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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.

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

  1. Deb Seaberg says:

    Does this apply to reverse mortgages also?

    • Joe Wallace says:

      Any FHA insured loan that would require an appraisal would be affected by such rules–the appraiser will note the condition of the sewer/septic system and make recommendations of those systems don’t meet FHA requirements or local code.

      • Anthony says:

        Except when dealing with [lender name deleted] apparently. They seem to believe FHA requires a plot of the septic system no matter the age of the home or septic system. No plot, no mortgage. My question to them was how do you expect to plot a system that has been in the ground for 30 or more years? No one was even considering such a thing back then. Digging up the entire system to satisfy this requirement is beyond asinine.

  2. Deb Seaberg says:

    I am dealing with a reverse mortgage for my mother. In 2010 she had a new septic system put in and it meets all of the requirements of the county and received a certificate of compliance from the county. The guy I am dealing with One Reverse Mortgage is telling me that I have to get the distance from the well and drainfield remeasured because it does not exceed the 75 feet or more that FHA requires, according to him. Becker County requires 50 feet or more. Can the requirements meet one and not the other? It meets the local code and may not meet The FHA requirments.

    • Joe Wallace says:

      Hi Deb–your situation sounds complicated. Best advice is to call the FHA directly and discuss the particulars: (800) CALL-FHA or (800) 225-5342. Good luck!

  3. Nicki says:

    I am looking at a home and have had all the inspections, etc. I just got the septic information back and it states that the drain field is not working properly. I have no problem in fixing it once I own the home, but will FHA approve the loan under the condition the at seller agrees to fix the drain field.

    • Joe Wallace says:

      Hi Nicki, thanks for asking. It’s tough to say whether the loan would be approved under the conditions you mention because you might have local ordinances which require repairs of that type regardless of what FHA might permit–FHA defers to federal, state or local laws which may apply when it comes to minimum property requirements such as these. What does your lender say about the situation?

  4. Mike says:

    Hey i had a question. I am looking to buy a home in the middle of a suburban neighborhood that is the only house in the area (that we know of) that is on septic. Everyone else is on city sewer. Now if the FHA comes out with an appraiser to inspect the home/property, will they require that the home be hooked up to city? Or will they inspect the septic systems to make sure its in proper working condition. And will it pass if it is? And will they allow it to stay on septic? It is a home in Silvis, IL.

    • Joe Wallace says:

      A lot depends on the local building ordinances/codes for that area. FHA does not turn down a home just because it’s on septic, but any septic system must live up to local/state/etc requirements as with any other feature of the home. Since FHA does not have a comprehensive list of local/regional code you’d have to consult an expert or look up the laws in your area.

  5. Mike says:

    So if the local laws/codes allow the home to be on septic, and it passes inspection, FHA will allow the grant/loan to go through? As long as the septic system is working properly and has been well maintenanced?

  6. Mike says:

    I mean could it be approved by FHA inspections if the city/county laws/codes allow the septic to be there?

  7. Dave says:

    I am looking at purchasing a home who’s septic has failed a Title V inspection in Massachusetts. It is a short sale, and the house has been assessed at $80,000 more than loan price. Would FHA approve this loan? Couldn’t I always refinance and fix the septic after moving in?

    • Joe Wallace says:

      Best advice is to call the FHA directly at 1-800 CALL FHA as this question involves specific building code issues that may apply in your area.

    • Corrine says:

      If you are looking at an FHA loan Dave, and repairs are needed, consider the FHA 203k. You would have to get contractors and professionals to give bids on the repairs (and only licensed contractors can do the work) but you could get up to $35k for remodeling and repairing the entire home. Of course this is more paperwork and could be a headache but you could also end up with your dream home in the process.

  8. Chris says:

    Is there a distance requirement for FHA from the septic tank to the dwelling? i.e…the septic tank must be so many feet away from the dwelling?

  9. luis says:

    my house have a septic tank under de cemment under the drive in of the house is this legal

    • Joe Wallace says:

      It depends on the building code in your area. You would need to check with the local authority to see what’s permitted in your city/state.

  10. Jason Welch says:

    My mom is trying to sell her house and when it was built it was on septic. When my parents bought the house in 1988, the neighborhood had been subsidised and city sewer was installed but not to their house that was already there prior to subsidizing. Now to get it on city sewer is gonna cost 13,000 dollars that she doesnt have. A potential buyer has put a bid on the house and is applying for an FHA insured loan and they are saying it HAS to be hooked to city sewer. Is this correct or does her existing system which is up to codes and works appropriately acceptable?

