The FHA Energy Efficient Mortgage program (EEM) is a federal program that helps home buyers, providing them with mortgage insurance to finance the cost of adding energy efficiency features to new homes, saving money on utility bills.

Very plain and simple, an energy efficient home costs less to operate, the bank knows you could afford a larger mortgage if the cost of running your home is considerably lower. The borrower does not have to qualify for the additional money and does not make a down payment on it.

The EEM program not only applies to new homes, existing homes are also eligible for these mortgages. For an existing home, you will need a home energy rating system report (HERS), which will give the house an energy rating, then suggest improvements and costs. The report ranges from $100 to $300.

Remember that FHA insures loans, FHA does not provide loans.

Source:HUD