Buying or Refinancing In A Flood Zone
A FEMA flood zone adds a required insurance policy and an escrow you cannot waive, not a denial.
A flood zone changes your insurance, not your eligibility.
Every item below is a condition you can meet, not a reason the file ends.
- Flood insurance is required when the loan is secured by a property in a Special Flood Hazard Area, a Coastal Barrier Resource System area, or an Otherwise Protected Area.
- Escrow waivers can be available for property taxes and homeowner’s insurance on some programs, but never for flood insurance premiums, as mandated by the Flood Disaster Protection Act of 1973.
- You must continuously maintain flood insurance for the life of the loan, and the policy has to be in force at closing.
- A renewal policy is required for hazard and flood insurance policies expiring within 60 calendar days from the loan closing.
- On USDA financing, a dwelling in a Special Flood Hazard Area must sit inside a community that participates in the National Flood Insurance Program.
- On USDA financing, the maximum deductible clause for a flood insurance policy should not exceed $10,000 unless a higher amount is allowed by state or federal law.
A flood zone home is still an eligible property
Required flood coverage follows a defined formula
Condos in a flood zone can still close
Manufactured homes have a separate grade rule
New construction has an elevation certificate path
Second lien coverage has a stated cap
What is the Saxton Flood Zone Home Loan?
The way Saxton handles a purchase or refinance when FEMA maps the property inside a flood zone.
The Saxton Flood Zone Home Loan is not a separate mortgage product. It is how a purchase or refinance is handled when FEMA maps the property inside a flood zone. Nothing about the designation makes the property ineligible. Every rule attached to it is a condition, an insurance policy plus an escrow for that policy, rather than an exclusion that ends the file.
Most people find out late. The offer is accepted, the appraisal is ordered, and a flood determination puts the address in a Special Flood Hazard Area or in Zone A or Zone V. Nothing about your credit, your income, or the sale price changed. What changed is that a flood policy is now part of closing and the premium for it goes into escrow.
There are real limits. You cannot waive the flood escrow, and you cannot carry less coverage than the required formula. New construction inside a Special Flood Hazard Area needs a FEMA elevation certificate showing the lowest habitable floor is at or above the 100-year flood plain elevation. This page covers a designation on a map, not a home damaged in a declared disaster.
Why choose the Saxton Flood Zone Home Loan?
This is for the buyer or homeowner who just learned the address sits in a FEMA flood zone and expects that to kill the loan.
The Zone Adds A Policy
Flood insurance is required when a loan is secured by a property located in a Special Flood Hazard Area, a Coastal Barrier Resource System area, or an Otherwise Protected Area. That is a condition on the file, not a decline. You bind the policy, the lender documents the coverage, and the loan moves forward the way it would at any other address.
Flood Escrow Cannot Be Waived
On some programs you can waive the escrow for property taxes and homeowner’s insurance. Flood is the exception. Premiums and fees for flood insurance must be escrowed as mandated by the Flood Disaster Protection Act of 1973, as amended. That is federal law, so no lender can waive it for you. Plan on a flood escrow from the first conversation.
Coverage Has A Set Floor
Required coverage is not a number you pick. On a first mortgage it must equal the lesser of 100 percent of the replacement cost value of the improvements, the maximum coverage amount available from NFIP, or the unpaid principal balance of the loan. Your insurance agent writes the policy to that amount and the file is checked against it.
Your Policy Must Stay Active
Coverage is not a closing day formality. The borrower must continuously maintain flood insurance for the life of the loan, and the policy must be in force at closing. If your current hazard or flood policy expires within 60 calendar days from the loan closing, a renewal policy is required before the file is complete.
The Complex Is Checked Too
A condominium in a flood zone is two checks, not one. When the project sits in a Special Flood Hazard Area, the buildings in the project need adequate flood insurance. Where Fannie Mae requires coverage, both the subject property and the complex must carry it. The association master policy is reviewed alongside your own file.
Second Liens Have A Cap
Flood rules follow the property, not the lien position. At least one program requires flood insurance on every property in a Zone A or Zone V flood zone regardless of lien position. On at least one second lien program, sufficient coverage is the lesser of the first lien unpaid balance plus the second lien unpaid balance, or $250,000.
Hear From Homeowners Like You
Frequently Asked Questions
The questions borrowers ask once the flood determination comes back.
No. The designation is a condition, not an exclusion. When the property sits in a Special Flood Hazard Area, a Coastal Barrier Resource System area, or an Otherwise Protected Area, flood insurance is required. You bind the policy and escrow the premium. Your credit and your income are reviewed the same way they would be at any other address. The property itself still has to stand on its own: at least one program will decline a property that is subject to regular flooding, whether or not it sits inside a mapped zone.
No, and no lender can approve that for you. Escrow waivers for homeowner’s insurance or property taxes are eligible on some programs, except as to premiums and fees for flood insurance as mandated by the Flood Disaster Protection Act of 1973, as amended. Flood is carved out by federal law. If you were counting on waiving escrows, budget for the flood portion to stay escrowed.
On a first mortgage the minimum amount must equal the lesser of three amounts. Those are 100 percent of the replacement cost value of the improvements, the maximum coverage amount available from NFIP, or the unpaid principal balance of the loan. On USDA financing, flood insurance must cover the lesser of the outstanding principal balance of the loan or the maximum amount of coverage. Your agent writes to that number.
It is fixable, but it has to be fixed before closing. A renewal policy is required for hazard and flood insurance policies expiring within 60 calendar days from the loan closing. Ask your insurance agent to issue the renewal early and send it to your loan officer. The policy also has to be in force at the time of closing, so a lapse is not something the file can absorb.
There is a path and it is documented. On USDA financing, new construction in a Special Flood Hazard Area requires a FEMA elevation certificate showing that the lowest habitable floor, including basement, and all related building improvements are built at or above the 100-year flood plain elevation in compliance with the NFIP. The dwelling also has to be located within an NFIP participating community.
Yes. On USDA financing the maximum deductible clause for a flood insurance policy should not exceed $10,000, unless a higher amount is allowed by state or federal law, which includes FEMA policies. A large deductible lowers a premium quote, so read the declarations page before you commit. A deductible above the cap will not be accepted on the file.
The site matters as much as the home. On at least one FHA manufactured home program, the finished grade level beneath the manufactured home must be at or above the 100-year return. A home set below that grade does not meet the requirement, and no insurance policy corrects it. Have the grade confirmed early, before you spend money on an appraisal.
Find out what you qualify for
A flood zone is a line on a FEMA map. It adds an insurance policy and an escrow you cannot waive. It does not end your purchase or your refinance. Bring us the address and we will tell you what coverage the file will need. Get a fast, no-obligation pre-qualification today.
Get Pre-Qualified*Loan amounts, rates, terms, and down payment requirements are subject to credit approval, income and asset verification, and program eligibility. Rural housing financing is governed by USDA area loan limits and income limits rather than by conforming loan limits. Down payment and cash-out limits vary by occupancy, credit score, and documentation type. Not all applicants will qualify. Saxton Mortgage, LLC is an Equal Housing Lender.