If you’re looking to purchase a home in Texas, one important factor to consider is flood risk. With extensive coastlines and rivers flowing through the state, certain regions of Texas are prone to flooding. If you plan to buy property in a designated high-risk flood zone, also known as Special Flood Hazard Areas (SFHAs), you’ll need to take special precautions and may encounter challenges getting a mortgage. (Flood Zone Mortgages in Texas)
Flood zones refer to geographic areas that the Federal Emergency Management Agency (FEMA) has classified as having varying levels of flood risk. These zones are depicted on Flood Insurance Rate Maps (FIRMs) that indicate the probability of a flood occurring in each zone.
In Texas, coastal regions and areas along waterways are most likely to contain high-risk zones, labeled as Zone A or Zone V. Zone A signifies a 1% annual chance of flooding, while Zone V denotes additional coastal flooding hazards.
If seeking a mortgage to purchase a home in a SFHA, you’ll face special requirements:
– Flood Insurance – Lenders will require you to purchase flood insurance on the property to protect the collateral securing the loan. Rates start around $600 per year but can be much higher.
– Elevation Certificate – You may need a certificate stating the home’s exact elevation height above sea level. This verifies the structure meets floodplain standards.
– Higher Down Payment – Flood zone mortgages sometimes require larger down payments, often 20% or more of the home’s value.
– Restrictions on Loan Types – FHA loans, USDA loans, and VA loans often cannot be used in high-risk flood zones. Conventional loans are more commonly required.
While buying a home in a flood zone presents challenges, it is possible with preparation:
– Shop multiple lenders – Compare options to find a lender familiar with flood zone mortgage requirements. Specialists may offer better rates.
– Evaluate home elevation – Consider a home’s elevation height and foundation type to determine true flood risk. This can lower insurance costs.
– Ask about exemptions – Some properties may be exempt from mandatory flood insurance due to elevation or flood control structures.
– Consider FEMA grants – FEMA may offer grants to elevate existing homes in floodplains, which can help lower insurance.
– Weigh risks and costs – Carefully consider both flood risks and total insurance expenses when selecting a property.
The flood zone mortgage experts at ZAPA Mortgage can guide you through the unique process of buying a home in a high-risk flood zone. Our experienced loan officers serve home buyers across Texas and can help you make your dream of homeownership a reality, even in flood-prone areas. Contact us today to get started!