---
title: "Flood Insurance: Waivers & Exemptions"
description: Understand the mandatory flood insurance requirements for loans in Special Flood Hazard Areas and the limited exemptions that exist.
---

[Banker's Compliance Consulting Blog ](https://blog.bankerscompliance.com/en)

# [Flood Insurance: Waivers & Exemptions](https://blog.bankerscompliance.com/en/flood-insurance-waivers-exemptions)

 Written by [Kevin Edwards](https://blog.bankerscompliance.com/en/author/kevin-edwards) | Apr 29, 2026 8:02:55 PM

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](https://www.fema.gov/about/glossary/special-flood-hazard-area-sfha). 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:

1. State owned property:
2. A loan of $5,000 or less where:

…*covered under a policy of self-insurance satisfactory to the Administrator of [FEMA](https://www.fema.gov/), 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

[View full post](https://blog.bankerscompliance.com/en/flood-insurance-waivers-exemptions)

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