What are FHA's requirements for sewage disposal systems?

An onsite sewage disposal system refers to wastewater systems designed to treat and dispose of effluent on the same property that produces the wastewater.  The Appraiser must:
  • note the deficiency of Minimum Property Requirements (MPR) or Minimum Property Standards (MPS) and notify the Mortgagee if the property is not served by an off-site sewer system and any living unit is not provided with an onsite sewage disposal system adequate to dispose of all domestic wastes in a manner that will not create a nuisance, or in any way endanger the public health.
  • visually inspect the onsite sewage disposal system and its surrounding area. 
  • require an inspection to ensure that the system is in proper working order if there are readily observable signs of system failure.
  • report on the availability of public sewer to the site.
  • note the deficiency of MPR or MPS and notify the Mortgagee if there is evidence that the Onsite Sewage Disposal System is not sufficient. 
The Mortgagee must confirm that a connection is made to a public or community sewage disposal system whenever feasible and available at a reasonable cost. If connection costs to the public or community system are not reasonable, the existing onsite sewage disposal systems are acceptable provided they are functioning properly and meet the requirements of the local health department.  When the onsite sewage disposal system is not sufficient and an off-site system is available, the Mortgagee must confirm connection to an off-site sewage system.  When the onsite sewage disposal system is not sufficient and an off-site system is not available, the Mortgagee must reject the property unless the onsite sewage disposal system is repaired or replaced and complies with local health department standards. 

For additional information see Handbook  4000.1 II.A.3.a.ii(Q) and 4000.1 II.D.3.q  available at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh


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-04119