October 27, 2014
A reader asks, “I just inspected a home with a buried point well. Public water is not available. This type of well is common and legal in th area. Is this an acceptable well for FHA guidelines. No survey was provided so it is impossible for me to determine well location and distance from the septic.”
FHA loan rules in this area tend to defer to the local authority. The FHA does not have detailed rules for wells that would cover all situations. The key to the acceptability of wells in connection with an FHA appraisal depends greatly on whether the wells are acceptable to the local authority.
It’s impossible to determine the nature of an individual well mentioned in a reader question, but in general borrowers should know that some wells may require health department certification, others may be acceptable in their existing state.
Still others may not be acceptable at all. Much depends on state/local laws, health code, etc.
Those who are in doubt as to the acceptability of a certain type of well should begin by consulting with the local authority to see if the well is within code/health regulations. That’s the first hurdle to being considered acceptable in connection with an FHA loan.
One type of well mentioned by name in FHA loan rules is the “dug well”. The FHA official site states:
“Properties served by dug wells are unacceptable unless a complete survey conducted by an engineer is delivered to the lender. To be considered acceptable, the engineer’s survey must include these items:
i. A health report with no qualifications
ii. A pump test indicating a flow of at least 3-5 gallons per minute supply for an existing well, and 5 gallons per minute for a new well
iii. No indication of exposure to environmental contamination, mechanical chlorination or anything else that adversely affects health and safety.”
This information is found in the HUD publication, “Frequently Asked Question: Valuation Protocol”.
Borrowers who have more general questions about wells and their acceptability under the FHA single-family home loan program should contact the FHA for assistance by calling 1-800 CALL FHA.
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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