What are limit on a HELOC in a Flood Zone

Question

I have a house I bought and rehabed in a flood zone.

I currently have a FEMA flood insurance policy with max coverage of 250K for structure & 100k for belongings. From what I understand this is the most flood insurance one can have.

I want to open a HELOC for 100K  on the house that will be valued at 375K with a balance of 215K.

How will the banks assess this loan?

It seems like there is a gap risk of 125K of the 250K coverage through fema and the actual value?

John Mocker · Answer

John,

$250,000 is the max. building coverage for a home in FEMA's National Flood Insurance Program (NFIP).  In the past, the NFIP was the only game in town.  Now there are dozen's of private market Flood programs.  Many offer the option for higher coverage and other enhancements.  I have found that ins most cases, quoting the Private Market programs yields better rates than NFIP.  However, you need to quote many of them because the one that is best for one property is not always the best for the next property quoted.

Because of the past, your mortgagee may still accept the $250,000 limt.  Since that was the most available in the past I have seen some Mortgagees continue to accept that amount.  That does not mean you should not look into higher coverage if the cost to rebuild the house would be more than $250,000.