Flood Insurance Details

[Eric Long]

Hi Everyone,

I am slightly confused by flood insurance, the different tiers, and how that ties into home insurance as a whole.

For context: I am looking at a duplex that is currently in the 'highest tier' for a flood zone and will, therefore, require a flood insurance policy. The house was for sale as 'cash only' but the realtor found out the owner will accept loans. I was told the 'cash only' was likely out there so that a buyer would not need to purchase a year's worth of flood insurance up front to get financing. I was also told that the property is being re-surveyed to try and drop it to a lower tier of flood zone, which should decrease flood zone insurance costs. Further, the house recently was 'waterproofed'. Finally, according to FEMA Flood Map, it is a floodway Zone AE.

My questions are:

1. When using bank financing for a house in a flood zone, are you required to purchase a year's worth upfront and then make monthly payments?
2. How easily can individual properties be rezoned to a different flood zone? 
3. Does waterproofing a house help change a property's flood zone?
4. Is flood insurance added on top of home insurance?
5. What are the different levels of flood zones and about how much of percentage drop/increase in price is attributed with each successive flood zone?

This will be my first real estate deal too. I plan on living in the lower unit and holding the property long-term. The location is fantastic (block away from a major hospital and a mile from a major university) so property value should increase over the life I will hold it. I am not too caught up on making sure it positively cash flows while I'm living in it either.

I know a few of these questions will be better answered by an insurance agent but I'm curious about general sentiment from investors who have spent time dealing with homes in a flood zone and get a feel for the thought process I should be adopting when it comes to looking at this issue.

Thanks in advance!