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Everyone enjoys a nice rain but no one enjoys a flood. This guide explains how flood zones work and when you need flood insurance.
Home buyers sometimes learn that a home they are interested in is in a flood zone, where flooding could destroy it. But often, they decide to go ahead and buy the home anyway. So, how does a home end up in a flood zone, and what can owners do to protect themselves in case of a flood?
The Federal Emergency Management Agency, or FEMA, determines flood zones. This government organization prepares flood maps for communities across the country, though some areas remain unmapped. The maps identify the likelihood of a flood. Federal rules require most lenders to pull a flood certification, or flood cert, before issuing a loan. If the lender determines your prospective property is in a flood zone, you’ll probably need flood insurance.
Check your home buying eligibility. Start here (Nov 2nd, 2026)
What a 100-Year Flood Zone Means
FEMA’s flood maps center on the 100-year flood zone, also called the special flood hazard area. A property there has a 1 percent chance of flooding in any given year. By contrast, the 500-year zone is a separate, moderate-risk designation with a 0.2 percent annual chance of flooding. A 100-year zone has a greater chance of flooding than a 500-year zone.
When a buyer seeks financing for a home, the lender will access a database. That database reports whether or not the property address is in a flood zone. If it is, the buyer may have to purchase additional insurance coverage to cover the likelihood of a flood. After all, standard homeowner’s insurance doesn’t cover floods from natural causes.
Ask a lender if your property is in a flood zone.
Elevation Certificate
Say the home you plan to buy or refinance turns out to be in a flood zone. In that case, you may want to hire a licensed surveyor or engineer to work up an elevation certificate. This certificate will show where the flood line exists and whether or not the structure is in or out of the flood zone. It also shows whether the home sits above the potential flood area.
A word of warning though: an elevation certificate can be expensive. But, homes that sit on elevated ground on the property may qualify for a FEMA Letter of Map Amendment (LOMA). A LOMA removes the federal flood insurance requirement, though your lender can still require coverage. That can save money over time.
When Do You Need Flood Insurance?
Flood insurance can be expensive. Even so, lenders require it when buyers finance a home in a special flood hazard area with a government-backed mortgage. If the home is in a flood zone, you may want to purchase a policy anyway to be on the safe side. That holds even if you aren’t financing the purchase or applying for a refinance.
So how do you know when a home is in a flood zone? When property owners list the home for sale, many states require them to inform potential buyers of the flood zone. However, the seller may be unaware, and the lender may identify the flood zone later. In that event, the buyer has three choices. One is to pay the additional coverage for flood insurance. Another is to renegotiate the sales price of the home to reflect the additional cost of flood coverage. The last is to walk away from the deal.
How Much is Flood Insurance?
Flood insurance premiums can vary greatly. The National Flood Insurance Program (NFIP) sets premiums by each property’s risk. FEMA data from 2023 group single-family policies by their full risk-based cost. About 37% fall at $0 to $1,000 a year, and 32% at $1,000 to $2,000. Some policyholders still pay less while their premiums phase up to that cost. Your insurance agent will be able to give you an exact quote.
The NFIP caps building coverage for a single-family home at $250,000. That means an NFIP policy alone can’t fully cover some more expensive flood-zoned homes. Take this fact into consideration if you plan to buy a larger home that’s within a flood zone.
Do You Need Flood Insurance to Refinance?
Flood zones sometimes change. As a result, the home you bought ten years ago that wasn’t in a flood zone may be now.
If your home is now in a special flood hazard area, lenders typically require flood insurance to refinance.
You can obtain flood insurance from most insurance agencies. Check first with the agent or company who provides your standard homeowners’ insurance.
Deciding what to do about a property in a flood zone is never fun. Still, you can avoid major financial loss in the future by getting the right insurance up front. Or, if you’re looking to buy, you can avoid the home altogether.
Check your home buying eligibility. Start here (Nov 2nd, 2026)
