Is a property with a well located inside its foundation walls acceptable for FHA financing?

An existing property, which is serviced by a well located within the foundation walls of the dwelling, is acceptable as security for FHA-insured financing only when the local jurisdiction recognizes and permits such a location, is common for the market area, and does not adversely affect marketability.  

A well located within the foundation walls of new construction is not acceptable except in arctic or sub-arctic regions. 

For additional information see Handbook 4000.1 II.D.3.p.v(C) and II.A.8.i.vii(A)(6) 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-03885