PowerSaver loans, which are backed by the Federal Housing Administration (FHA), offer homeowners up to $25,000 to make energy efficiency improvements such as installing insulation; duct sealing; doors and windows; heating, ventilation, and air conditioning systems; water heaters; solar panels; and geothermal systems. The PowerSaver program is currently in a pilot phase, and is available in specific target markets through participating lenders. State and local governments with a participating lender in their area may consider promoting PowerSaver loans, formally partnering with the lender, and/or providing complementary incentives.
While backed by the FHA, PowerSaver loans also include significant investment from private lenders. FHA mortgage insurance will cover up to 90% of the loan amount in the event of default. Lenders will retain the remaining risk on each loan, incentivizing responsible underwriting and lending standards. FHA will provide streamlined insurance claims payment procedures on PowerSaver loans. In addition, lenders may be eligible for incentive grant payments from FHA to enhance benefits to borrowers, such as lowering interest rates.
PowerSaver loans have been designed to meet a need in the marketplace for borrowers who have the ability and motivation to take on modest additional debt to realize the savings over time from a home energy improvement. PowerSaver loans are available only to borrowers with good credit, manageable overall debt, and at least some equity in their home (maximum 100% combined loan to value).
More details on Title 1, which is the authorizing statute for PowerSaver loans, can be found on the U.S. Department of Housing and Urban Development's (HUD) Title 1 website.