A guide to buying a house in a flood zone

Living near water is a delicate balance: life by the water offers many pleasures, but the potential for flooding can cast a shadow over the fun times.

Water can be extremely destructive to a home. A single inch of floodwater can cause up to $25,000 in damage, according to the Federal Emergency Management Agency (FEMA). This doesn’t mean you should avoid buying a house in an area that’s at risk for flooding, but you do need to be prepared for the insurance costs and have a good understanding of the risks and how you can mitigate them.

What is a flood zone?

A flood zone is an area classified by FEMA to be at risk for flooding. An area’s specific flood zone designation tells us its flood risk as determined by FEMA. FEMA uses a variety of different codes to communicate the specific flood risk to an area.

High-risk zones: Special flood hazard areas

High-risk zones are known as Special Flood Hazard Areas (SFHA).

The difference between these zones marked “A” and “V” is that a “V” indicates the zone is in a coastal area.

Moderate-risk zones

In a moderate-risk zone, it’s less likely that the area will experience flooding, but it’s still possible. These zones are coded as Zone B or Zone X (shaded).

Minimal-risk zones

In these zones, the risk of flooding is minimal, though flooding is still possible. These zones are either Zone C or Zone X (unshaded).

Is my house in a flood zone: Assessing your risk

the first thing to do is to figure out which zone the house you’re considering is located in.

Find your zone on the flood map

You can use FEMA’s Flood Map Service Center to find out whether your home or a home you’re considering purchasing is in a high-risk flood zone.

If you’re in an SFHA, that means you have a 1% or higher chance of experiencing flooding each year. That’s the definition of a 100-year flood (statistically, a 1% chance of flooding will result in a flood at least once every 100 years). While that might sound relatively low, over the course of a 30-year mortgage, that translates to a one in four chance (or slightly greater) of experiencing flooding, according to FEMA.

Understand your risk

It’s important to understand that buying a house in a low- or moderate-risk area isn’t a guarantee of protection from flooding.

According to the National Flood Insurance Program (NFIP), which is the federal program that underwrites flood insurance policies to those in participating communities, policyholders outside high-risk flood areas account for 40% of all NFIP claims. People shouldn’t be surprised if this trend continues, based on weather and environmental changes over the past several years.

Budget for flood insurance

If you are currently in the market for a new home in a flood zone, you should weigh the risk that flooding presents before going through with the purchase. Understand that homeowners insurance does not cover damage due to flooding. We’ll discuss the costs of flood insurance below.

You should also know that lenders may have additional requirements – for example, they may ask for a Natural Hazard Disclosure Report – for homes located in a flood zone. Remember that you'll pay for these on top of your other mortgage costs, so consider carefully before choosing a home in a high-risk area.

Buying a house in a flood zone: What are the risks?

If your dream home is in an SFHA, you’ll need to be prepared to deal with the risks. Here are some of the threats you’ll face when you buy a house in a high-risk flood zone.

Potential for significant flood damage

Flooding can cause everything from mold growth to major structural damage, depending on the severity.

Extreme flooding or flooding caused by a natural disaster can be both emotionally and financially devastating. It could mean having to evacuate your home and find temporary shelter while repairs are completed or even having to completely rebuild the home or relocate and start over somewhere else.

Even small amounts of flooding can create huge headaches for homeowners. It could mean replacing flooring, drywall and damaged personal belongings such as furniture, or having to hire professionals to remove the water from your home and sanitize the affected areas.

High cost of flood insurance

The higher your risk, the more you’ll likely have to pay for flood insurance. According to FEMA, the average flood insurance policy premium was $888 in 2022.

Flood insurance covers damage that homeowners insurance doesn’t typically cover, so if you don’t have flood insurance, you could be left paying hefty out-of-pocket costs.

Flood insurance can be obtained from the National Flood Insurance Program (NFIP) or through a private insurance carrier. If you get flood insurance through NFIP, you can get up to $250,000 in coverage for your home’s structure and up to $100,000 in coverage for your personal belongings, which includes things like furniture or electronics.

If you need a larger policy or want to purchase additional coverage, you may be able to do so through a private insurer.

Can be difficult to sell

Buyers may be hesitant to buy a home located in a high-risk flood zone. This makes sense – buying a home is a huge investment, and the higher chance of flooding puts that investment at risk. Plus, these properties can be expensive to insure.

Because of this, it can be difficult to sell a home in an SFHA.

Buying a house in a flood zone: What are the advantages?

While there are obvious challenges to owning a house in a flood zone, many people see definite upsides this choice.

Lower prices 

The risk of flooding helps lessen the price of homes in some of these areas. This can lead to large savings for a savvy buyer. If the prospective homeowner is aware of the risks and is willing to ride out the tough times, they may be able to get a house with higher value than they originally planned. If you’re considering a home in a flood zone because of its lower price tag, be sure you factor in the potentially high costs of flood insurance.

Waterfront property

Owning land by the water is a dream for many people. The allure of waterfront property sometimes overrides any worries about flood damage. Wise buyers take all possible home safety precautions against flooding to protect their waterfront assets.

How do i get a mortgage for a house in a flood zone?

The process of getting a mortgage for a home in a high-risk flood area is basically the same as getting a mortgage for a home anywhere else. The main difference is the types of insurance you’ll need to buy.

If you’re using a mortgage to purchase a home in an SFHA, you’ll most likely be required to purchase a flood insurance policy. Flood insurance coverage is required for borrowers who have government-backed loans, such as FHA loans, or conventional loans backed by Fannie Mae or Freddie Mac.

It’s important to factor in the cost of flood insurance premiums when considering your home buying budget. Your lender may roll your flood insurance premium into your monthly mortgage payment, so you’ll pay a little bit of your annual premium into escrow each month, or you could elect to pay it once a year in a lump sum.

Applying for initial mortgage approval can be a good way to figure out what you qualify for so you'll have a better idea of what extras – like flood insurance – you can afford.

Questions to ask before buying property in a flood zone

If you’re considering buying a home that’s at significant risk of flooding, work with your real estate agent to learn more about the property’s history.

What is the home’s flood zone designation?

Your real estate agent should be able to answer this question for you, but as we already mentioned, you can also find out yourself by entering the property’s address into FEMA’s flood map database.

How often does this property flood?

Laws vary from state to state when it comes to required seller disclosures of flood risk, but if you can, you should try to find out if the home has experienced flooding or flood damage in the past and how frequently flooding happens.

If you don’t get much information from the seller and your state doesn’t require flood risk disclosures, you can do a little research of your own by asking neighbors or searching online archives from local news outlets.

What flood mitigation has been done on the property and in the community?

Ask the seller what, if anything, has been done to mitigate the risk of flooding on the property. Your real estate agent can also help you find out what steps the local government has taken to protect the community as a whole from the area’s flood risks.

Can my flood zone code get changed?

FEMA regularly assesses flood zone information and data on an ongoing basis. No coding is permanent, as codes are based on conditions with the potential for change. If your code gets increased to a higher classification, the cost of flood insurance might increase to match it.

The bottom line: Is it worth buying a house in a flood zone?

As you consider whether to buy in a flood zone, think about your own level of comfort with risk as well as your ability to financially recover from potential flood damage. Consider whether flood insurance will give you peace of mind, even if your lender doesn’t require it, and remember to factor these premiums into your monthly budget.

Ready to learn more about what you can afford? Start the approval process to learn the upper limit of your home purchase budget.