Commercial entity is refinancing purchase of residential rental properties (from another bank). Four properties, but only one in flood zone.

Total loan amount is $331,040. Replacement cost per hazard policy for property in flood zone is $113,000.

Since only this property is in flood zone, do we use the total loan amount (all proeprties) or only the amount attributed to property in flood zone to calculate?

With all properties:

Loan Amount: $331,040
Hazard replace: $113,000
Maximum FEMA: $250,000

With only property in flood zone:

Loan Amount: $76,000
Hazard replace: $113,000
Maximum FEMA: $250,000

Thanks in advance.

The minimum requirement is the lesser of:

The insurable value of the property or properties located in a SFHA,
The outstanding balance of the loan or loans,
The maximum coverage available through the NFIP for the property type.


Your minimum coverage for this loan would be the insurable value of the property located in the SFHA.