In real estate transactions, lenders focus on ensuring the drinking water supply is safe, adequate, and compliant with health standards—especially for properties with private wells or non-public water systems. Public/municipal water is generally accepted with little extra scrutiny (unless local issues like contamination are known), but private wells trigger specific requirements during appraisal and underwriting.   When you read this article, we, the Know Your H20 Team,  hope you get the impression, the requirements of the lender, are the minimum and in many respects, they are not adequate to protect you, your family, and your investment.

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Requirements vary by loan type (FHA, VA, USDA, conventional), lender overlays, state/local regulations, and property location. They tie into Minimum Property Requirements (MPR) for habitability and safety.

What Water Tests Do Lenders Require?

Public/Municipal Water Systems

• Lenders usually require confirmation of connection to a public or community system. This is not adequate.  The Know Your H20 Team is aware of many public water systems that have significant problems with the system and produced water quality.
  
  
• No routine water testing is needed unless the appraiser notes issues (e.g., taste, odor, nearby hazards, or known contamination like lead pipes).
  
  
• The appraiser may flag environmental hazards affecting water quality.   We also recommend ordering a Neighborhood Hazard Report for the parcel.

Private Wells / Individual Water Systems

Lenders require verification that the water is potable (safe for drinking), has adequate flow/pressure, and the well is properly located to avoid contamination.

1. Water Quality Testing (Most Critical Requirement)

• Required for: FHA, VA, USDA loans on private wells. Conventional loans often require it too, or at least a potability certificate.
  
  
• Common Tests: Total coliform (bacteria), nitrates/nitrites, lead. Sometimes arsenic, E. coli, or other local contaminants. This is not adequate !
  
  
• Who Performs It: Certified lab, local health authority, or disinterested third party (not buyer/seller). Sample often taken at the home's tap.  It may be advisable to collect more than one sample and it may be advisable to collect an untreated and a treated water sample.
  
  
• Standards: Must meet local/state health department requirements. If none, follow EPA National Primary Drinking Water Regulations (40 CFR 141/142) and the EPA Secondary Drinking Water Standards. (Standards)
  
  
• Validity: Typically 30–180 days (e.g., 180 for FHA, 90 for VA).
  
  
• Results must show the water is safe; failures may require treatment, a new well, or loan denial.  We strongly suggest you request a free pdf  copy of our booklet on drinking water, the booklet is titled “Our Drinking Water”.
  
  

2. Water Flow and Quantity

• Proof of adequate supply (e.g., 3–5 gallons per minute sustained for 1–2 hours, depending on local codes and household needs).
  
  
• Lenders may require a well flow test or pump report.  This should be conducted by a licensed well drilling contactor and it would be advisable to measure the static and the dynamic water level in the well.
  
  

3. Well Location and Setbacks (to Prevent Contamination) FHA/VA/USDA have minimum distances (local codes may be stricter)

• Property line: 10 feet.
  
  
• Septic tank: 50 feet.
  
  
• Drain/absorption field: 75–100 feet.
  
  
• Other: Sewer lines, etc. (e.g., 10 feet).
  
  

4. Other Documentation

• Well certification or report (construction details, depth, casing).
  
  
• Proof of compliance with local health authority.
  
  
• For shared wells: Agreements on maintenance/shared costs.
  
  
• Sometimes a full well inspection (beyond just water quality).
  
  

Loan-Type Specifics

1. FHA: Strict on connection to public water if feasible/reasonable cost. Water must meet local/EPA standards + flow requirements.
   
   
2. VA: Water must meet local health standards; testing required for private wells. No mandatory public connection, but preferred if available.
   
   
3. USDA: Similar to FHA/VA; specific tests often required (coliform, nitrate, lead, etc.). Not adequate.
   
   
4. Conventional: More flexible—depends on lender/Fannie Mae/Freddie Mac. May accept local standards or require testing only if red flags exist.
   
