FHA Single Family Housing Policy Handbook 4000.1, Part II — m. Solar and Wind Technologies (08/19/2024)

FHA Single Family Housing Policy Handbook 4000.1, Part II — m. Solar and Wind Technologies (08/19/2024)

m. Solar and Wind Technologies (08/19/2024) The solar and wind technologies policy allows the Mortgagee to increase the Base Loan Amount to cover the cost and installation of new solar or wind energy system improvements made, or to be made, to the Property at the time of a purchase or refinance. i. Eligibility (A) Eligible Property Types The following property types are eligible for the solar and wind technologies policy: • one- to four-unit Properties • Manufactured Housing (one unit) Installation of solar and wind technologies on Manufactured Housing must comply with Additions to Manufactured Housing requirements. Condominium units are ineligible for solar and wind technologies. (B) Eligible Programs and Transaction Types Costs for new solar and wind energy systems may be added to an FHA-insured base Mortgage, for the following programs: • Section 203(b) o purchase transaction o Rate and Term refinance and Simple Refinance • Section 203(h) Mortgage Insurance for Disaster Victims • Section 203(k) Rehabilitation Mortgage Insurance Program ii. Eligible Solar and Wind Technologies Active and passive solar systems, as well as wind-driven systems, are acceptable. (A) Photovoltaic Systems Photovoltaic systems must provide electricity for the residence, and must meet applicable fire and electrical code requirement. (B) Wind Turbine for Residential Properties A wind turbine must: • have a nameplate capacity of no more than 100 kilowatts; • have a performance and safety certification from: o the International Electrotechnical Commission (IEC) standards from an accredited product certification body; or II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured Housing Programs Forward Mortgages 8. Programs and Products - Solar and Wind Technologies (08/19/2024) Handbook 4000.1 488 Last Revised: 11/26/2025 o the American Wind Energy Association (AWEA) standards from the Small Wind Certification Council (SWCC) or a Nationally Recognized Testing Laboratory (NRTL); and • be installed by an installer who has received either a North American Board of Certified Energy Practitioners Small Wind Installer Certification or small wind turbine installation training from an accredited training organization. iii. Title to Systems The Borrower must own, not lease, solar or wind energy systems for the systems to be considered eligible improvements. Leased equipment and Solar Power Purchase Agreements (SPPA) may not be financed under any FHA Title II programs. iv. Maximum Mortgage Amount Calculation (A) Maximum Mortgage Amount - Purchase The Mortgagee must compute the Adjusted Value by using the purchase price excluding the cost and installation of the solar or wind technology system and the Property Value excluding the cost and installation of the solar or wind technology system. The Mortgagee must add the lesser of: • the cost and installation of the solar or wind technology system; or • 20 percent of the Property Value to the Base Loan Amount. The Mortgagee must exclude any rebates identified in the contract and assigned to the contractor in determining the cost and installation of the solar or wind technology system. (B) Maximum Mortgage Amount - Refinance The Mortgagee must compute the Adjusted Value by using the Property Value without the cost and installation of the solar or wind technology system. The Mortgagee must add the lesser of: • the cost and installation of the solar or wind technology system; or • 20 percent of the Property Value to the Base Loan Amount. The Mortgagee must exclude any rebates identified in the contract and assigned to the contractor in determining the cost and installation of the solar or wind technology system. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured Housing Programs Forward Mortgages 8. Programs and Products - Solar and Wind Technologies (08/19/2024) Handbook 4000.1 489 Last Revised: 11/26/2025 (C) Nationwide Mortgage Limit – Purchase and Refinance The Base Loan Amount may exceed the Nationwide Mortgage Limit for the geographic area by no more than 20 percent. See Maximum Mortgage Amounts. v. Required Documentation The Mortgagee must document the cost of work, including the energy systems’ materials and labor. vi. Cash-Out The Borrower may not receive cash back from the mortgage transaction. If an excess exists, the Mortgagee must apply these funds to the principal Mortgage balance. vii. Escrows The Mortgagee must establish an escrow account in accordance with the Repair Completion Escrow Requirements for the remaining cost of the energy improvements if the installation of solar or wind energy systems is not complete by the time of closing. If the energy package is part of a 203(k) Rehabilitation Mortgage, then the escrowed amounts of the energy package must be included in the rehabilitation escrow account. Any funds remaining in the escrow account at the end of the improvement period must be applied to pay down the mortgage principal. (A) Borrower Labor Escrows may not include costs for labor or work performed by the Borrower (Sweat Equity). (B) Required Documentation: Form HUD-92300, Mortgagee’s Assurance of Completion When funds to complete the solar or wind energy systems are escrowed, the Mortgagee must execute form HUD-92300, Mortgagee’s Assurance of Completion, to indicate that the escrow for the solar or wind improvements has been established. viii. Completion Requirements for Solar and Wind Technology Installation (A) Time of Completion Installations of solar and wind energy systems must be completed within 120 Days of the mortgage Disbursement. The Mortgagee must apply the remaining solar and wind escrow funds to a prepayment of the mortgage principal, if the work is not completed within the required time frames. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured Housing Programs Forward Mortgages 8. Programs and Products - Solar and Wind Technologies (08/19/2024) Handbook 4000.1 490 Last Revised: 11/26/2025 (B) Inspection The Mortgagee or their agent must inspect the solar and wind improvement or obtain evidence from a local authority that the system was installed in accordance with local code. (C) Escrow Closeout Certification After the repair or rehabilitation escrow account is closed, the Mortgagee must complete the Escrow Closeout Certification screen in FHAC within 30 Days after the escrow account is closed. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured Housing Programs Forward Mortgages

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