    • Joe Wallace says:

      That decision may depend on state or local building code–in situations like these you’ll need to consult the local authority to determine what the applicable laws might be. FHA does not keep records of all state and local building codes.

  11. Karen says:

    Is the comment about the cesspool still valid today. That if the local township approves of the cesspool and well placement that fha most approve the loan.

  12. penny ewing says:

    I am selling a estate in Tennessee fha has passed every inspection except for septic…septic tank is 58 foot from well health dept has been out and says its a working good system but when it was put in was never maped ground is shale and really rocky the drain fill cant be located although exit to drain fill points that it goes out further the oppsite way from where the well is.tried to probe to rocky camara didnt work dye didnt work,but state of tenn says its a working system……what can i do?

  13. Marjorie Lehto says:

    I have a neighbor that has a septic tank which has water on top of the ground,the inspector says it is in compliance? this is the second time this has happened, it is now accumulating mosquitoes.what does compliance mean when this continues?

    • Joe Wallace says:

      That might depend on state or local code and how it is interpreted in your area. Best advice is to contact the local authority with jurisdiction over such matters to discuss the problem.

  14. My husband & I purchased a home 2 years ago that my Realtor said was on City sewer. We found out a year later that we were actually on Septic and it was a Major fail. The realtor and the Lender were friends and neither had us get the septic system inspected or Certified. And now we’re stuck paying for repairs that were needed before we bought the home. Home was bank owned. Did the Lender Blow it?

  15. deanna says:

    We are looking at purchasing a home that was built in 1871 almost everything has been replaced but the owner can not find the well. They have an idea of where it is but not sure. They just put in a UV Water system and replaced the septic tank, but I am concerned that we will not get approval with an FHA loan. Any advice or suggestions would be greatly appreciated. I have already contacted our county property surveyor and health inspector and there is no information with the county on the property because in NY only new properties get surveyed.

    • Joe Wallace says:

      It’s impossible to say because state and local building code may apply–you would need to consult the local building code authority to learn whether the property is considered in compliance or not based on the upgrades and improvements and conditions you mention.

  16. kate says:

    Does FHA accept aerobic white water septic systems that have been DEC approved?

    • Joe Wallace says:

      The FHA does not maintain a list of “approved” systems–the system would have to meet state/local health code requirements and building code requirements in order to qualify.

  17. kate says:

    would like to add that this white water septic system is the only one we can have where we’re located, as required by the state.

  18. becka says:

    Hello joe, are you available? ?

    • Joe Wallace says:

      You can always ask a question in the comments section…we’re happy to respond to any question pertaining to the FHA loan process.

  19. Steve says:

    I am in the process of a FHA 203K loan. The bank required a report showing the distances of the well and the septic, so I had a survey on the property. The survey clearly shows the property is on a lagoon system and not a septic tank system, but the underwriter says they still need to see the location and distance to the septic tank and drain field. Any suggestions on explaining this to the loan processor?

    • Joe Wallace says:

      There are many issues that could be at work here but you may need to have the surveyor somehow communicate these details to the lender. However, if state or local code requires a septic tank and drain field, you may need to have a conversation with the lender on what may or may not be permitted in your specific circumstances.

  20. DARYL says:

    i bought a home with fha loan and a well system and septic
    later found the well was a spring box system and not on the property
    we were forced to buy the property seperate from the house .

    The well has never worked and runs out all the time , i was told that
    FHA wouyld be inspecting the well system prior to closing , but now we have asked for the inspection and it was never done on the well or the septic systm . any ideas on where to get help

    • Joe Wallace says:

      You may need to seek legal counsel with regard to the non-functioning well issue. Did you pay to have a licensed home inspector review the property before purchase?

      • DARYL says:

        yes we did have a inspection done ourselves. At the time we thought the well was on the property but now we know what they looked at was the pressure pump not the actual well. I was told that FHA requirments are they are supposed to check the well before funding the loan .Im not really up to date with wells but this one is a dug well with spring box , so no one knows how this loan even got approved

  21. Bryan says:

    Does FHA require a specific type of certification for septic inspections. I am a licensed septic installer in my state and qualified to do repairs. Will lenders accept my inspections or must I also be a home inspector?

    • Joe Wallace says:

      There may be health code issues that would require a certified professional to sign off on. The septic system would have to meet sanitation/health standards based on those of the local authority.

