The Biden Administration, through the U.S. Department of Housing and Urban Development, recently announced new measures to connect families served by HUD programs to solar power and help lower their electricity bills.
Over 4.5 million low-income families are currently served by HUD programs.
In addition to the recent announcement, HUD will continue to connect and convene stakeholders in regional and local offices to highlight federal funding sources—including funding streams from President Biden’s Bipartisan Infrastructure Law, and HUD programs such as Home Investment Partnerships Program and Community Development Block Grant HOME and CDBG that can be used to improve energy efficiency and lower utility costs for communities including HUD-assisted properties and residents.
“The combination of extreme heat and rising utility prices creates a perfect storm, and HUD-assisted families and communities are some of the most vulnerable,” said Secretary Marcia L. Fudge. “The steps announced by the Biden Administration will not only help families reduce utility costs, but also provide an opportunity for HUD-assisted residents to participate in the clean energy economy through local community solar programs.”
Below is information about how HUD will leverage specific programs and take new steps to help ease energy cost burdens through Community Solar, HUD’s Small Rural Frozen Rolling Base Utility Program, FHA’s 203(k) Rehabilitation Mortgage Insurance Program, FHA’s Financing and Energy Efficient and Climate Mitigation Home Improvements, and FHA Education and Outreach.
New Guidance to Connect Families to Solar Power
HUD is issuing national guidance to help ensure that residents of assisted housing can access cost-saving community solar subscriptions.
With this guidance, HUD sets the stage for 4.5 million families to reap the benefits of community solar which, on average, can save families 10% per year on their electric bills. In some programs, such as the Washington, DC Solar for All program, savings from subscribing to local community solar can reach up to 50% per year.
This national guidance builds on recent state-specific guidance that HUD has provided to Illinois, Washington, DC, and New York, that determined community-net-metering (CNM) credits would be excluded from household income and utility allowance calculations and therefore not increase housing costs for residents in properties participating in HUD Multifamily, Public Housing and Housing Choice Voucher rental assistance programs.
Small Rural Frozen Rolling Base Utility Program
Last year, HUD implemented new statutory changes creating a new energy and water savings incentive program for Small Rural housing authorities.
The Small Rural Frozen Rolling Base program enables small rural housing authorities to retain utility cost savings from efficiency or capital investments from conservation measures.
Now, HUD is launching an educational campaign and partnership to encourage broader usage of the incentive and help housing authorities partner with Weatherization providers to access low-cost energy efficiency measures.
HUD will make public a list of eligible Rural housing authorities, as well as a list of buildings owned or operated by those Housing Authorities that meet the new categorical income eligibility requirements for the Department of Energy Weatherization program. Leading up to the September deadline for new applicants for the Frozen Rolling Base program, HUD will maximize outreach efforts to ensure eligible housing authorities are aware of the savings opportunities.
FHA’s 203(k) Rehabilitation Mortgage Insurance Program
Given the urgent need for utility cost savings, HUD is working to educate lenders and homebuyers about the products the Federal Housing Administration (FHA) offers for energy-related improvements that may help homeowners reduce their utility costs.
- The 203(k) Rehabilitation Mortgage Insurance program is FHA’s primary program for the rehabilitation and repair of single-family properties. It is flexible and makes it easy to incorporate the costs of repairs into a loan when purchasing a home or refinancing a current mortgage. The eligible improvements include energy efficiency upgrades, energy-saving equipment, and energy generation improvements. The Limited 203(k) Mortgage permits homebuyers and homeowners to finance up to $35,000 into their mortgage to repair, improve, or upgrade their home. In Qualified Opportunity Zones (QOZ), the amount is up to $50,000 per home, enough to make a range of important and cost saving energy improvements.
FHA Education and Outreach
- HUD Homeownership Centers offer training sessions on FHA products, programs, and policies throughout the year which includes the 203(k), Energy Efficient Mortgage, Weatherization, and Solar and Wind programs. These trainings are offered live and may be recorded; an example is the 2022 Single Family Housing Lender Training – Credit Underwriting: Session II (located here) conducted in June.
- FHA is considering ways to make it easier for lenders and consumers to use the 203(k) Rehabilitation-Mortgage Program to make a range of home improvements, including those related to climate mitigation and energy efficiency improvements. When these changes are in place, FHA will execute a robust education and outreach plan to update consumers and lenders.
- FHA is working with the appraisal community to develop strategies to ensure single family appraisers are aware of approaches for valuing energy- and hazard-mitigation-related improvements.
Contact an FHA-approved lender for more information on the Section 203(k) Rehabilitation Mortgage Program or visit HUD’s 203(k) Rehabilitation Mortgage Insurance Program web page at https://www.hud.gov/program_offices/housing/sfh/203k.