Economists estimate that there will be approximately $1.1 trillion in residential loans made in 2010, which is less than half of the amount loaned in 2009. They expect 80% of the volume to be home purchases; nearly 3 out of 4 will be first time homebuyers.

Many of the homes available for first time homebuyers need upgrades or repairs in order to qualify for financing. Most sellers are unlikely to make the required repairs due to short sales and bank owned properties. Combined with tightened appraisal and lending standards, it would seem sales are problematic at best.

At the same time the situation can be viewed as an opportunity for buyers, for realtors, and for contractors, especially if you have an interest in energy efficiency. New FHA loan packages are changing the market. Continued below...

Need to find a qualified energy rater?
Earth Advantage Institute (EAI) can help.

Earth Advantage Institute's home energy rating team will allow you to:

• Qualify more borrowers.

• Access more reliable borrowers who are less likely to default because of lower energy payments.

• Increase your business through Earth Advantage Institute's active network of more than 300 builders, 650 EA certified brokers, and many other home industry professionals.

• Augment your visibility through Earth Advantage Institute's green lender marketing support program.

• Gain a competitive edge

Homebuyers. FHA loans are the primary source of lending for first time homebuyers. FHA loans now offer homebuyers the opportunity to purchase homes they might not have been able to afford even a year ago; and fix them up just the way they want! Just as importantly, they can have comfortable homes that conserve energy.

Real estate professionals. Brokers can increase the number of properties they show. Why? Because the selection of available homes can be expanded to include homes that need remodeling. Buyers want a specific type of home in a specific neighborhood. If the only home available is a less attractive 600-square-foot structure on a desirable corner lot, an FHA loan can allow the buyer to remodel that home to make it look just right, and incorporate energy saving features.

Contractors. Contractors of all types also have an opportunity: homebuyers and homeowners who would like to remodel their homes. Both can obtain financing of up to 96.5% loan-to-value based on completed value. This way you know you will get paid by the bank! The FHA loan is a typical construction-perm loan based on a specific draw schedule.

The FHA Energy Efficient Mortgage (EEM) can be used on purchases, refinances, or construction loans on owner occupied 1-4 family units and condos. The EEM allows up to 5% of the value/sales price to be used to finance qualified energy efficient improvements into the loan. For example, on a $275,000 purchase, a borrower could finance up to $15,000 in energy efficient improvements, such as insulation, a furnace, a water heater, weather stripping, and energy efficient appliances and windows.

Another opportunity for the median income owner-occupied homebuyer is the Neighborhood Stabilization Program (NSP). This program offers borrowers who are within 120% of median income a $50,000, no interest, no payment second mortgage for the purchase of bank owned properties in targeted areas. This program is normally used with an FHA first mortgage. The NSP program uses the borrower's home inspection, as well as additional inspections, to determine what work would be required to bring the home up to a certain standard. They then use up to $50,000 to complete the repairs on the home and allow the borrower to use up to 20% of the sales price towards the down payment.

Let's not leave out multifamily properties! FHA also has remodel loans available for purchase and refinance of apartment buildings. They have construction remodel loans available up to 90% LTV and have more lenient debt service requirements. They will use future rents based on what your renters will pay for a more desirable apartment. Imagine being able to attract long-term renters for premium rents in exchange for a clean, updated, and energy efficient property!

If you would like more information on any of the subjects mentioned in the article, please contact Tamera Lovely-Carroll, Branch Manager of HomeLinq Mortgage. 503-768-4808, 888-768-4808, tlcloans@homelinq.com.