Outdated Federal Regulation Changed to Make It Easier for First Time Home Buyers to Buy Propane Home

Late last month, the U.S. Housing & Urban Development (HUD) Department finally addressed an outdated regulation that made residential properties within 300 feet of a 1,000-gallon propane tank ineligible for Federal Housing Administration (FHA)-backed loans, which are common among first-time homebuyers.

The regulation stated: If the subject property line is located within 300 feet of an aboveground or subsurface stationary storage tank with a capacity of 1,000 gallons or more of flammable or explosive material, then the Property is ineligible for FHA insurance, and the Appraiser must notify the Mortgagee of the deficiency of MPR or MPS. This includes domestic and commercial uses as well as automotive service station tanks.

At the request of Texas propane member retailer, the National Propane Gas Association engaged FHA and HUD to identify the underlying regulation and advocate for the incorporation of NFPA 58 standards for separation distances between propane tanks and structures. Initially, HUD proposed to permit 250-gallon propane tanks within 300 feet of an FHA-backed property; however, NPGA continued to push for a higher container volume to accommodate homes utilizing propane for multiple appliances.

Ultimately, HUD changed the regulation to: (a) exclude all underground propane tanks; (b) exclude aboveground propane tanks of 1,000 gallons or less, if they comply with NFPA 58 2017 Edition, and (c) incorporate by reference NFPA 58 – 2017 Edition. HUD also instructs FHA to update the Single-Family Housing Handbook to reflect these changes. The changes are effective February 24, 2020.

Please direct any questions or comments to NPGA’s Deputy Counsel, Regulatory Affairs, Sarah Reboli at sreboli@npga.org.