Under the special program, called Home Energy Advantage, the qualifying ratios for home loans may be exceeded by up to two percentage points if an energy-efficient home is purchased. The program recognizes that owners of energy-efficient homes spend less money on utility bills, so they can afford larger mortgage payments.

The USDA loan program is available to qualified low- and moderate-income families to purchase modest homes in rural areas. Loans can be made for up to 100 percent of the appraised value of the property. The cost of installing energy-saving features in a home, such as insulation, storm windows and doors, as well as energy-efficient appliances may be included in the loan amount.

All new homes that that are built to meet the 2000 International Energy Conservation Code (IECC) or a subsequent comparable code are considered energy efficient and eligible for the two percentage point increase in the qualifying ratios. Existing homes that meet the same standard, or are being retrofitted to meet it, are also eligible. The program is a nationwide pilot, and will operate for the next 18 months.

Further information is available at a local USDA Rural Development office or by visiting USDA's Website at www.rurdev.usda.gov.

Publication date: 06/26/2006