What Is an Uninsurable Property?

Uninsurable Properties Explained

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Uninsurable properties are properties ineligible for either homeowners' insurance or for a mortgage insured by the Federal Housing Administration (FHA).

Uninsurable properties are properties ineligible for either homeowners' insurance or for a mortgage insured by the Federal Housing Administration (FHA). In both cases, they are often in need of major repairs and may even be uninhabitable.

Learn more about what makes a property uninsurable and what options are available to insure these types of properties.

Key Takeaways

  • Uninsurable properties are usually unable to be insured by the FHA. However, Section 203(k) under the FHA provides loan assistance.
  • Properties in high-risk areas, such as those prone to floods, as well as homes in need of significant repairs are sometimes considered uninsurable.
  • Some states have programs in place to help provide insurance to owners of high-risk homes, and private insurers may offer insurance at a higher cost.

Definition and Examples of Uninsurable Property

An “uninsurable property” can mean one of two things:

  • The home is not in good enough condition to qualify for FHA mortgage insurance (and thereby for an FHA loan).
  • The home is ineligible for property insurance because the insurance company considers the home too great a risk to insure.

A property can be deemed uninsurable during the application process. For example, if you’re applying for an FHA mortgage and the home you want doesn’t meet its minimum property standards or requirements, a mortgage on that property would be denied.

A property can also be deemed uninsurable later, once the policy is already issued. The insurer may cancel your policy or choose not to renew it. For example, an insurer could choose to cancel or not renew a home insurance policy if the home is located in an area prone to wildfires.

How Uninsurable Properties Work

There is some variance as to what makes a property uninsurable but in general, the insurer (or the FHA) will deem a home “uninsurable” because the home presents risks it isn’t willing to take.

In most cases, once you apply for homeowners insurance or an FHA mortgage,  someone will be sent to inspect the property. If the inspection of the home reveals any existing or potential issues that could require costly insurance claims, it may be considered uninsurable.

Examples of issues that could render your home uninsurable include:

  • Poor construction: Structural issues that impact safety and security.
  • Crime-heavy location: Homes in areas where crimes such as vandalism and theft are commonplace.
  • Multiple claims: If the property has had multiple insurance claims in the past, an insurance company may be hesitant to cover the home, knowing there’s a higher chance of a claim based on the property’s history.
  • Extreme weather: Homes located in areas prone to tornadoes, hurricanes, and other extreme weather.
  • Pollutants: Toxic chemicals, radioactive materials, and other pollutants can make a property uninsurable.


In high-risk home areas, it can be helpful to ask around for insurer recommendations, as neighbors may have been in the same situation.

FHA Mortgage Insurance

The FHA’s minimum criteria for homes it will insure is often more strict than the criteria used by home insurance companies. A home could be considered ineligible (“uninsurable”) for an FHA purchase mortgage if it does not meet certain expectations for health and safety that might otherwise be acceptable to a commercial insurer. In this case, the FHA would refuse to insure the mortgage used to buy the home, making the potential homebuyer ineligible for an FHA-backed loan.


Determining the eligibility of a home for the FHA program requires an FHA-specific appraisal. During an appraisal, the appraiser inspects the property for major defects and makes note of them in the follow-up report. The seller then has the opportunity to repair these items to complete the transaction, but this can cause closing delays. If the seller will not make repairs, the home is sold as-is.

Declaring an Insured Home Uninsurable

An insurer can consider an insured home “uninsurable,” too. For example, in Massachusetts, insurers can cancel your policy if “physical changes in the property” make it uninsurable, you don’t pay your premiums, or you misrepresented yourself or the home when you applied for insurance.

The uninsurable designation also extends to homes left vacant for more than 60 consecutive days or those that have been exposed to vandalism or other damage.

Vacation homes, for example, can be considered uninsurable because they are not often inhabited and so are susceptible to events such as pipes bursting.

Alternatives for Uninsurable Properties

There are several alternatives you might be eligible for if your home is uninsurable when it comes to homeowners insurance or an FHA mortgage.

FAIR Plans

Many states also offer programs for assistance known as Fair Access to Insurance Requirements (FAIR). Plans vary by state, but typically, all property insurers must participate to offer solutions to owners of high-risk homes who are otherwise ineligible for homeowners insurance coverage.

HUD First Look Program

The Department of Housing and Urban Development’s First Look Program provides a 15% discount off the list price of uninsurable properties in certain designated areas.

FHA Rehab Loans

The FHA offers insured 203(k) rehab mortgages to finance properties in need of significant repairs costing more than $10,000. Section 203(k) loans allow homebuyers and homeowners to finance both the purchase cost and the rehabilitation of the home with a fixed or adjustable mortgage rate term.

If a buyer wants to purchase a home that needs to be repaired to qualify for an FHA loan, applying for an FHA-insured 203(k) loan rolls the cost of the repairs and the mortgage into one loan.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Department of Housing and Urban Development. "Minimum Property Standards for Housing, 1994 Edition Handbook (4910.1): Chapter 2," Page 2. Accessed Oct. 8, 2021.

  2. JMAC Lending. "FHA Underwriting & Appraisal Guidelines," Page 46.

  3. U.S. Department of Housing and Urban Development. "MPS Supplementing Model Building Codes."

  4. State of Connecticut Insurance Deparmtent. "Homeowners Insurance—Frequently Asked Questions." Accessed Oct. 8, 2021.

  5. Department of Housing and Urban Development. "Implementation of a 15 Percent Discount to Neighborhood StabilizationProgram (NSP) Grantees Purchasing Uninsurable Properties Through HUD’s First Look Program," Page 1. Accessed Oct. 8, 2021.

  6. Department of Housing and Urban Development. "203(k) Rehab Mortgage Insurance." Accessed Oct. 8, 2021.

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