The White House wants the Federal Housing Administration to enter the business of co-insuring small loans to finance energy-saving home improvements.
FHA 'PowerSaver' loans will "grow the home retrofit industry" and give middle class families the "tools they need to invest in home energy upgrades," said vice president Joe Biden.
The Department of Housing and Urban Development is launching a two-year PowerSaver pilot program that will allow FHA to provide co-insurance on loans of up to $25,000.
Lenders that are selected to participate in the pilot must absorb 10% of any loss with FHA covering the rest.
"We believe there are a number of lenders who will be interested in working with us to help save energy and money for homeowners, while creating jobs and cutting greenhouse gas emissions," said FHA commissioner David Stevens.
The PowerSaver loans will give homeowners a choice of financing the installation of insulation, doors and windows, heating and cooling systems, water heaters, solar panels, and geothermal systems.
