Flood zones and USDA properties

Typically when a home is in a flood zone, lenders will require flood insurance in addition to the normal homeowners / fire insurance policy that all homeowners obtain.  In most cases, the cost of the flood insurance will pretty much double the insurance costs for the property, although the actual premium will be dependent on a number of factors including the area, the type of flood zone, the deductibles, etc.

For properties bought with USDA financing, the USDA also requires an “elevation certification” or elevation cert, verifying that the first floor elevation is above the 100 year flood plane.  If an acceptable elevation cert has already been done on the property, then that is satisfactory.  If the property has no elevation cert, then one has to be completed prior to the loan closing.

Other issues can arise with USDA financed properties in flood zones with regards to wells, septic systems and whether the property is new construction or not.  These factors are best handled on a case-by-case basis with your lender.

Baxter Scruggs is a mortgage banker specializing in USDA loans in California, NMLS #156370. He can be reached at bscruggs@guildmortgage.net, or at 760-497-7705, or toll-free at 877-347-0004, ext. 226. Licensed by the California Department of Business Oversight under the California Residential Mortgage Lending Act.  The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Guild Mortgage Company or its affiliates. Terms and conditions apply, all loans subject to underwriter approval. Subject to change without notice. Guild Mortgage Company NMLS #3274

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