The term Property Flipping refers to the purchase and subsequent resale of a property in a short period of time. The eligibility of a property for an FHA mortgage lender is determined by the time that has elapsed between the date the seller acquired title to the property and the date of execution of the sales contract that will result in the new FHA mortgage lender . FHA mortgage lenders define the seller’s date of acquisition as the date the seller acquired legal ownership of that property. FHA mortgage lender defines the resale date as the date of execution of the sales contract by all parties intending to finance the Property with an new FHA mortgage lender.
FHA mortgage lender Resales Occurring Between 91-180 Days After Acquisition:
An FHA mortgage lender must obtain a second appraisal by another appraiser if:
- the resale date of a property is between 91 and 180 days following the acquisition of the property by the seller’s; and
- the re-sale price is 100 percent “over the purchase price” paid by the seller to acquire the property.
The required second appraisal from a different appraiser must include documentation to support the increased value.
must obtain a second appraisal by another appraiser if:
- the resale date of a property is between 91 and 180 days following the acquisition of the property by the seller’s; and
- the re-sale price is 100 percent “over the purchase price” paid by the seller to acquire the property.
The required second appraisal from a different appraiser must include documentation to support the increased value.
FHA mortgage lender Resales Occurring within 90 Days or Fewer After Acquisition:
A property that is being resold within 90 days or fewer following the current owner’s date of acquisition is not eligible for a new FHA mortgage lender.
Exceptions to FHA property flipping restrictions are made for:
- properties acquired by an employer or relocation agency in connection with the relocation of an employee;
- resales by HUD under its real estate owned (REO) program;
- sales by other U.S. government agencies of Single Family Properties pursuant to programs operated by these agencies;
- sales of properties by nonprofits approved to purchase HUD-owned Single Family properties at a discount with resale restrictions;
- sales of properties that are acquired by the seller by inheritance;
- sales of properties by state and federally-chartered financial institutions and Government-Sponsored Enterprises (GSE);
- sales of properties by local and state government agencies; and
- sales of properties within Presidentially Declared Major Disaster Areas (PDMDA), only upon issuance of a notice of an exception from HUD.
- The restrictions listed above and those in 24 CFR 203.37a do not apply to a builder selling a newly built house or building a house for a borrower planning to use FHA-insured financing.