Photo of a map of Florida emphasizing the city being surrounded by bodies of water.

Buying a House in a Flood Zone

Florida is extremely prone to flooding due to its location and climate, and flood zones play an important role in real estate transactions throughout the state.

Water can be incredibly damaging to a house. According to the Federal Emergency Management Agency (FEMA), a single inch of floodwater can cause up to $25,000 in damage. This doesn’t always imply you should avoid buying a home in a flood-prone area, but you should be prepared for the insurance costs and have a thorough grasp of your risks and how to manage them.

What Is A Flood Zone?

The flood zone classification of a location indicates its flood risk as assessed by FEMA. FEMA employs a number of different codes to indicate the specific flood risk to an area.

Special Flood Hazard Areas:
High-Risk Zones

These areas are referred to as Special Flood Hazard Areas (SFHA). You are in an SFHA if your flood zone code begins with an A or a V. The distinction between these zones labeled “A” and “V” is that a “V” denotes that the zone is on the coast.

Moderate-Risk Zones

It is less likely that flooding will occur in a moderate-risk zone, but it is still possible. Zone B or Zone X (shaded) are the codes for these zones.

Minimal-Risk Zones

Although flooding is unlikely in these areas, it is still possible. Zone C or Zone X (unshaded) are the labels for these zones.

Is My House In A Flood Zone?

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

Find Your Zone

You can use FEMA’s Flood Map Service Center to determine whether your house or a home you want to buy is in a high-risk flood zone.

If you live in an SFHA, you have a 1% risk of experiencing floods each year. That is the definition of a 100-year flood (a flood occurs at least once per 100 years if there is a 1% risk of flooding). While it may appear to be a minimal risk, according to FEMA, it amounts to a one in four chance (or slightly higher) of suffering floods over the duration of a 30-year mortgage.

Understand Your Risk

It is vital to recognize that purchasing a home in a low or moderate-risk location does not ensure flood protection.

According to the National Flood Insurance Program (NFIP), policyholders outside high-risk flood zones accounted for 40% of all NFIP claims between 2014 and 2018. Based on recent weather and environmental changes, people should not be shocked if this pattern continues. The solution is to be prepared.

Budget For Flood Insurance

If you are in the market for a new house in a flood zone, you should consider the danger of flooding before proceeding with the purchase. Understand that flood damage is not covered by homeowners insurance.

You should also be aware that lenders may have extra requirements for houses in flood zones, such as a Natural Hazard Disclosure Report. Remember that you will be paying for this in addition to your other mortgage fees, so think carefully before purchasing a house in a high-risk location.

Buying In a Flood Zone

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

Potential For Significant Flood Damage

Depending on the intensity, flooding can result in anything from mold development to serious structural damage. It may be necessary to leave your house and seek temporary refuge while repairs are made, or it may be necessary to totally rebuild the home or relocate and start over someplace else.

Even minor flooding can cause major problems for homes. It could require the replacement of flooring, drywall, and damaged personal belongings such as furniture, as well as the hiring of specialists to remove the water and disinfect the affected areas.

High Cost Of Flood Insurance

The greater your risk of flooding, the higher your flood insurance premium would be. In 2019, the average flood insurance policy premium was $700, according to FEMA.

Flood insurance is required if you wish to be protected in the case of flood damage. Flood damage is often not covered by standard home insurance, so if you are uninsured, you may wind up having to pay large charges out of cash.

You may obtain up to $250,000 in coverage for your home’s structure and up to $100,000 in coverage for your home’s contents, which includes items like furniture or electronics if you purchase flood insurance through the NFIP.

Difficulty of Selling

Buyers may be hesitant to purchase a house in a high-risk flood zone. This makes sense: purchasing a property is a significant investment, and the increased likelihood of flooding puts that investment in danger. Furthermore, these houses might be costly to insure. Consequently, it can be challenging to sell a home in an SFHA.

How to Get a Mortgage in a Flood Zone

Obtaining a mortgage in a high-risk flood zone is much the same as it is anyplace else.

If you decide to use a mortgage to purchase a house in an SFHA, you will certainly be required to get flood insurance. Lenders with government-backed loans, such as FHA loans, or conventional loans, must purchase flood insurance.

When planning your home-buying budget, remember to include the cost of flood insurance premiums. Your lender may include your flood insurance premium in your monthly mortgage payment, which means you’ll put a portion of your yearly premium into escrow each month, and your lender will make the payment when it’s due.

Questions to Ask Before Buying in a Flood Zone

If you’re thinking about buying a home in a flood-prone area, consult with your real estate agent to discover 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, but you may find out for yourself by entering the property’s address into FEMA’s flood map database.

How Often Does this Property Flood?

When disclosing flood risk, laws vary by state. Try to find out if the house has a history of flooding and its frequency.

If the seller does not provide much information and your state does not mandate flood risk disclosures, you can conduct your own research by questioning neighbors or browsing internet archives from local news sites.

Flood Mitigations

Inquire with the seller about what, if anything, has been done to reduce the danger of flooding on the property. Your real estate agent may also assist you in determining what actions the local government has made in terms of floodplain management to safeguard the entire community from the area’s flood dangers.

Is It Worth It?

Choosing where to live is an individual choice, and only you can determine whether purchasing a home in an SFHA is the best option for you.

Homes in high-risk flood zones may be dangerous to buy and expensive to insure. They can bring joy, especially in a beautiful waterfront location.

When deciding to buy in a flood zone, assess your risk comfort and financial resilience regarding potential flood damage. Factor flood insurance premiums into your budget for peace of mind, even if your lender doesn’t require it.

I hope that this article has given you a thorough grasp of the advantages of dealing with a real estate agent when purchasing houses in a flood zone. Please contact us if you have any more questions or would like to discuss your individual situation in further detail.