A Flood Hazard Area Determination is a crucial step in the mortgage lending process that verifies if a property is located in a Special Flood Hazard Area (SFHA) as defined by the Federal Emergency Management Agency (FEMA). Lenders are required by federal regulations to order this determination to identify flood risk accurately. It involves mapping the property using FEMA’s Flood Insurance Rate Maps (FIRMs) and reporting the result on the Standard Flood Hazard Determination Form (SFHDF).
If a property is in an SFHA—such as zones A, AE, AO, AH, V, or VE—the law requires lenders to ensure borrowers purchase and maintain flood insurance for the life of their loan, protecting against flood damages that standard homeowners policies exclude. Commonly, this determination costs $20 to $50 and appears in your loan estimate and closing costs. Learn more about Mortgage Closing Costs.
Flood zones are categorized by FEMA to indicate different flood risks:
- High Risk (SFHA): Zones A, AE, AO, AH, V, and VE, representing areas with at least a 1% annual chance of flooding and often including coastal storm surge risk.
- Moderate Risk: Zones B and X (Shaded), areas with about a 0.2% annual flood chance.
- Low Risk: Zones C and X (Unshaded), areas with minimal flood risk.
While flood insurance is federally mandated only in SFHAs for mortgage borrowers, those in moderate- or low-risk areas are strongly encouraged to consider it since over 25% of flood claims come from outside SFHAs. You can buy flood insurance through FEMA’s National Flood Insurance Program (NFIP) or private insurers.
If you disagree with the flood zone designation, you can request a Letter of Map Amendment (LOMA) from FEMA, which requires a licensed surveyor to certify your property’s elevation and may remove the flood insurance requirement.
Many mistakenly believe homeowner insurance covers flood damage; however, it does not. Separate flood insurance is necessary to protect against flooding from storms, river overflow, and heavy rain.
For more detailed information on flood insurance, see our Hazard Insurance guide. You can also explore FEMA’s flood zones and flood insurance options directly from FEMA.gov and the Consumer Financial Protection Bureau.
