What evidence does FHA require to demonstrate that a property serviced by a public water system with unacceptable levels of contaminants is eligible for an FHA insured mortgage?

FHA requires lenders to ensure that each property has a continuing and sufficient supply of safe and potable water under adequate pressure and of appropriate quality for all household uses and also to ensure that, each property is free of all known environmental and safety hazards, and adverse conditions that may affect the health and safety of the occupants. Lenders may require evidence that the property meets these requirements such as testing or remediation as required by:
  • SF Handbook 4000.1 II.A.3.a.ii(F) (Requirements for Living Units) and (J)(Environmental)
  • 24 CFR §200.926d (f) Water supply systems
  • 24 CFR §203.52 Acceptance of individual residential water purification equipment
Handbook 4000.1 is available at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh
Regulation 24 CFR §200.926d (f) and 24 CFR §203.52 are available at https://www.ecfr.gov

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-05138