What are FHA's Flood Insurance Requirements for existing construction?

The Mortgagee (lender) must determine if a property is located in a Special Flood Hazard Area (SFHA) as designated by the Federal Emergency Management Agency (FEMA).  The Mortgagee must obtain flood zone determination services, independent of any assessment made by the appraiser to cover the Life of the Loan Flood Certification.  The Life of Loan Flood Certification must be obtained for all properties. 
A property is not eligible for FHA insurance if:

  • a residential building and related improvements to the property are located within SFHA Zone A, a Special Flood Zone Area, or Zone V, a Coastal Area, and insurance under the National Flood Insurance Program (NFIP) is not available in the community; or 
  • the improvements are, or are proposed to be, located within a Coastal Barrier Resources System (CBRS).   

When any portion of the residential improvements is determined to be located within an SFHA, flood insurance must be maintained for the life of the mortgage in an amount at least equal to the lesser of:

  • the outstanding balance of the mortgage, less estimated land costs; or
  • the maximum amount of the NFIP insurance available with respect to the property improvements. 

For New Construction requirements, see Handbook 4000.1 II.A.8.i.vii(A)(5). 
For additional information see Handbook 4000.1 II.A.1.b.iv(A)(1) 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-04965