  22. Virginia says:


    Looking to purchase a home that in Massachusetts that currently has a passed Title V but there is city sewer available at the street that is not currently piped into. Will FHA require this be done in order to obtain a FHA loan?

    • Joe Wallace says:

      That may depend greatly on state or local building code, and whether the existing setup meets health requirements in your area.

  23. Christian says:

    I’m looking to buy a condo in a 7 unit condominium building in Chicago Illinois. The condo seller has disclosed there are issues with the units plumbing. We see that there has been back up in the sinks and toilets within the condo unit, but none in the common areas of the unit. We have the ability to buy the condo unit with 20% down and pay for the renovations with cash. Will FHA lend money to finance the purchase of the condo given there is a documented issue with the plumbing? Would a standard 203k loan work in this scenario?

    • Staff Writer says:

      A 203K loan may be a good way to proceed-it’s best to talk to a loan officer about your 203K options to see what is permitted and under which program–the 203k or the Streamlined 203K.

  24. luly T says:

    Looking at buying a home, it is older, an estate sale. Private septic and well. I am pre-qualified for an FHA loan, BUT the sellers family refuses to pay for the septic and well inspections. I am told by several companies that FHA requires testing, inspection, and pumping of septic system along with alot of paperwork and reports. The cost for me to do this is $700. I am afraid to spend the money and then the septic or well does not pass inspection, I am out the $700 and the deal falls thru. Cant seem to get an answer from my lender as to what EXACTLY i need to get to qualify for the loan as far as checking the septic and well..

  25. Jeremy Loizos says:

    Just bought a home and while in crawl space installing drain tile I realized the main sewer line was leaking. The house was unoccupied for 2 years prior to purchase. I have an FHA loan and cannot afford to have contaminated soil removed and line repaired. I realize that I made a mistake buying this home but I felt protected from major issues in getting an FHA loan. What can I do?

  26. Peggy Kenny says:

    I am buying a foreclosed home on a 203k loan. I have done all of the jumping through hoops that I was aware of. I didn’t know that I had to have a septic inspection done. (The home is on a well and septic). Who has to do the inspection? Am I required to pay for this or does the seller, or lender. I’m assuming not the lender. Also, if I have to do this, what requirements does the company inspecting the septic need to have? Is there a particular form they need to fill out?

  27. Will Meiklejohn says:

    I have a client that is FHA approved, and has had their appraisal done but can not locate the well. Well and septic have been tested and municipality has signed off on both stating they were ok with the way they are. My clients lender says “no way, must meet the 50′ set back, other lenders say “we can do it as long as you have the letter from the township” My buyers don’t want to start over as they are set to close on the house they are selling in 2 weeks. How can one bank say something different from another while following FHA guidelines?

    • Staff Writer says:

      That may boil down to how the appraisal was carried out, lender standards, or an issue with state or local building code that could be sorted out by asking the FHA for an exception given that the local authority is willing to sign the FHA at 1-800 CALL FHA to learn how to request an exception for an appraisal issue such as this.

  28. hilary shabazz says:

    Isabela, PR (00662). what is HUD/FHA requirement regarding septic tank covered with grass. the complete back yard, including septic tank is covered. I am undergoing a HARP refinance

    • Staff Writer says:

      FHA loan rules require the septic tank to conform with local/state standards and codes– so you would need to check with the local authority to see what may apply in your circumstances.

      • Amanda Parish says:

        No, that is not true. FHA has own guidelines, they do not go by the state and local guidelines. We were set to close on a brand new home, we had a well inspection and water test which all complied with local guidelines and 3 days before closing the FHA said it didn’t meet their guidelines so we can’t close. We have to try to get a waiver and my only question is, how long will that take?

        • Staff Writer says:

          You’re talking about well water, but the original article you say “is not true” is discussing septic and sewer systems, not well systems for potable water. FHA loan rules do have specific requirements for certain aspects of the well water system, but FHA loan guidelines will not overrule state or local requirements.

  29. nicole says:

    We closed on house on 3/31. Had inspection. Stated was sewer, prev owner said was sewer, realtor said was sewer. On 5/8 found waste backed up in toilet in basement, called plumber, found out we have a septic system, currently waiting on them to come out inspect and pump.
    we have a FHA loan. How was this missed? we have no problem paying to have it pumped, but who is responsible if it more then pumping out issue? The company we called (only one in area) stated he had just pumped it 2 years ago. So prev owners knew it was on septic.

    • Staff Writer says:

      Did you rely on the FHA appraisal or did you pay for a home inspection separate from the FHA appraisal?

