  1. 2 Responses  to “New Low-Cost Green Home Improvement Loan: The Smartest $25,000 You'll Ever Get”

  2. Aug 26, 2011
    The PowerSaver loan could be a real game changer. I'm giving worst case scenario with these numbers. If you include the 30% U.S. Federal Tax Credit and the real cost could be as low as $80 per month. Then tax advantage of local rebates, utility rebates and renewable energy credits and you're talking ridiculously cheap and clean fuel.
  3. Aug 26, 2011
    Wow, if only this was available in the UK. Although there are incentives for new build green options