Flood Insurance

A lender requires flood insurance when the house is in a Special Flood Hazard Area on FEMA's flood maps, which are the high-risk zones that begin with A or V. Federal law requires regulated lenders and federal loan programs to require flood coverage on those loans, and in most cases the premium is escrowed (42 U.S.C. 4012a). Outside those zones, flood insurance is usually optional, but your homeowners policy does not cover flood. Check the map before your option period ends.

How the lender finds out

Early in the loan, the lender orders a flood zone determination for the property. If the building is in a Special Flood Hazard Area, you will receive a notice and the lender will require a flood policy in place at closing. You can look up the map yourself first at the FEMA Flood Map Service Center.

What the lender requires

• Coverage amount. Federal law sets a minimum tied to the loan balance, the insurable value of the building and the maximum available under the National Flood Insurance Program. Your lender confirms the exact amount.
• Escrow. For loans covered by the federal escrow requirement, flood premiums are collected in escrow even if other items are not. See escrow accounts.
• Policy type. A National Flood Insurance Program policy works. Private flood policies can also be accepted when they meet federal and investor requirements. Ask before you bind.

Ways the result can change

An elevation certificate, a Letter of Map Amendment, or a Letter of Map Revision can change the requirement or the premium for a specific property. These are FEMA and surveyor processes that take time. If you plan to pursue one, start early, not the week of closing.

Timing in a Texas contract

The TREC resale contract includes a flood disclosure and notices (TREC No. 20-19). The practical point is your option period. If the determination comes back in a high-risk zone, decide during the option whether the house still works with the added premium. After the option ends, your earnest money is at stake and the flood policy is still required if you proceed with the loan.

Fictional example

Fictional example: a buyer's contract on a Fort Worth home near a creek is in the option period. The flood determination shows Zone AE. The homeowners quote the buyer liked does not include flood. The buyer gets a flood quote, sees the escrow impact, and asks a surveyor whether an elevation certificate might help. With that information, the buyer decides before the option ends. The seller's statement that the house "never flooded" did not change the map requirement.

Common mistakes

• Assuming homeowners insurance covers flood.
• Assuming zone X means no risk. Many flood claims are outside the high-risk zones.
• Treating wind and flood as the same conversation. They are separate perils. See wind and hail.
• Waiting until after the option period to check the map.

What to have ready

• The property address and any existing elevation certificate from the seller.
• The seller's flood disclosure and any history of claims.
• Quotes from your insurance agent for both homeowners and flood coverage.

The premium goes into your monthly payment and your cash to close. For the rest of your coverage, see homeowners insurance.

Next step

Send me the address before you write an offer and I will check the flood zone so the premium is part of the plan, not a surprise. Book a call, or start an application.

Related questions

• How much homeowners insurance does a lender require?
• How do wind and hail deductibles work in Texas?
• How does a mortgage escrow account work?
• How much cash will I need at closing?

Sources

Links checked Oct 21, 2026.

• 42 U.S.C. 4012a, Flood insurance purchase and compliance requirements (current U.S. Code): https://www.law.cornell.edu/uscode/text/42/4012a
• FEMA Flood Map Service Center, flood map lookup (live tool, checked Oct 21, 2026): https://msc.fema.gov/portal/home
• TREC One to Four Family Residential Contract (Resale), TREC No. 20-19, Paragraphs 5, 13 and 23 (form dated May 4, 2026): https://www.trec.texas.gov/forms/one-four-family-residential-contract-resale
• CFPB Regulation X, 12 CFR 1024.17 Escrow accounts (current text): https://www.consumerfinance.gov/rules-policy/regulations/1024/17/

About the author: McKade Lively, NMLS 2704474, American Pacific Mortgage Corporation dba True North Home Loans, NMLS 1850.

Equal Housing Opportunity.

Last reviewed: Oct 2026

‍