Quantcast

FHA loan standards include a set of requirements for utilities, and water quality which must be met as a condition of loan approval. Some properties aren’t served by a local water utility system, and instead rely on well water. They must meet FHA loan standards addressing these areas.

FHA Mortgage Loan Rates

September 25, 2018
FHA Rates for September 25, 2018
Offering 30 Year Fixed Mortgages
Offering 15 Year Fixed Mortgages
Use our mortgage calculators
to see what you can afford!
FHA.com is a private company, is not a government agency, and does not make loans.

Prequalify Now!

Compare mortgage rates for your refinance or home purchase loan.

CHOOSE A LOAN TYPE

then
get
your

FREE CREDIT SCORE

Do you know what's on
your credit report?
FHA.com is a private company, is not a government agency, and does not make loans.

FHA Loan Articles

News and Updates for Homeowners

FHA One-Time Close Construction Loan Rules for Water Utilities

FHA One-Time Close Construction Loan Rules for Water Utilities
January 31, 2018 - An FHA One-Time Close construction loan has appraisal requirements the same as any other type of home loan transaction. FHA loan rules, state/local building code, and applicable local health authority requirements will all play a part in determining whether the finished construction project is acceptable.

FHA loan standards include a set of requirements for utilities, and water quality which must be met as a condition of loan approval. Some properties aren’t served by a local water utility system, and instead rely on well water. Properties that use wells, and properties with septic tank systems must meet FHA loan standards addressing these areas. What are those standards?

FHA Loan Water Supply/Utility Rules

In general, FHA loan rules require all properties to be "free of all known environmental and safety hazards and adverse conditions that may affect the health and safety of the occupants, the Property’s ability to serve as collateral, and the structural soundness of the improvements."
The FHA does not spell out all the health and safety rules which may apply-the local health authority will be responsible for establishing those standards which must be heeded as a condition of loan approval.

The lender is also required to properly document the nature of a home's relationship to local utilities. From HUD 4000.1, the FHA loan handbook:

"If utilities are not located on Easements that have been permanently dedicated to the local government or appropriate public utility body, the Mortgagee must confirm that this information is recorded on the deed record."

FHA loan rules in HUD 4000.1 have standards for the construction of wells. For example, lead piping is not permitted and there is a minimum requirement for water flow. Where new construction is concerned, "Wells must deliver water flow of five gallons per minute over at least a four-hour period". In certain cases shared wells may be allowed, but they must also meet a set of requirements including the following guidelines for water delivery.

Shared Wells

HUD 4000.1 requires a shared well to be capable "of providing a continuous supply of water to involved Dwelling Units so that each existing Property simultaneously will be assured of at least three gallons per minute (five gallons per minute for Proposed Construction) over a continuous four-hour period."

This section adds that the well may have a "lesser yield" in cases where "pressurized storage is provided in an amount that will make 720 gallons of water available to each connected existing dwelling during a continuous four-hour period or 1,200 gallons of water available to each proposed dwelling during a continuous four-hour period. The shared well system yield must be demonstrated by a certified pumping test or other means acceptable to all agreeing parties".

FHA Loan Rules For Local Utilities

When it comes to the availability and usage of public utilities, FHA loan rules in HUD 4000.1 state that the lender must, "confirm that a connection is made to a public or Community Water System whenever feasible and available at a reasonable cost. If connection costs to the public or community system are not reasonable, the existing onsite systems are acceptable, provided they are functioning properly and meet the requirements of the local health department."

The "whenever feasible" requirement is a rule of thumb that can be applied to most utility concerns in this area. For any FHA loan (including FHA One-Time Close construction loans or other types of mortgages) there are no specific rules found in HUD 4000.1 about the quality of water or other utilities except as provided for in that quote above and this guidance found on page 167:

"When an Individual Water Supply System is present, the Mortgagee must ensure that the water quality meets the requirements of the health authority with jurisdiction."

And when there are no local or state standards? FHA rules anticipate this situation, instructing the lender:

"If there are no local (or state) water quality standards, then water quality must meet the standards set by the EPA, as presented in the National Primary Drinking Water regulations in 40 CFR §§ 141 and 142."

Learn More About FHA One-Time Close Construction Loans

We have done extensive research on FHA One-Time Close mortgages and have compiled a list of licensed lenders for most states. These are qualified mortgage loan officers who work for lenders that know the product well.

Each company has supplied us the guidelines for their product. If you are interested in being contacted by one licensed lender in your area, please respond to the below questions to save time. All information is treated confidentially.

Your response to onetimeclose@fha.com authorizes FHA.com to share your personal information with a licensed mortgage lender in your area to contact you.

Please note that the FHA One-Time Close Construction Program only allows for single family dwellings (1 unit) – and NOT for multifamily units (no duplexes, triplexes or fourplexes).

1. Send your first and last name, e-mail address, and contact telephone number.

2. Tell us the city and state of the proposed property.

3. Tell us your credit score and/or the Co-borrower’s credit score, if known. 620 is the minimum qualifying credit score for this product.

4. Are you or your spouse (Co-borrower) eligible veterans?

5. If either of you are eligible veteran’s, the down payment is $0 up to the maximum VA lending limit for your county. If not, the FHA down payment is 3.5% up to the maximum FHA lending limit for your county.

------------------------------

RELATED VIDEOS:
Show Them You're Serious By Depositing Earnest Money
Homebuyers Benefit From the Work Done by Freddie Mac
Your Second Mortgage Is a Home Equity Loan

FREE CREDIT SCORES   From All 3 Bureaus  

Do you know what's on your credit report?

Learn what your score means.


FHA.com Reviews

FHA.com is a one-stop resource for homebuyers who want to make the best decisions when it comes to their mortgage. With our detailed, mobile-friendly site, individuals can access information about different FHA products, the latest loan limits, and numerous other resources to make their homebuying experience easier. Take a look at some of the reviews from other FHA.com visitors!