Private well FHA requirements to know before contract

Private Well Minimum Distance Requirements for FHA Loans

Most don’t realize that when using an FHA loan, there are some requirements in regards to distances away from areas for private wells. In reading the rules, you may see a well referenced as an Individual Water System too. This rule is often overlooked until late in the process, so it is a good practice for a real estate agent to reference these rules when there is a private well on the property. This article explains the FHA rules as referenced with Mortgagee Letter 2002-25 dated December 27, 2002.

Private Well Distance Requirements

If a private well is the primary source of drinking water, these minimum requirements must be met in order to obtain an FHA loan

Minimum of 100 feet from septic tank’s drain field
Minimum of 10 feet from any property line
If state or local regulations require greater distances, those must be followed

BUT FHA states that “If, however, the locality permits distance requirements less than those prescribed by FHA, the property may be considered eligible for a mortgage insured by FHA provided that the lender submits evidence in the case binder that the subject property is in compliance with the applicable local or state distance requirements and meets the conditions stated below: Therefore waivers from the Homeownership Centers will no longer be necessary for properties meeting these distance requirements:”

Domestic Well from Septic Tank Drain Field: FHA will recognize state/local distance requirements provided they do not allow for less than 75 feet of separation.
Domestic Well from Property Line: FHA will recognize state/local distance requirements provided that the well is not within 10 feet of any roadway or the property line of other than a single-family residential property, i.e., the well cannot be within 10 feet of a commercial, industrial, or multifamily building.

How to Document the Well Distances

There are a few ways to prove the distances requirements for the private well when using an FHA loan. Whichever option is used must clearly show the distances for each mentioned above. So, you can use…

An appraisal clearly showing the location of the private well(s) and septic systems including the distances mentioned above
A qualified party can verify the distances such as by a survey or the local health authority

Mortgage Options That Do Not Have Well Distance Requirements

One thing to keep in mind if the property does not meet FHA requirements is that the borrower could try another loan type. For instance, a buyer could try for a USDA Guaranteed loan which does not require a down payment and doesn’t have the above requirements. If one of the buyers is a Veteran, service member, or qualified surviving spouse, then a VA loan could provide a great option with potentially no money down. Additionally the buyer could use a conventional mortgage with 3 – 5% down payment as Fannie or Freddie do not have these well requirements.

To learn more details in reference to private wells, you can read this HUD HOC Reference Guide

Related Resources:

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