What is the FEMA flood buyout program & how does it work?

The FEMA flood buyout program provides funding to help people move out of dangerous flood zones and replace their homes with public land. However, funds are limited and not everyone qualifies.

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Rachael BrennanSenior Editor & Licensed Auto Insurance ExpertRachael Brennan is a senior editor and a licensed auto insurance expert at Policygenius. Her work has also been featured in MoneyGeek, Clearsurance, Adweek, Boston Globe, The Ladders, and AutoInsurance.com.

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Jennifer GimbelJennifer GimbelSenior Managing Editor & Home Insurance ExpertJennifer Gimbel is a senior managing editor and home insurance expert at Policygenius, where she oversees our homeowners insurance coverage. Previously, she was the managing editor at Finder.com and a content strategist at Babble.com.

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127 million Americans lived in coastal areas in 2014, which accounted for almost 40% of the population. [1] Many Americans who don’t live in coastal areas still live near rivers, lakes, and other natural sources of water, leaving a significant portion of American homeowners at risk of flood damage. While some people will be able to make home upgrades or buy flood insurance in addition to their homeowners insurance to protect their property, other people will need to relocate completely.

As climate change continues to increase the number and severity of natural disasters in the United States, the Federal Emergency Management Agency (FEMA) has set aside some funding to help move people out of harm's way. [2]

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What is a FEMA buyout?

FEMA provides funding to your community to buy your property if your home is located somewhere they expect will receive significant flood damage over time. The program is designed to accomplish three things:

1. Getting you and your family out of harm’s way

The most important goal of the FEMA flood buyout program is to get you and your family out of the way of potential flood waters. This saves lives and helps reduce the cost of flood damage in the area. At more than $5 billion a year, flooding causes more damage than any other type of disaster. [3]

2. Preventing the house from being sold to new owners

For most people, the only way they can afford to move is to sell their home to someone else. This works for that individual person, but selling a home that will likely be damaged or destroyed in future floods leaves the new owners in a bad financial situation. The FEMA flood buyout program allows your community to buy the property and demolish it, preventing other people from ending up in the same situation in the future.

3. Turning the property into public land that can handle flood waters

Once your former home has been demolished, your local government is required to do something with the land that turns it into public space. This could be something like a park, wildlife refuge, or other area with few or no physical structures. Turning this land into public space not only moves people out of danger, it also creates natural space that can absorb flood waters and prevent floods from spreading further inland.

How does the FEMA flood buyout program work?

In its simplest form, FEMA puts up most of the money to buy certain property after a disaster. However, the actual process of finding communities that qualify and have homes that need to be bought out is more complex.

There are several steps to the FEMA flood buyout program:

  • The state sets priorities for how it will spend its FEMA mitigation funds after a disaster. This sometimes includes purchasing damaged homes or other property.

  • The community takes the necessary steps to be eligible for the program. This includes signing up to participate in the National Flood Insurance Program.

  • A major storm or weather event is declared a disaster by the president. Local officials decide whether to request funds (including FEMA funding) from the state to buy flooded homes.

  • Homeowners interested in a buyout contact their local government to apply for assistance. The local government reviews the requests to decide who, if anyone, should be considered for buyouts.

  • Communities interested in buyouts submit a proposal to the state regarding how the buyout funds will be used. They’ll also make their case for why they should be given the funding to buy flooded properties.

  • FEMA reviews the proposals to make sure they are environmentally sound and cost-effective before issuing funds. Once a determination has been reached, FEMA will work with your local government to provide the funds to buy certain homes. Residents who have been approved for the program should work with their local government representatives to make sure everything is done correctly and the sale is closed successfully.

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Is my property eligible for a FEMA buyout?

According to FEMA, eligibility guidelines fall under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, which has a minimum set of requirements for any property acquisition project receiving Hazard Mitigation Grant Program (HMGP) funds. [4] But every community is unique, which means different places may have different eligibility requirements for a FEMA flood buyout. 

Beyond conforming to the rules and regulations stipulated by state and federal hazard mitigation plans, there are several other criteria a property must meet before it qualifies for a FEMA buyout, including:

  • Buying out the property must create a substantial reduction of future flood risk.

