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NGBS Green Certification Recognized for New FHA Green MIP Reducations

May 23, 2022 | Upper Marlboro, MD

NGBS Green Certification Recognized Under FHA’s New Green MIP Reductions for Residential Care Facilities

Reductions Support Administration’s Environmental Objectives, HUD’s Climate Action Plan

Earlier this month, as published in the May 19th Federal Register, the Federal Housing Administration (FHA) announced its intent to implement significant reductions in the upfront and annual mortgage insurance premiums (MIP) it charges for most mortgage insurance categories under the Section 232 mortgage insurance program for residential care facilities where the facilities meet industry-recognized green building certifications and achieve meaningful, measurable energy and water efficiency improvements. NGBS Green is honored to be one of the recognized certification programs, and a pathway for owners of assisted living facilities, and board and care homes to adopt higher, more energy efficient, and sustainable standards for construction, rehabilitation, repairs, maintenance, and property operations.

FHA’s new “Section 232 Green MIP” will reduce capitalized upfront MIP from 100 basis points to 25 basis points for most insurance categories for mortgages on properties that meet the  requirements. In addition, FHA will reduce annual MIP rates, which are generally between 45 and 77 basis points, to 25 basis points for properties that meet the requirements. On an average FHA Section 232 transaction for an insured loan of $12.5 million, FHA estimates that a borrower will save $93,000 in upfront MIPs on many loan types, and tens of thousands of dollars in annual MIPs depending on the loan type. 

Section 232 Green MIP reductions will apply for new Section 232 mortgage insurance applications where the owner of the facility indicates that the property will achieve a specified industry-recognized standard for green building certification and will achieve meaningful, measurable energy and water efficiency improvements. Other requirements include:

  • For properties that have already achieved a specified green building standard certification and that are refinancing with the lower MIP, proceeds must be used to complete further efficiency upgrades and thereby achieve the next level of green certification.
  • The owner must certify that the property has achieved, or will pursue, achieve, and maintain a score of 75 or better ENERGY STAR score, using EPA’s Portfolio Manager for the Senior Care Community building type.
  • MIP rates will not be modified on FHA-insured Section 232 loans initially or finally endorsed, in conjunction with Interest Rate Reductions, or in conjunction with Loan Modifications.

FHA plans to finalize and publish its implementation requirements for lenders to begin using the program with their borrowers, with the intent to begin receiving applications for the Section 232 Green MIP reduction later this year.

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ABOUT: Home Innovation Research Labs, located in Upper Marlboro, Md., is a full-service research, testing, and consulting firm determined to improve the quality, durability, affordability, and environmental performance of single- and multifamily homes and home building products – in short, we aim to perfect the home. Founded in 1964 as a subsidiary of the National Association of Home Builders (NAHB), our team has been integral in solving many of our client’s most difficult product and technology issues, and helping to introduce some of the most groundbreaking innovations in construction. Through an interdisciplinary research approach – including market research, building science analysis, laboratory testing, and standards development – we help to find a home for innovation in the construction industry.

NOTE TO EDITORS ON STYLE USAGE: To identify this company and its work correctly, first reference should be "Home Innovation Research Labs." In subsequent mentions, “Home Innovation” should be used; we are not identified by an acronym. Prior to February 12, 2013, the company was known as the NAHB Research Center.