Flood Insurance Requirements for Mortgages: Avoid Costly Closing Delays
- FloodPrice
- 10 minutes ago
- 3 min read
The Hidden Deal-Breaker for Closings
If you’re a loan officer, mortgage broker, or loan processor, you know how easily a small detail can stop a deal. One of the biggest culprits? Lack of flood insurance.
According to FEMA and the National Flood Insurance Program (NFIP), most homes located in a Special Flood Hazard Areas (SFHAs) with federally backed loans are required by law to carry flood insurance. Because of this, lenders typically require proof of flood insurance before closing. If coverage isn’t in place, the mortgage can’t fund — and your closing date could get pushed back.
What Triggers Flood Insurance Requirements
The property is in a FEMA-mapped high-risk flood zone (Zone A or Zone V).
The mortgage is federally regulated or insured (Fannie Mae, Freddie Mac, FHA, VA, or USDA).
The loan is being made, increased, renewed, or extended on a property in a flood zone.
“Need to check a property’s Flood Zone? Use your Free Flood Zone Lookup Tool!”
How Missing Flood Insurance Can Delay Closings
When flood insurance isn’t secured, the underwriter can’t issue final approval. That means:
Funding stalls
Borrowers panic
Agents and sellers get frustrated
Common causes include:
A government shutdown means the NFIP can’t write new flood policies
The insurance company hasn’t issued the binder or declaration page.
The policy doesn’t meet lender requirements (limits, deductible, or loss payee wording).
The home was recently re-mapped into a flood zone.
“Policies sold through FloodPrice.com meet federal guidelines! Shop Private and NFIP with a single quote. Compare options and prices side-by-side entirely online.”
Private Flood Insurance vs. NFIP: What Mortgage Professionals Should Know
As a mortgage broker or loan officer, you’re responsible for ensuring the borrower’s flood insurance meets lender standards.
Here’s what to keep in mind:
The NFIP is government-run and widely accepted.
Private flood insurance can often issue coverage faster and may offer flexible terms.
Lenders must accept either option, as outlined in the Biggert Waters Act.
Using a comparison platform like FloodPrice.com lets your borrower instantly see both NFIP and private options side-by-side.
Need flood insurance? Get your quote online in minutes. Our quote tool shows rates from the NFIP and trusted private insurers side-by-side — making it easy to find great coverage at the right price.
Saving on flood insurance can directly improve a borrower’s debt-to-income ratio by lowering their overall monthly housing expense. This added affordability can help more buyers qualify, strengthen marginal files, and keep tight deals from falling apart in underwriting.
How Loan Officers and Mortgage Brokers can Prevent Closing Delays
Check Early
Use FloodPrice’s obligation-free Flood Zone Lookup Tool to check your FEMA flood zone.
Quote Early
Encourage your borrower to get quotes as soon as possible. Delays in issuing the policy can stall closings.
Confirm Requirements
Coverage amount meets or exceeds the loan balance.
Mortgagee clause and effective date are correct.
Give Borrowers Options
If the NFIP can’t issue a policy quickly (for example, during a lapse), private flood insurance may help keep the deal on track.
Communicate Clearly
Explain that flood insurance isn’t just “extra coverage” — it’s a closing condition for certain properties.
Keep Deals Moving — Not Waiting
Every mortgage professional knows how frustrating last-minute conditions can be. Having flood insurance squared away early helps you close on time, maintain relationships, and reduce stress for everyone at the table.
Need flood insurance? Get your quote online in minutes. Our quote tool shows you rates from the NFIP and trusted private insurers side-by-side — making it easy to find great coverage at the right price.
Get a quote from FloodPrice.com and keep your closings moving.
TL;DR for Loan Officers and Mortgage Brokers: Flood Insurance and Closings
Lenders require flood insurance for homes in FEMA-designated zones (Zones A & V).
Missing flood insurance can delay or stop closings.
NFIP or private flood policies from FloodPrice meet loan requirements — both are valid.
NFIP lapses during government shutdowns can affect funding.
Use FloodPrice.com to get instant, compliant quotes and prevent last-minute delays.
Disclaimer: The information on this site is provided for general guidance and informational purposes only. We make no guarantees regarding the completeness or reliability of the content. All liability for any reliance on the information is expressly disclaimed.