      • nicole says:

        We had inspection, the inspection said sewer also. We called the inspection company, and was told not their problem.
        Realtor had listed as sewer also. We got it pumped worked for two weeks now backed up again. Currently have company in route to dig up and inspect the whole system, minus the field unless need to.
        The appraisal also stated sewer. How can all these people not realize it was on septic? And now we have an FHA loan that thinks we are on sewer. Home warranty won’t pay anything because septic wasn’t inspected and certified.

  30. Mike M says:

    I am going through FHA to purchase a home in MD. What are the septic system inspection requirements for FHA? Basic dye test or pic&shovel which opens tank up after pumping and instpects for in leakage. Having home inspection done as well.

    • Staff Writer says:

      State/local code requirements would apply–you would need to check with the local authority to see what is required in your area, as FHA rules (which can be very general in such cases as state/local code addresses such issues) would not affect or overrule those regulations.

  31. Wesley roberts says:

    I’m selling my house that was built in 1950. The well and septic are about 40 feet apart. I live in Indiana is there some why I can be grandfathered in. Fha ref 50 ft recomendation is there a way around this test water show it’s find

  32. Bill Poelma says:

    My house is currently on a septic system that was installed 15 years ago. In that time, the city has brought public sewer available to the area. I am now trying to sell my house to a person getting an FHA loan. They are telling me that I will need to get the house hooked up to the city sewer in order to sell to a person with an FHA loan. I have had the septic tank pumped, and the city has inspected the system and passed it as totally functional. Do I really need to hook up to the city at a cost of $5,000+ to sell to someone getting an FHA loan?

    • Staff Writer says:

      FHA minimum property requirements say the property should be hooked up to such utility systems whenever feasible. You may need to contact the FHA directly or via the lender to inquire about a waiver, which would be handled on a case by case basis and may not be available to all applicants.

  33. Dee says:

    The property I have my eye on has a septic tank that has a crack in it and needs to be repaired or replaced. The seller has stated that they cannot fix or replace it. Does that disqualify it from an FHA loan? The mortgage is only about $30,000 so I probably wouldn’t qualify for a standard mortgage.

  34. tim says:

    Looking at a house that the septic is parsley garage will this meet fha stander.there is acsess to pump out and inspection ext

    • tim says:

      Septic tank is in the garage cement floor access holes cut in floor so it can be pumped and inspected is this accepted by fha

  35. Joe K says:

    This is another question on septic system which was discovered bad after closed on and moved in. The home had been for sale for over a year and unoccupied for 6-8 months. FHA appraisal didn’t do any inspection of this system and it appears they should have due to the length of time it hadn’t sold or been unoccupied. It has been replaced and trying to be compensated for the expense. Thoughts??

  36. Jen says:

    I have a question with regards to USDA loans. we have a cement septic tank were the access point is 4 feet underground. we were required to have it pumped and inspected. a backhoe was needed to get to the access point in which it was then pumped and inspected. This was done while the house was winterized therefore, the commodes could not be flushed for drain flow. Inspector indicated it appeared to be working ok overall and provided the inspection letter with no additional recommendations. The underwriter is now telling us that they want the septic tank to be uncovered again to see that water is draining into the tank. Wouldn’t the final inspection with electric/ water running determine that the property meets HUD guidelines as they would inspect drainage as well?

    • Staff Writer says:

      Unfortunately USDA loans are outside our subject matter area but in general it may be that lender standards or state law (or both) may apply in cases like these.

  37. Carolyn Scott says:

    We have a cistern we installed and met our building codes. We were issued a Certificate of Occupancy and not required to put in a well. We haul and purchase our water from the town of Hatch, UT. One of our main reasons for getting a Reverse Mortgage put in a well and pay off our credit cards and bills. We built by our self a log cabin home except the sewer system . We built it without a loan or mortgage but we are now tapped out on funds. If we met all building code requirements on our cistern, why can’t we close on our reverse mortgage until the well is in. The well and purchase of .25 acre of water share will cost us another $20,000.00. We are about ten miles off the highway and up in the mountains. We have installed all water saving plumbing fixtures and appliances. We use 8,800 gallons of water per year which comes to about 1/8th of the .25 acres of water we are required to purchase.

    • Staff Writer says:

      You would need to ask the lender about this issue-we can’t speculate as to why the financial institution made its decisions in this instance.

