What to Know About Septic Inspections
Before we work through what you need to know about loan requirements for a septic inspection, it will be essential to have at least a basic understanding of what a septic system is and how it works. Most septic systems contain a septic tank, a distribution box, and a leach field. People also refer to a leach field as a drain field. Septic tanks assist in digesting organic matter and will separate floatable matter such as oil, grease, and solids from the wastewater.
A septic system that is functioning correctly will discharge the liquid from the septic tank to a distribution box to perforated pipes that are buried in a leach field. The lines are designed to release the effluent into the ground slowly.
How Often is a Septic Tank Inspection Required?
To ensure your septic system is functioning perfectly, inspect it every 3 to 5 years. This is about the same schedule you will need to keep when having the tank pumped.
Septic tank pumping is a vital part of maintenance. Fortunately, the cost of septic tank pumping is minimal, given the expense you will face with a failed system.
If you stick to a schedule like this, your septic tank should continue to work well for the system’s life. If you have a large family, you may want to consider it slightly more often.
Unfortunately, many homeowners don’t stick to a schedule like this—missing septic inspections and not having the tank pumped as frequently as possible. The lack of maintenance can result in a septic system requiring extensive repairs.
Why a buyer should always have the septic system inspected
There nothing worse than buying a home and within days discovering you have a sewage back up with expensive repairs. A current or recent inspection by a reputable inspector or septic company is worth it's weight in gold, and minimizes buyer transaction dissatisfaction.
When do lenders require a septic inspection and clearance, and what loan program is more likely to need one?
FHA loan and septic systems
If a community sewage disposal system is available to the property and it is feasible to connect at a reasonable cost, it must be done so before the loan can close. If the cost is unreasonable, the existing septic system would be acceptable
Typically it is the appraiser that determines of a septic inspection and clearance is required for a FHA loan
If the property also has a well there are distance requirements between the septic tank, drain field and well. Typically the septic tank must be 50 feet from the well and the drainage field 100 feet, although when local health departments allow a reduced distance, 75 feet is acceptable. Some health departments require greater distances than what is listed here. Be aware a small lot with both a well and septic might be an issue complying with these distances.
Keep in mind a handful of lenders will require a review of the septic system-and clearance if it's listed in the sales contract as a contingency, even though this is not something FHA specifically requires.
A common issue I see is when the seller gives a buyer a "closing cost credit in lieu of repairs" via a contract addendum. This will trigger many lenders to require a review of the property conditions present that led to this type of seller credit, especially if the dollar amount is large
In addition, a buyer paying for repairs on the closing statement can trigger a requirement with some lenders to review inspections and require clearances
Maximum age of inspection is 180 days unless the local health department requires a shorter time period
VA loan
USDA loan
Conventional Loan