For those who want a VA mortgage on property in rural or remote areas, well water can be a big issue. Before you can be approved for a VA mortgage loan, the government requires an appraisal of the property to make sure it meets the VA minimum property requirements. Those requirements are focused on the safety, structural soundness and sanitary conditions of the property.
VA minimum property requirements also include having access to an adequate water supply that is safe and drinkable.
VA rules do allow you to buy land with a well as the primary water supply, but there are stipulations. According to the VA, the property must be connected to a public or community water system "whenever feasible," but you can have a well instead, provided the well and water meet local health authority requirements.
Some areas may not be governed by a local health authority, and in these cases the VA recognizes the authority of the EPA. Your well and well water must meet EPA standards and provide safe drinking water. But how do you determine what "safe" is when there's not a local government authority to certify a well?
In these cases, the well can be tested by a sanitary engineer or a commercial laboratory. Once the engineer or lab has certified the well, check with your loan officer about where to file the results.
When applying for your VA loan, the question of dug wells versus drilled wells may also come up. According to the VA, there is no technical distinction (with regards to qualifying for a VA mortgage) between dug or drilled wells. Official VA loan guidelines do point out that dug wells can be more vulnerable to contamination in some cases, but if the well is placed in a good location, drinkable water can still be obtained.
The VA leaves the responsibility for a dug well to the borrower, but the water from such wells must meet testing requirements. If the water is found to be contaminated, you may need to do some additional negotiations or planning to correct the issue before you can be approved for the VA home loan.
For properties that are served by wells, FHA loan rules now say, “When an Individual Water Supply System is present, the Mortgagee must ensure that the water quality meets the requirements of the health authority with jurisdiction. If there are no local (or state) water quality standards, then water quality must meet the standards set by the EPA, as presented in the National Primary Drinking Water regulations in 40 CFR 141 and 142.” Total Coliform, E. coli, Lead, Nitrate, Nitrite, and Turbidity
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How to disinfect a well by South Carolina Department of Health and Environmental