Reverse Mortgage In A Flood Zone
A HECM is possible on a home in a FEMA special flood hazard area. Flood insurance must be kept for the life of the loan, and some locations are not eligible.
When flood insurance is required
HUD ties the flood insurance rule to where the home and its essential structures sit on FEMA’s flood maps.
- The lender must determine whether the home is in a special flood hazard area designated by FEMA.
- That check uses a flood zone determination service, independent of any assessment by the appraiser.
- If any part of the dwelling or essential structures is in that area, you must obtain and maintain flood insurance.
- The community must participate in the National Flood Insurance Program, whether or not you buy NFIP coverage.
- Coverage can come from an NFIP policy or a private flood insurance policy.
- Flood insurance must be maintained for the life of the HECM.
Private flood policies can qualify
Coverage follows a set formula
FEMA map letters are accepted
Condo coverage comes from the association
Your coverage history is reviewed
Remapping is handled after closing
How Flood Coverage Is Set
HUD sets a minimum coverage amount and requires it to stay current.
For a home in a special flood hazard area, flood insurance must be at least the lowest of three amounts. Those are 100 percent of the replacement cost of the insurable value of the improvements, the maximum NFIP coverage available for that type of property, or the outstanding principal balance of the HECM.
When the outstanding balance sets the amount, coverage must be adjusted each renewal cycle. It must cover at least the balance at the end of that coverage period. A private policy must be at least as broad as a standard NFIP policy and give 45 days written notice before cancellation or nonrenewal.
Before closing, the lender reviews your insurance payment history for continuous coverage over the prior 12 months. If flood insurance was not in place for those 12 months, you must get coverage and prepay 12 months at or before closing. Under our reverse mortgage program, flood insurance premiums due within 90 days of funding are paid at closing.
Why choose Saxton for a reverse mortgage in a flood zone
This page is for homeowners, and adult children helping a parent, whose home sits in a FEMA special flood hazard area.
Flood Maps Are Checked
The lender must determine whether the home is in a special flood hazard area. That determination comes from a flood zone determination service, separate from any assessment by the appraiser.
Some Locations Cannot Qualify
A home in the Coastal Barrier Resources System is not eligible. A home in a Zone A or Zone V flood area is not eligible if NFIP insurance is not available in the community.
Elevation Can Decide New Construction
A newly built home in a flood area needs a FEMA letter removing it from the area, or an elevation certificate. The certificate must show the lowest floor, including the basement, is built above the 100-year flood elevation.
Manufactured Home Grade Rule
For a manufactured home in a flood area, the finished grade beneath it must be at or above the 100-year flood elevation, unless a FEMA letter removes it from the area. Our reverse mortgage program applies FHA flood zone elevation rules to manufactured homes.
Condo Coverage Is Verified
For a condo building in a flood area, the condo association must carry flood insurance. That coverage must protect unit owners and the common areas.
Coverage Stays Current After Closing
If FEMA remaps your home into a special flood hazard area later, the servicer must enforce HUD’s flood insurance requirements. If a required policy is not renewed, the servicer must buy lender-placed flood insurance.
Hear From Homeowners Like You
Frequently Asked Questions
Common questions about reverse mortgages on homes in FEMA flood zones.
It is possible. The home must be in a community that participates in the National Flood Insurance Program and has NFIP coverage available. You must also keep flood insurance for the life of the HECM.
Yes, if it meets HUD’s requirements. It must be at least as broad as a standard NFIP policy for that type of property and give 45 days written notice before cancellation or nonrenewal. The lender may rely on a compliance statement in the policy that it meets FHA’s definition of private flood insurance.
At least the lowest of 100 percent of the replacement cost of the insurable value of the improvements, the maximum NFIP coverage for that type of property, or the outstanding HECM balance. If the balance sets the amount, coverage must be adjusted each renewal cycle to keep up with it.
Homes in the Coastal Barrier Resources System are not eligible. Homes in a Zone A or Zone V flood area are not eligible when NFIP insurance is not available in the community. A condo project with any part in the Coastal Barrier Resources System is not eligible for FHA single-unit approval.
Only in certain cases. For new construction or a manufactured home in a flood area, HUD accepts a FEMA letter of map amendment or revision that removes the property, or an elevation certificate meeting the 100-year flood elevation rule. When these apply, they go in the loan file with the life of loan flood certification.
The condo association must carry flood insurance on buildings in the flood area, protecting unit owners and the common areas. The policy must list the condo association as the named insured. A condo project with any essential part in a flood area must meet HUD’s flood requirements to be approved.
If remapping puts your home in a special flood hazard area, the servicer must enforce HUD’s flood insurance requirements on coverage amounts and maintenance. Under our reverse mortgage program, a HECM is due and payable if the borrower fails to pay property taxes and insurance on time.
Saxton Mortgage does. A HECM is possible on a home in a FEMA special flood hazard area when the community participates in the National Flood Insurance Program and flood insurance is kept for the life of the loan.
Find out what you qualify for
Tell us about your home and its flood zone, and we will check how it fits our program.
Get Pre-Qualified- U.S. Department of Housing and Urban Development, FHA and housing resources
- U.S. Department of Housing and Urban Development, FHA mortgage insurance premiums
Loan amounts, rates, terms, and eligibility are subject to credit approval, asset and income verification, appraisal, and program guidelines. Program availability varies by state. Not all applicants will qualify. Saxton Mortgage, LLC is an Equal Housing Lender.