The borrower must qualify for the portion of the loan used to purchase or refinance a home. Borrowers are not required to qualify on the portion of the loan used for making energy-efficient upgrades. All FHA-approved lenders are eligible to offer EEM to persons who are purchasing or refinancing with an FHA-insured mortgage.

Borrowers must qualify for a home purchase or refinance under FHA’s minimum credit requirements. The energy-efficient improvements must be cost-effective, meaning that the total cost of the improvements must be less than the energy saved over the expected life of the improvements.

An estimate of energy savings must be determined by a home energy rating report that is prepared by an energy consultant using a Home Energy Rating System (HERS). The cost of the energy rating report and inspections may be financed with the cost-effective energy-efficient improvements.