What are USDA Flood Zone Requirements?
In today’s video, I will share with you the details regarding USDA flood zone requirements and how to navigate the qualifying process.
However, before we get started, don’t forget to take advantage of our FREE download, USDA Blueprint for Success. This free guide is designed to walk you through the USDA process step-by-step and is a great resource for both homebuyers and realtors alike.
How do FEMA Flood Maps impact USDA loan eligibility?
USDA flood zone requirements for properties located in a Special Flood Hazard Area (SFHA) are different for existing dwellings versus new or proposed construction properties.
Today, I will only be covering USDA flood zone requirements for existing dwellings. If you do have any USDA new construction questions, please call my team so we can assist!
Existing dwellings are eligible under the USDA single-family housing guaranteed loan program only if:
- Flood insurance, through FEMA’s National Flood Insurance Program (NFIP), is available for the community; and
- Flood insurance whether NFIP, “write your own,” or private flood insurance, as approved by the lender, is purchased by the borrower.
Remember, it is important to note that USDA guidelines also provide flexibility for other structures and state the following:
“flood insurance is not required for any additional structures that are located on the property but are detached from the primary residential structure and do not serve as a residence, such as sheds, garages, or other ancillary structures.”
USDA Flood Insurance Coverage Requirements
USDA flood zone guidelines require that “flood insurance must cover the lesser of the outstanding principal balance of the loan or the maximum amount of coverage allowed under FEMA’s National Flood Insurance Program (NFIP).”
Further, certain deductibles must also be met:
“unless a higher amount is allowed by state or federal law (which includes FEMA policies), the maximum deductible clause for a flood insurance policy should not exceed the greater of $1,000, or one percent of the face amount of the policy, or the minimum deductible offered by the borrower’s chosen insurance carrier. Existing dwellings for the SFHGLP are eligible if flood insurance is available.”
In summary, while today’s topic can be confusing, don’t let the details overwhelm you! Just remember that USDA flood zone guidelines have greatly improved over the years and while it is possible to qualify for a USDA loan with a property located in a flood zone, insurance coverage requirements must be met along with obtaining certain deductibles.
As a USDA approved lender, we are here to help walk you through the process step by step. Just call or email to discuss your scenario and let us show you the “Metroplex” difference.
I want everyone to make it a great day, and look forward to seeing you right here for the next tip of the week!
P.S. – You can download our “USDA Blueprint for Success” by CLICKING HERE.