   

Process in a Transaction

1. Appraisal Stage: Appraiser notes water source and any visible issues; may require testing.
   
   
2. Underwriting: Lender reviews test results, flow reports, and compliance.
   
   
3. Closing: Satisfactory results needed before funding. Seller often pays for testing in negotiations.

Tip: Order water testing early (during inspection period) via a certified lab. Costs vary ($100–$500+ depending on tests). In some states, sellers must provide disclosure or testing by law.  If the property is located in an area with oil or natural gas development, ask the seller if baseline water testing was done and it would be advisable to review issues related to oil, gas, and mineral rights for the property.  In addition, we also suggest conducting a comprehensive informational water quality test, such as the one of the Quick Tests available from NTL (affiliate).

If the property has public water but older plumbing (e.g., lead pipes), additional scrutiny or remediation may apply. Always check with your specific lender, as overlays exist. For personalized advice, share your loan type, location, or if it's a well vs. public system!

Well water testing standards for real estate transactions (especially mortgage-financed purchases) focus on ensuring the water is potable (safe for drinking), has adequate quantity, and the well is properly sited to avoid contamination. These are not federally mandated for private wells in the same way as public systems (private wells are largely unregulated under the Safe Drinking Water Act), but lenders require compliance with local/state health standards or EPA benchmarks for loan approval.

Use  the Primary and Secondary Standards from EPA or Your State as a Guide  (Not Quasi-Standards)

• Local or State Health Authority: Primary reference. The water must meet their requirements.
  
  
• Fallback (if no local standards): EPA National Primary Drinking Water Regulations (40 CFR 141/142). Lenders (especially for FHA/VA/USDA) default to these.   We also recommend conducting water testing for some of the Secondary Drinking Water Contaminants, such as: chloride, copper, total dissolved solids.

Key EPA Maximum Contaminant Levels (MCLs) relevant to wells:

• Total Coliform Bacteria: Must be absent (0 colonies per 100 mL). Indicates possible fecal contamination.
  
  
• Nitrates (as Nitrogen): ≤ 10 mg/L (ppm). High levels risk "blue baby syndrome" in infants.  Use 5 mg/L as a warning limit. 
  
  
• Nitrites: ≤ 1 mg/L.  To be honest, if nitrite is detectable  you may want to do more testing for standard plate count, surfactants, turbidity, nuisance bacteria, and ammonia. This normally oxides very quickly and this would suggest a local source of nitrogen compounds and/or possibly bacterial contamination.
  
  
• Lead: Action level 15 ppb (parts per billion); aim for as low as possible.  Strongly recommend conducting first-flush and flushed water sampling and we suggest that you consider adding testing for copper and zinc.
  
  
• Other common tests: Arsenic (varies by region; EPA MCL 5 to 10 ppb), E. coli (absent), pH, total dissolved solids (TDS).

Additional tests (e.g., VOCs, radon, iron, hardness) may be required based on local risks, geology, or lender overlays.  Seek the advice of an expert.

Table 1. Mortgage-Specific Requirements (FHA, VA, USDA, Conventional).

EPA General Recommendations (for ongoing homeowner use, not just loans):

• Test annually for: Total coliform, nitrates, pH, total dissolved solids.
  
  
• Every 3–5 years: Arsenic Testing , lead, other inorganics.
  
  
• More frequently if near agriculture, industry, or after events (flooding, etc.).
  
  

Recommendations

Begin finding a local expert when you determine the targeted area you are considering.  Order testing early during the inspection period, do not waive home inspections,  and spend some time and get to know the home inspector.  Check with your lender for exact required panel (they may have a specific form or approved lab). Local health departments often provide guidance on what to test or offer low-cost testing options, but if you are making a long-term investment for you and your family consider doing both certified and informational water testing. Standards can vary significantly by state and county — for example, some areas test for radon or specific pesticides. Share your location, loan type, or specific concerns (e.g., nearby farming) for more tailored info!  Consult a certified water testing professional or your lender for the latest requirements.

Do Not Forget

1. Request a free copy of our booklet “Our Drinking Water”.

2. Bookmark, the Know Your H20 Website.

3. Take a drink of the water, run the water, look for signs of a problem and maybe even try out our Diagnostic Tool.

4. The following is a table of drinking water standards based on available federal and state organizations, regional requirements, industry recommendations, and standards used in foreign counties ( i.e. Not the USA).

5. Get the Water Tested (FHA VA Quick Series)

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