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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.

47 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.

  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?

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