Are properties having a well acceptable for FHA financing?

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.   FHAs regulations 40 CFR, 141 and 142 are available at  Requirements for the location of wells for FHA-insured properties are located in 24 CFR  200.926d (f) (3). 

Handbook 4000.1 requires the inspection and testing of a private well only in cases where the Appraiser cannot determine that a Property meets HUD's Minimum Property Requirements (MPR) or Minimum Property Standards (MPS) for private wells, or where other documentation in the file may indicate that the private well does not meet HUD's MPR or MPS for private wells.

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 Handbook 4000.1 II.A.3.a.ii.(O) at

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