HUD to Allow Private Flood Insurance Options to FHA Mortgages in Special Areas

Beginning December 21, 2022, HUD will allow homeowners with FHA-insured mortgage financing to obtain flood insurance policies from private insurance providers.

Source: HUD | Published on November 22, 2022

Flood Insurance
Flood Insurance

The United States Department of Housing and Urban Development (HUD) announced today that, beginning December 21, 2022, homeowners with FHA-insured mortgage financing will be able to obtain flood insurance policies that meet FHA requirements from private insurance providers. The change was announced in a final rule published in the Federal Register today, as well as in a companion Mortgagee Letter published today, which provides implementation guidance for FHA-approved lenders.

FHA requires flood insurance on insured mortgages for properties in Special Flood Hazard Areas (SFHAs) designated by the Federal Emergency Management Agency (FEMA). Previously, only flood insurance obtained through the National Flood Insurance Program (NFIP) was allowed for FHA-insured mortgages, limiting consumers’ options.

“Today, HUD is expanding the flood insurance options available to individuals and families with FHA-insured loans in areas designated by FEMA as having a high risk of flooding,” said HUD Secretary Marcia L. Fudge. “Flood insurance is required to ensure that families and individuals are prepared in the event of a disaster.” One way we are building more resilient communities in the face of climate change is by expanding consumer options for this critical protection.”

“We understand that borrowers are facing affordability issues right now, but a flood can be devastating to a family who is not properly insured,” said Federal Housing Commissioner Julia Gordon. “The option to choose private flood insurance may allow some borrowers to obtain policies that are less expensive or provide more coverage.”

As part of its implementation, FHA will require lenders to provide detailed flood insurance coverage information when electronically submitting mortgages for FHA insurance on properties in SFHAs beginning December 21, 2022. This data collection is a goal of HUD’s Climate Action Plan, and it will enable FHA to capture and analyze flood insurance information on mortgages in its portfolio at a more granular level than previously possible.

A key component of HUD’s Climate Action Plan is ensuring that borrowers are protected from flood risk. In response to President Biden’s Executive Order on Tackling the Climate Crisis at Home and Abroad, HUD issued its Climate Action Plan in 2021. HUD has been implementing this broad approach to the climate crisis, which reduces climate pollution, increases resilience to the effects of climate change, protects public health, promotes environmental justice, and promotes well-paying union jobs and economic growth. The action taken today will help to further integrate climate resilience and environmental justice into HUD’s core programs and policies. Visit for more information on HUD’s work to advance sustainable communities and address climate change.