  38. Jo Ellen says:

    I’m purchasing a home with well water. It has been tested and we are waiting results. There is city water available for $1700 for hook up to meter. I’m assuming from meter to house will be another expense. Does FHA loan require the city water hook up, or can I stay totally on well water.

    • Staff Writer says:

      FHA loan rules say a property to be purchased with an FHA loan should be hooked up to a local utility “whenever feasible”. FHA loan rules also state that properties served with a well must meet FHA minimum standards and state/local requirements in order to be eligible for an FHA mortgage. These requirements will vary from state to state so you will need to check with the local authority to see what those requirements might include.

  39. Selling a home under FHA on almost 2 acres with an approved septic tank. It is 275 feet from the road and there is sewer there. It will cost over $8000 to connect. Due to the distance, will the owner be required to attach to sewer?

    • Staff Writer says:

      FHA loan rules require city hookups “wherever feasible”. City ordinances and building code might have a deciding factor in the whether it’s required in this case or not.

  40. Betty McPherson says:

    Does FHA requure a septic tank to have risers in order to getting a loan or is it per banks discretion

    • Staff Writer says:

      State or local building code would have a say in this, as well as any applicable health code requirements locally that may affect the design, placement, and use of a septic tank.

  41. Della Grice says:

    My parents’ home was build in 1971, before city sewer became available. A couple of weeks ago, it became evident that the lateral line has cracked. So now, we must either install an aerobic septic system or connect to the city sewer. Unfortunately, the city sewer will require tearing up part of the street as the city did not cap off at their property. In addition, the neighbor’s fence must be pulled down and then repaired, the sprinkler system will require repair, and it’s possible that water well pipes will need repair. (The house is on city water, but a well was installed for the sprinkler system.) All of these costs must be paid by my parents. We would prefer to go ahead with the sewer route if it will be required later anyway–when listing the house for sale–because both options are expensive. Our understanding is that FHA loans are not available for homes that are not connected to the city sewer system if the system is, indeed, available. Is this true? Thank you–

  42. Tami Dalley says:

    How many hours is a flow test on an existing well in the state of California.

  43. Brandi B. says:

    We have made an offer on a home, the offer was accepted and we had an inspection done and the lender has arranged for the appraisal (FHA appraisal) which was completed. The appraiser came back with information stating the well was 4inches from one side of property line and 6 ft from other side. The neighboring property line is a field, no home is near the property line. The appraiser said they could not locate the drain field which is in question.
    My realtor has went to local health department to obtain those records. Could FHA make an exception if our county/state codes state lesser inches or ft for well and property, and well and drain field?

    • Staff Writer says:

      That’s an issue you would need to take up with the FHA directly-you can call them at 1-800 CALL FHA, but it may be a good idea to discuss the issue with the lender first to see what may be possible in your circumstances.

  44. Kimberley Plachta says:

    The appraisal just came back on my FHA loan which has been going pretty smoothly ..up to now. The addendum says “The location of the well head t the lot line is in compliance with th elocal guidelines. both the septic tank and septic tile fiel dmeet local authority min distamce requirement of 50′. It is the lenders discretion to accept the distance requirement of the local authority vs the distance requirement of HUD>

    My lender responded to this by saying: “As of October 2015, HUD changed the guidelines on this topic slightly. They used to allow lenders to have “blanket waivers”, and we were approved for several of them. It is no longer allowed to have blanket waivers, so all lenders must adhere to the to the guidelines on page 161 of the HUD handbook. If the situation is such the property meets county/local requirements but not HUD requirements, then we must submit evidence of this to the Philadelphia HUD office to request a waiver for this specific loan. The chance they approve are almost 100%, but I’ve been told these are taking about 3 weeks for HUD to process.

    The distance between septic and well can be provided as a sketch from a home inspector, septic inspector, etc…just about anywhere as long as it’s a creditable source.”

    My question is…does it really take three weeks to get a response back? How many hands does the file go through to resolve and answer the question? I am in Michigan, BTW….

    • Staff Writer says:

      We aren’t associated in any way with the FHA, so we can’t speak to their processing times.

      • Kimberley Plachta says:

        The file is going to HUD to approve. I guess I wasn’t clear in my post.
        Please revise your response. thanks a bunch.

  45. Maggie says:

    Trying to get approval on a house with a septic system. The overflow goes into the property next to the one I am trying to buy. There is an easement in place for this. They are telling me this is a shared system. No one else has access to the overflow. It is cattle pasture and the easement does not allow anyone to use the system. Why are they calling it a shared when it is so obviously not?

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