You are contemplating buying a previously-occupied home which meets the majority of your requirements. However, your home inspector has advised you that not only is the furnace 12 years old, but it is far less efficient than today's models. If you are eligible for FHA financing, you may be in luck.

FHA will allow you to add to your loan the costs of making energy efficiency improvements. In addition to low-cost improvements such as added insulation and weatherizing, you may be able to finance the cost of a new furnace. You will need to demonstrate that the monthly cost of your additional borrowing will be offset by the monthly savings from your lower heating bills. Let's say that your local power company says a new furnace will save you $300 per year. FHA would allow you to finance up to $3,500 for a new furnace, which would cost you about $300 in added annual financing costs.

Limits vary regionally as to how much money can be added to your loan to cover energy efficiency improvements, so check with your lender before finalizing your plans.

For a free consultation to discuss which type of mortgage loan will work best for you, call Victoria Spannaus at Wachovia Mortgage Corp. at (800) 741-7813 or 910-692-6225.