In Massachusetts if you have a septic system, it must pass a Title V inspection to be financed by a conventional lender. If money is tight, there are few options until now. You could sell(at a greatly reduced price to a cash buyer that will deal with the problem, short sale the property if there is no equity(and damage your credit),  you could sell with the failed septic to an FHA 203k Buyer but you must have a septic design completed that usually costs between $3,000 and $4,000 including machine time and soil tests. Although this is a less financially devastating solution, the buyer base is greatly reduced to those willing to deal with FHA  and the installation and you still have to put up a significant chunk of change for the design. This still puts you in a position where you will have to take a hit on the selling price because most folks do not want to deal with this kind of aggravation.

The Commonwealth has developed three programs to assist  on-site septic system owners with wastewater management problems. There are 0% financing options and tax credits available to those who qualify.

Ther following is from the Massachusetts Department of Environmental Protection website:

Community Septic Management Program

This MassDEP program offers 0% loans to communities, which in turn provide low-interest betterment loans to eligible homeowners with failed septic systems through their local Boards of Health.

Description of the Community Septic Management Program
Web page

Information about betterments
Web page

Regional Contacts for the Community Septic Management Program:
Metro/Northeast: – 978-694-3237
Southeast: – 508-946-2881
Central: – 508-767-2763
Western: – 413-755-2148

Homeowner Septic Loan Program

This is a bank loan program for homeowners whose systems have failed Title 5 inspection. Participating banks offer low interest rates to eligible homeowners through this MassHousing Program. For more information contact Massachusetts Housing Finance Agency (MHFA), 617-723-0500 or go to their Web site:
MassHousing Web site

                     Tax Credit

The Commonwealth provides a tax credit of up to $6,000 over 4 years to defray the cost of septic repairs to a primary residence. Forms are available from the Department of Revenue (DOR) to enable homeowners to claim up to $6,000 in tax credits for septic upgrades. The credit cannot exceed $1,500 in any year and may be spread out over 4 years. The tax credit is limited to work done on a primary residence only. Tax Form Schedule SC is the correct form for the tax credits.
MassDOR Web site

In addition, these federal programs are available to aid septic system owners with wastewater management problems:

Federal Farmers Home Administration (FHA)

FHA offers low-cost financing to those who qualify. For more information contact FHA:
* Multi-family home: 202-708-2495
* Single-family home: 202-708-3175

USDA Rural Development Program

This program offers government loans to assist very low income rural homeowners who are in need of repair and improvements to their homes for health or safety reasons, including septic system repairs or upgrades.
USDA Web site

About the author: The above Real Estate information was provided by Jay Falone, a Nationally recognized leader in his field. Jay can be reached via email at  or by phone at 508-893-7996.  Jay has helped many people move in and out of  Metrowest and Worcester Counties since 1987.

I service the Metrowest and Worcester areas of Massachusetts .If you are selling or Buying outside of the Metrowest  or Worcester Massachusetts area or need to do a short sale please feel free to contact me and I would be happy to refer you to a Realtor in your area. I have a network of  Realtors all around the country and worldwide.

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