Veteran Home Loans and Flood Zones

You’ve found the perfect home and everything seems to be going according to plan. You’ve found a lender that offers veteran home loans and is willing to work with you. Then, all of a sudden, things take a turn for the worse and you find out the home you want to buy is located in a flood zone. What happens now? Is it possible to use your VA loan for a home located in a flood zone? Or will you have to start your home search from the beginning all over again? Here’s what you need to know.

Can You Use a VA Loan in a Flood Zone?

Being located in a flood zone doesn’t automatically prevent you from buying a property with a VA loan. What does matter is the extent of risk. If the property is located in a FEMA Special Hazard Flood Area, you may be required to purchase flood insurance, but should still be able to move forward with your plans. If, however, flood insurance is not available, the property will not be eligible. Additionally, if your appraiser determines that regular flooding is an issue, it’s unlikely that you will be able to buy the home with a VA loan.

Where Can I Get Flood Insurance?

The VA allows veterans to choose where they purchase flood insurance. You can go the standard route of obtaining insurance through the National Flood Insurance Program or, if you choose, purchase private flood insurance.

It’s important to note that most standard home insurance policies do not include flood insurance. Usually, flood insurance is purchased separately.

What Are the Risks of Buying a Home in a Flood Zone?

Some parts of the U.S. are at higher risk of flooding than others including the states of New York, New Jersey, California, Florida, and Louisiana. Needless to say, many people choose to live in these areas regardless. That being said, there are certain risks to buying a home in a flood zone. This includes:

Risk of flood damage: Whenever you buy a home that’s in a moderate or high-risk flood zone, you run the chance of incurring flood damage. Flood damage can be mild or can be extremely costly and devastating to your home.

Cost of flood insurance: Flood insurance can be expensive. You’ll need to have room in your budget not only to cover your regular home insurance, but also your flood insurance policy. The higher the risk of flooding, the more expensive your insurance will be.

Resale potential: Not everyone is comfortable living in a home that’s at risk of flooding. Selling a home that’s located in a flood zone can be difficult. This is something that buyers should take into consideration.