May 20, 2016
A reader got in touch with us recently to ask a question about wells and FHA loan approval. “Is a flow test required on a pre-existing drilled well in order to get financing using FHA? This is in a town where there is no public water and a drilled well is the normal. Well has passed all other test to determine all health safety and has been approved by the FHA appraiser.”
FHA loan rules state that “Wells must deliver water flow of five gallons per minute over at least a four-hour period”. Furthermore, “The Mortgagee must ensure that new wells are drilled and are no less than 20 feet deep and cased. Casing should be steel or other casing material that is durable, leak-proof, and acceptable to either the local health authority or the trade or profession licensed to drill and repair wells in the local jurisdiction.”
The definition of “new wells” may depend on a variety of factors including state law, which is why we include those FHA rules quoted here.
That said, there may not be a specific test spelled out in FHA loan rules. Much depends on state or local ordinances, and if the well has passed an FHA appraisal that would seem to be the end of the issue-with one very important exception. Before we discuss that exception, let’s see what FHA loan appraisal rules found in HUD 4000.1 say about the water system of the home:
“The Appraiser must notify the Mortgagee of the deficiency of MPR or MPS if the plumbing system does not function to supply water pressure, flow and waste removal.”
“The Appraiser must flush the toilets and operate a sample of faucets to check water pressure and flow, to determine that the plumbing system is intact, that it does not emit foul odors, that faucets function appropriately, that both cold and hot water run, and that there is no readily observable evidence of leaks or structural damage under fixtures. The Appraiser must examine the water heater to ensure that it has a temperature and pressure-relief valve with piping to safely divert escaping steam or hot water.”
As you can see, the appraiser’s job is fairly simple in this respect, at least according to FHA minimum standards. However (and this is where we start discussing the important exception) FHA minimums are not the only standards at work. State or local laws also have a say, and lender standards may also require something extra depending on circumstances.
So the FHA minimums aren’t the only areas to be concerned with. A lender may have added requirements and state law may dictate how to proceed in such cases. It may be best to discuss a given situation like the one this reader is asking about with the loan officer to see what is typical or has been done in the past. A real estate agent may also have some prior experience with these situations.
Do you work in residential real estate? You should know about the free tool offered by FHA.com. It is designed especially for real estate websites; a widget that displays FHA loan limits for the counties serviced by those sites. It is simple to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today:
http://www.fha.com/fha_loan_limits_widget
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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