Are properties with a well eligible for FHA financing?

The Appraiser must report on the availability of connection to a public and/or Community Water System and any jurisdictional conditions requiring connection.  When the Appraiser obtains evidence that any of the water quality requirements are not met, the Appraiser must notify the Mortgagee and provide an estimated cost to cure.

The Mortgagee must confirm that a connection is made to a public or Community Water System whenever feasible and available at a reasonable cost. If connection costs to the public or community system are not reasonable, the existing onsite systems are acceptable, provided they are functioning properly and meet the requirements of the local health department.

When an Individual Water Supply System is present, the Mortgagee must ensure that the water quality meets the requirements of the health authority with jurisdiction. If there are no local (or state) water quality standards, then water quality must meet the standards set by the Environmental Protection Agency (EPA), as presented in the National Primary Drinking Water regulations in 40 CFR §§ 141 and 142.

Requirements for Well Water Testing

A well water test is required for, but not limited to, Properties:

  • that are newly constructed;
  • where an Appraiser has reported deficiencies with a well or the well water;
  • where water is reported to be unsafe or known to be unsafe;
  • located in close proximity to dumps, landfills, industrial sites, farms (pesticides) or other sites that could contain hazardous wastes; or
  • where the distance between the well and septic system is less than 100 feet.

All testing must be performed by a disinterested third party. This includes the collection and transport of the water sample collected at the water supply source. The sample must be collected and tested by the local health authority, a commercial testing laboratory, a licensed sanitary engineer, or other party that is acceptable to the local health authority.  At no time will the Borrower/owner or other Interested Party collect and/or transport the sample.

The Mortgagee must obtain a valid water test from the local health authority or a lab qualified to conduct water testing in the jurisdictional state or local authority.

The following provides the minimum requirements for water wells:


  • Lead-free piping;
  • If there are no local chemical and bacteriological water standards, State standards apply;
  • Connection to public water when feasible;
  • Wells must deliver water flow of five gallons per minute over at least a four-hour period.


  • Existing wells must deliver water flow of three- to five-gallons per minute;
  • No exposure to environmental contamination;
  • Continuing supply of safe and potable water;
  • Domestic hot water;
  • Water quality must meet requirements of local jurisdiction or the EPA if no local standard.

For additional information see:

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.

Topic Number: KA-03559