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Do VA Loans Require Flood Insurance?

Some areas throughout the country are more prone to flooding than others. If you plan to purchase a home in a flood zone, VA flood insurance may be necessary. Investing in this insurance offers a higher level of financial protection to your biggest asset - your home. It’s important to know the VA loan flood insurance requirements before you decide where to buy a home or how to finance it.

Can I Use a VA Loan in a Flood Zone?

Generally speaking, you can use a VA loan to purchase a home in a flood zone. However, the higher risk of flooding may mean that VA home loan lenders might require you to purchase an additional insurance policy to protect the home from the risk of flooding and the resulting damage.

A typical home insurance policy doesn’t cover damage from flooding, meaning you would have to cover flood repair costs out of pocket. With flood insurance, some or all of these costs should be covered.

Do You Have to Have Flood Insurance on a VA Loan?

The location of your home determines if you need to purchase flood insurance. If you’re in a flood zone, you’ll need to purchase a flood insurance policy as VA lenders want to make sure their investment is protected.

A property may not even be appraised for a VA mortgage if the home is located in a Special Flood Hazard Area and one or more of the following circumstances apply:

  • The property is proposed or under new construction with the lowest floor below the 100 year flood level
  • There is an indication that the property is subject to regular flooding
  • Flood insurance is not available

Most often, a Veteran with a home in a flood zone needs to purchase flood insurance prior to closing on a VA loan. Flood insurance would then be required throughout the life of the VA loan.

How to Determine if You’re in a Flood Zone

Most VA loan lenders will order a flood certification to help pinpoint where the house is located and whether or not it is in a flood zone. To check this in advance, you can utilize online resources like those offered by the Federal Emergency Management Agency (FEMA) to find out if the house you want to buy is in a designated flood zone.

However, it’s important to note that not all areas are a part of the National Flood Insurance Program, which FEMA uses to determine where flood zones are. In non-participating communities, lenders may require a borrower to have a professional elevation certificate completed to show the home isn’t in a flood zone.

Do VA Loans Allow Private Flood Insurance?

Flood insurance may come through the National Flood Insurance Program or a private insurer. Typically, it’s possible to purchase flood insurance in the same manner as you would private homeowners’ insurance. It’s good to consider both options to determine which provides you with the best coverage while allowing you to remain within your budget.

How Much Does Flood Insurance Cost?

The cost of flood insurance depends widely on the geographic region and the home itself. Based on 2019 policy premiums, FEMA states that the average cost for flood insurance in the U.S. is $700 per year. Considering that the average flood claim payout from the National Flood Insurance Program that same year was $52,000, it’s often worth investing in this coverage.

Flood insurance from a private lender may cost less and may provide more options, allowing you to increase the coverage you purchase if desired.

The Importance of Flood Insurance

Whether a Veteran buys a home in a high flood-risk zone or not, flood insurance may prove invaluable. Homeowners typically benefit from insurance policies that limit their risk in adverse, unpredictable events. The benefits of flood insurance are numerous for homebuyers.

Cost versus coverage is also a large factor. The cost of flood insurance often is much lower than the average claim for a significant flooding event. When a flood occurs, insurance may help with restoring the home to its proper condition, covering the cost no matter how extensive the repairs. That means Veterans don’t have to draw from their savings or create debt to remain in their home after such an event.

When it comes to VA loans and flood zones, be sure to speak to your lender about your need for coverage. Even if it's not required by your lender, it's a good idea to consider the value of this type of policy. It may end up being a fraction of the cost you would pay for recovery.