Will My Lender Accept Private Flood Insurance?

Federal regulations allow lenders to accept private flood insurance as an alternative to NFIP coverage when the policy meets defined requirements. These rules apply to most conventional mortgages and are intended to give borrowers more choice while maintaining lender protection.

Policies are reviewed based on coverage terms, not simply the name of the insurer.

For conventional loans, private flood insurance is widely accepted when the policy meets federal private flood insurance standards. Many lenders are familiar with these policies and review them as part of the normal loan process.

In some cases, lenders may request documentation confirming that the policy meets required criteria.

Private flood insurance can also be accepted for FHA-insured mortgages when the policy meets FHA requirements. In recent years, FHA rules were updated to allow private flood insurance as an alternative to NFIP coverage under qualifying conditions.

As with any loan type, lender review and policy structure play an important role in acceptance.

Not all lenders review private flood insurance policies frequently, which can sometimes lead to questions or delays. This does not mean the policy is invalid. It usually means the lender needs time to verify that coverage meets federal requirements.

Clear documentation and properly structured policies help streamline the approval process.

For official guidance on private flood insurance and lender acceptance, these resources provide clear, up-to-date information:

• The Federal Emergency Management Agency explains private flood insurance acceptance through its FloodSmart program

  https://www.floodsmart.gov/flood-insurance/private-flood-insurance

• The Federal Housing Administration outlines private flood insurance eligibility for FHA-insured mortgages

  https://www.hud.gov/sites/dfiles/OCHCO/documents/2019-06hsgml.pdf