June 26, 2017

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FHA Loans: What Are the FHA Requirements For Sewer/Septic Systems?

FHA loans require a property to meet certain requirements before a loan will be approved. FHA loan applicants looking at properties that can’t meet such minimum property requirements must look elsewhere, but when a property can be modified, repaired or improved to meet those standards, FHA rules allow that to happen.

Some properties have features that can’t be improved–some homes are situated in areas where well water is the only source available, and if the well doesn’t meet health and safety standards, the home may be considered inappropriate for an FHA mortgage.

One similar area concerns septic and sewage systems. What are the FHA requirements for septic/sewage?

FHA rules state that the lender is responsible for making sure a particular property lives up to local requirements and that community sewage systems are property licensed and “adequate to service the property.” The FHA does not maintain a specific list of “approved” septic systems.

Some properties may not be connected to a public sewer system. This does not automatically render the home ineligible to be purchased with a FHA-insured loan, but the rules are clear–the system must be approved locally. “For properties that cannot connect to a public system and are served by an individual sewage system that is acceptable to the local health authority, the system is then acceptable to HUD/FHA.”

The FHA says a variety of systems qualify under this rule–cesspools, mound systems, and “individual pit privies”. If any of these meets local code, there are no questions asked from the FHA end of the process.

There is one exception–any such sewage system that shows evidence of failure must be inspected by the local health authority or a licensed professional sanitarian. The system must pass inspection in order for the property to be approved for an FHA mortgage loan. In cases where the property has been unoccupied for a month or more, “the lender’s underwriter must decide if an inspection of the system is necessary.”

Sewer systems are not identical, but as long as the system is functioning properly and lives up to local codes, the FHA does not disqualify the home simply because a sewage or septic system isn’t the same as a typical suburban system in a metropolitan area.

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FHANewsBlog.com was launched in 2010 by seasoned mortgage professionals wanting to educate homebuyers about the guidelines for FHA insured mortgage loans. Popular FHA topics include credit requirements, FHA loan limits, mortgage insurance premiums, closing costs and many more. The authors have written thousands of blogs specific to FHA mortgages and the site has substantially increased readership over the years and has become known for its “FHA News and Views”.

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