FHA · HUD Handbook 4000.1FHA well and septic requirements: water tests, distances and septic systems

Homes on a private well or septic system get extra attention on an FHA loan. Under HUD Handbook 4000.1, when the home has an individual water supply system (a well), the lender must make sure the water meets the local health authority's standards, or EPA's National Primary Drinking Water regulations (40 CFR parts 141–142) if there are none. A home whose water source includes a mechanical chlorinator, or is served by springs, lakes, rivers, sand-point wells or artesian wells, isn't eligible for FHA insurance. A well water test is required for, among others, new construction; when the appraiser reports deficiencies with the well or water; when the water is reported or known to be unsafe; and near dumps, landfills, industrial sites, farms using pesticides or other possible hazardous-waste sites. The sample must be collected, transported and tested by a disinterested third party – the local health authority, a commercial lab, a licensed sanitary engineer or another party the health authority accepts – never by the borrower, the owner or another interested party, and the test may be no more than 180 days old at disbursement. For existing homes, the well must be at least 10 feet from the property line, 50 feet from a septic tank and 100 feet from a drain field (75 feet if the local authority allows), with greater local distances prevailing, and must deliver at least 3 gallons per minute continuously (new construction: 5 gallons per minute over four hours, 24 CFR 200.926d(f)). A shared well may serve no more than four units, needs a shut-off valve on each line and a recorded shared well agreement with the provisions HUD lists. For sewage, the lender must confirm a connection to a public or community system whenever feasible at reasonable cost; otherwise an existing onsite sewage disposal system is acceptable if it works properly and meets local health department requirements – if it isn't sufficient and no off-site system is available, the property is rejected unless the system is repaired or replaced. The appraiser visually observes a septic system and must require repair or further inspection for readily observable deficiencies.