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VA Loans & Hawaii Water Catchment Systems

Rainwater catchment systems are typically a no-go with the VA loan. However, in Hawaii, these systems are common and may meet the VA's appraisal guidelines.

Thousands of homes in Hawaii rely on rainwater catchment systems to provide drinking water.

VA policies and guidelines have varied over the years regarding catchment systems, which the state’s Department of Health has historically viewed as unsafe for home use. The VA appraisal guidelines require homes to have a safe and sanitary water source.

Historically, the VA has considered water catchment systems an unacceptable water source, making properties with them all but impossible for the loan program. But a policy shift in early 2014 opened the door to VA backing for Hawaii homes with water catchment systems.

» MORE: Check your $0 down VA loan eligibility

VA Process for Water Catchment Systems

As part of the VA appraisal process, lenders must order a water quality test by a lab acceptable to state officials. No one connected to the transaction is allowed to obtain the sample. The lab work cost can be negotiated between the buyer, seller, and others in the transaction. It’s also possible to finance the cost in some cases.

The state of Hawaii doesn’t regulate water catchment systems. Instead, the water will need to safe water standards in line with federal guidelines. You can learn more about the catchment screening test and acceptable results at the Hawaii Department of Health’s website.

Also, lenders must provide educational materials to prospective buyers considering a property with a water catchment system. Borrowers have to sign written acknowledgment that they’ve received the publication.

When Testing Turns Up Trouble

If the water samples fail to meet safety standards, prospective buyers will need to consider their options. You can ask the seller to take steps to improve the quality of the water and seek another test confirming it meets requirements.

Just adding some kind of filtration or treatment system at the property won’t suffice -- the water source itself will need to meet safe drinking water standards. And the water has to meet these criteria to make it through the VA appraisal process.

Talk with a loan officer in more detail if you’re considering purchasing a Hawaii home with a water catchment system.