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Why do you need a cistern waiver to close my FHA home loan purchase?

By
Real Estate Agent with Montana Homestead Brokers, Broker, CRS, GRI, SFR, RN

Some people are totally surprised that some of the rural areas of Yellowstone County have limited access to good drinking water. 

  • Sometimes the reason is simply that if you drill a well, you may not find water if you drill, and drill and drill.  It gets pretty expensive to just keep drilling!
  • Sometimes the water that you do reach is of insufficient quantity and what may be worse, it has too many yucky solids in it to be good for you.
  • Sometimes the cost of the well prohibits some landowners from even trying to drill a well.

cistern for underground water storageThe next best option is to dig a hole and have a water tank buried under the ground and have the tank filled by a source that's delivered on wheels.  Lots of people use a water hauling service, some stick a tank on the back of their pickup truck and pick up a tankfull on the way home from town.

When a FHA buyer is looking to buy a home that has a cistern water supply, they run into a little problem with getting the loan approved, generally, FHA doesn't approve cistern water sources unless cisterns are common in the area.

Back to Yellowstone County, and a few other counties as well, an FHA buyer must apply for a Cistern Waiver from the "powers that be" in order to qualify the home for the loan.  In Montana, the nearest office for this approval is in Denver.

 

 

The cistern waiver process requires:

  • A cover letter with all of the details of the property, lender, FHA case # and about 10 other things
  • An FHA appraisal, complete with color photos
  • A water test, completed by a non-interested third party (like a home inspector)
  • A long wait once all of the proper documents have been delivered to the HOC/Appraiser that processes the requests, sometimes it can take 30 to 45 days!

Buyers and sellers need to work together with their Realtor and Lender to make sure that all of the steps have been followed correctly the first time, no body wants to start this process over!

So if you are considering a move to the country, and the water source is a cistern, and you want to use an FHA loan, a bit of planning will make the whole process go smoothly! 

My good friend has raised 5 children (all that laundry) and never has given her cistern a second thought (other than to make sure the deliveries come on time!)

Montana living, it's a good thing!

Posted by

The Quilting Realtor

Wanda Thomas

Many Dream Of Living In Montana

I'm One of the Lucky One's That Already Do!

Wanda Thomas

2wandathomas@gmail.com

Call or Text 406-698-8640 for help with all things Montana.

Local MLS Search Link

 

David Spencer
Keller Williams Northland - Kansas City, MO
Show Me real estate in Kansas City

Urbanites have a problem with country living. Sewer and water are underground and out of site. You need a lot of explanation to do the simplest of a transaction.

Feb 02, 2011 02:31 PM
Wanda Thomas
Montana Homestead Brokers, Broker, CRS, GRI, SFR, RN - Billings, MT
Billings Montana Real Estate

I know, it can be rather entertaining to show a rural property and have the buyer's face drop when they find out there is no water or sewer service. 

Feb 02, 2011 02:43 PM
Brenda Whitman, Live in Laramie Real Estate
Live in Laramie Real Estate, Laramie, Wyoming - Laramie, WY
Broker/Co-Owner, Laramie, Wyoming

Wanda, thank you for this timely and informative article!  Lots of rural properties here have cisterns and I was told that FHA would not even consider these properties.  So you have just shown me a fantastic option to explore - Thanks! 

Feb 02, 2011 03:07 PM
Nina Rogoff
Boston, MA
Wix Websites for Real Estate Agents

It's so interesting learning about the particular requirements in different parts of the country. We don't have town sewer service in Sharon. Lots of people can't believe that. But, when you live here, you don't think twice about it. When it comes to selling though, we have to get a Title V certficate that states the septic tank is in good condition. No one want to hear that they have to replace their septic tank. It's very costly!

Feb 02, 2011 03:14 PM
Kristal Kraft
Novella Real Estate - Denver, CO
Selling Metro Denver Real Estate - 303-589-2022

Wanda, Good post!  It so true that "normal" isn't the same all across the country.  If it were, why would anyone ever bother to move? 

I bet living in Montana is wonderful, the views and the wildlife are so spectacular, you are very lucky.

kk

Feb 02, 2011 03:37 PM
John Pusa
Glendale, CA

Wanda - Thak you for sharing very good blog about Cistern waiver on FHA home loan purchase.

Feb 02, 2011 04:14 PM
Wanda Thomas
Montana Homestead Brokers, Broker, CRS, GRI, SFR, RN - Billings, MT
Billings Montana Real Estate

Brenda, Talk to one of your lenders and see if they've managed to complete this, if cisterns are common for the area, seems they should.

Nina, I'm with you, I live in the country and only think about my septic system when I change my zone valve 2 times per year and have it pumped and cleaned every few years.

Kristal, thank you and I wake up every day, look outside and thank the Lord for such a wonderful place.

John, hope you have a great day.

Feb 03, 2011 01:38 AM
Anonymous
mark whisler

thank's Wanda , I've been trying to  get a straight answer from all parties i'm dealing with on my FHA loan . . .  Finaly I had to ask my computer what the problem was...!

Oct 05, 2011 04:18 PM
#8
Tom Arstingstall, General Contractor, Dry Rot, Water Damage Sacramento, El Dorado County - (916) 765-5366
Dry Rot and Water Damage www.tromlerconstruction.com Mobile - 916-765-5366 - Placerville, CA
General Contractor, Dry Rot and Water Damage

Never heard of a Cistern Waiver Wanda, I guess every area has its requirements.  :)

Apr 17, 2013 09:28 AM
Russ Connors
Russ Connors Realty, LLC - Independence, KY

I had a loan go down because FHA wouldn't lend on house that had cistern. I don't think the waiver would have worked because public water is available at the street.

Sep 22, 2015 03:28 AM