Because of all of the changes coming to the USDA Maps in NC – we are getting inquiries from folks who are going to use a FHA Loan for a home that is in a more rural setting.  Many of these homes do not have public water systems, and that’s okay with FHA.  They require that homes in NC are connected to public water and sewer whenever that’s possible. However, individual well and septic systems are okay, based upon the FHA Underwriting Guidelines, s long as they meet the minimum distance requirements.

FHA Loans and Septic Field Requirements in NC

Even if a public water supply or community water or sewer system becomes available – that’s not a guarantee that you have to connect in order to qualify for a FHA loan.  Most Underwriters are looking for a cost of less than 3% of the cost of the home.  Meaning that if the cost to connect for a $100,000 home in Benson is $4000 – the FHA Loan Underwriter will generally accept the private well or Septic system.

FHA Loans and Septic Field Requirements in NC are based upon the local and state requirements.  That being said, the minimum that most underwriters are looking for when considering FHA requirements for distances for properties with well & septic systems in NC is 75 feet. In other words they are looking for the distance between the well and septic tank drain field to be 75 feet.  Additionally, they want more than 10 feet between the system and any property lines or easements.

FHA is clear on their guidelines for distances for properties that have a well & septic system, but FHA also will make exceptions to their guidelines in certain circumstances if the distances are within the local and State requirements.

For example FHA guidelines require that a well be:

• A minimum of 50 feet from a septic tank
• A minimum of 100 feet from the drain/leach fields
• A minimum of 10 feet from any property line

But should State or local regulation allow for distances that are less than the FHA guidelines the property may be considered for an exception.  In order to obtain the exception the Lender must provide evidence that the property is in compliance with the State and local distance requirements and meets the following conditions:

• The State and local distances are not less than 75 feet between the well and drain/leach fields
• The well is not within 10 feet of a roadway
• The well is not within 10 feet of another single-family residential property
• The well is not within 10 feet of an Easement – if that Easement is for a third party utility
• The well is not within 10 feet of a commercial, industrial, or multifamily building

Acceptable evidence to obtain an exception to the FHA well & septic system distance requirements are:

An appraisal clearly showing the location of the well and septic system on a site sketch showing the distances between the two.

• The Underwriter obtains from a qualified party (well or septic company for example) satisfactory evidence that the distance requirements between the two systems, and between the well and property lines have been met.  This needs to include a Professional sketch showing the location of the well, septic tank, and drain field with relation to the subject property and property line. The sketch must specify the actual distances separating the well and septic system components: well to property line, well to septic, and well to drain field. HUD distance requirements: Well to Property Line 10 Ft, Well to Septic Tank ? 50 Ft, and Well to drain field 100 Ft.
• Unless the Appraiser notes that there’s a problem with the Well and Septic – we are not required to get a Well Inspection.  However, if they note that there’s a problem – there will be a requirement for a Well test in accordance with Mortgagee Letter 95-34. This includes testing for Led, Nitrate (as Nitrogen), Nitrite (as Nitrogen), Total Nitrate/Nitrite, Total Coli forms, and Fecal Coli forms or E. coli. When coli form is present, how was the Coli form corrected.

Again – we don’t normally have to get a Well Test on a FHA Loan.  However, every now and then… an appraiser will make a notation, and we do.  There are 2 different Well tests we see pretty often, one of them is a Metals test, the other is a Bacteria / Contamination Test. Even though it’s not always requried for a FHA Loan, we ENCOURAGE you to get the Bascteria and Metals test.  That will insure you that there’s no lead, coli, nitrate, or magnesium coming into your water.  The tests take a couple of days to order and incubate – so if you know that the property is on a well / septic system let us know that at loan application.  The Water test generally costs between $125 and $150.  The Septic test is generally done by the Home Inspector.  We don’t require a home inspection though, so if it’s a separate test we’re sending someone out to do, that’s another $125.

If the property is located in an area with a private third party system in place, we have to provide the underwriter with a copy of the most recent Convenience and Necessity Test.  This is an independent certification done by the State of NC stating that the systems passed all tests.  We have ALL of these letters for Wake and Johnston County.

If you have questions about FHA Loans and Septic Field Requirements in NC,  Buying a Home With A FHA Loan, or if you are considering FHA Loan in a Rural Community because of the USDA Home Loan Map Changes  please call Steve and Eleanor Thorne, Govenment Mortgage Loan Experts, 919-649-5058