  • A FEMA flood buyout must be the most practical, effective, and environmentally sound way to solve the problem.

  • The benefits of buying the property and turning it into public land must be greater than the benefits of leaving the property as-is.

  • The sale of the property must be voluntary; eminent domain cannot be used to force people out of their homes under this program.

There are even more requirements that must be met after the property has been purchased by the community. Those requirements include:

  • The land must forever remain open space in the future, which means it cannot be resold to future developers or homeowners.

  • The land is no longer eligible for disaster assistance in the future.

  • Property must be demolished or removed within 90 days of closing.

  • Flood-prone communities must participate in the National Flood Insurance Program (NFIP) to receive funds.

  • To prevent duplicating benefits, communities must subtract from the purchase price of every property the total value of other disaster-related repair assistance previously paid to the owner.

Check the FEMA Property Acquisition handbook if you want more information about whether the FEMA flood buyout program is a good fit for you.

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Where to move after a FEMA buyout

According to a study by James R. Elliot and Zheye Wang at Rice University, many people are not moving very far after a flood buyout. 

“Nationwide, the median driving distance from buyout origin to destination is just 7.4 miles, with 58% of retreating homeowners staying within a 10-mile drive of their bought-out home, and 74% staying within a 20 mile drive.” [5]  

In some instances, individuals have even moved closer to the shoreline after a buyout instead of further away.

If you receive a FEMA flood buyout you’ll want to research new homes very carefully, with special consideration given to reducing your risk of flood damage again in the future. If possible, try to move away from natural water sources and choose property that is on higher ground to avoid having the same issues in your new home. You can refer to FEMA flood maps to make sure you know exactly how much flood risk you are taking on before buying a property. [6]

Learn more about flood insurance where you live

Frequently asked questions

Does FEMA buy flood-prone homes?

FEMA provides funding for a buyout program that purchases homes in specific flood zones, but the organization does not buy the property directly. Local communities can use funding provided by FEMA to buy out flood-prone homes and turn that land into public space.

What is a buyout program?

A buyout program buys houses and other property, demolishes the buildings, and turns the land into space for public use, like a park or a wildlife refuge.

How does FEMA work for flood victims?

FEMA is a federal organization that provides funding for temporary housing, repairs, and other expenses associated with natural disasters. Some of the funding provided is used to buy property from people whose homes are in dangerous flood plains so they can move someplace less likely to experience flood damage.

Are there non-FEMA flood buyouts?

Yes, local governments and smaller organizations offer flood buyouts outside of the funding FEMA provides, but these will likely be local to your area. Check with your city or state government to find out if you have options for flood buyouts beyond those funded by FEMA.

References

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Policygenius uses external sources, including government data, industry studies, and reputable news organizations to supplement proprietary marketplace data and internal expertise. Learn more about how we use and vet external sources as part of oureditorial standards.

  1. National Ocean Service National Oceanic and Atmospheric Administration

    . "

    What percentage of the American population lives near the coast?

    ." Accessed April 25, 2024.

  2. FEMA NFIP

    . "

    Climate Change Increases Risk of Flooding

    ." Accessed April 25, 2024.

  3. FEMA

    . "

    Flood Impact

    ." Accessed April 25, 2024.

  4. FEMA

    . "

    PROPERTY ACQUISITION HANDBOOK FOR LOCAL COMMUNITIES: A SUMMARY FOR STATES

    ." Accessed April 25, 2024.

  5. IOPscience

    . "

    Managed retreat: a nationwide study of the local, racially segmented resettlement of homeowners from rising flood risks

    ." Accessed April 25, 2024.

  6. FEMA

    . "

    Flood maps

    ." Accessed April 25, 2024.

Author

Rachael Brennan is a senior editor and a licensed auto insurance expert at Policygenius. Her work has also been featured in MoneyGeek, Clearsurance, Adweek, Boston Globe, The Ladders, and AutoInsurance.com.

Editor

Jennifer Gimbel is a senior managing editor and home insurance expert at Policygenius, where she oversees our homeowners insurance coverage. Previously, she was the managing editor at Finder.com and a content strategist at Babble.com.

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