Flood insurance is required anytime an institution makes, increases, renews or extends a loan secured by a building located in a Special Flood Hazard Area. A common misconception is that the flood insurance requirements can be waived. The fact is, neither the lender or the borrower can waive the requirements and there are only a few limited circumstances when a loan would be exempt from the mandatory purchase requirement. These include:
- State owned property:
- A loan of $5,000 or less where:
…covered under a policy of self-insurance satisfactory to the Administrator of FEMA, who publishes and periodically revises the list of States falling within this exemption. [§339.4(a)]
The original outstanding principal balance was $5,000.00 or less AND has a repayment term of one year or less. [§339.4(b)]
Kevin explains more in the video.
Published 2026/04/29
