FHA Guidelines On Buying House Flips For Home Buyers

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This BLOG On FHA Guidelines On Buying House Flips For Home Buyers Was UPDATED And PUBLISHED On April 22nd, 2020

What are the FHA guidelines for buying homes at home for buyers

What Are FHA Guidelines On Buying House Flips

FHA Guidelines On Buying House Flips mandate a minimum of a 90 day waiting period for a property seller to be able to sell a home to a home buyer who can only buy it with an FHA loan.

In this article, we will discuss and cover FHA Guidelines On Buying House Flips For Home Buyers.

Renovating Homes By Property Flippers

Many real estate investors can normally get a home rehabbed in less than 30 days after the date of their home purchase:

  • However, they are not able to sell the rehabbed home to a FHA home buyer
  • This is because, under FHA Guidelines On Buying House Flips, homebuyers cannot purchase a flip unless the house flip has been seasoned for at least 90 days
  • This is one of the dumbest rules ever implemented and definitely hurts home buyers, home sellers, and the economy
  • Nothing is wrong with a real estate investor purchasing a home that is in need of work and rehabbing it and reselling it for a profit
  • There are real estate investors out there who can turn around a complete gut rehab in less than 30 days on a single-family home
  • Rehabbed homes are better than brand new construction homes

But due to FHA Guidelines On Flips, homebuyers who are only approved for FHA Loans cannot purchase a house flip home sellers have less than 90 days seasoning on it.

Setback On Real Estate Investors

Which means failure of real estate investors

FHA Guidelines On Flips are extreme setbacks and inconveniences for real estate investors due to the fact that this rule puts a limit on the pool of home buyers for their rehabbed homes.

  • FHA Guidelines On Flips definitely impacts not just the real estate investors
  • It also impacts home buyers who fall in love with a totally rehabbed home but cannot purchase it
  • This is because the home is a flip and has been seasoned less than 90 days
  • The 90 day waiting period does not apply to Fannie Mae and Freddie Mac which means that conventional loans do not have any 90-day waiting period

Real Estate Investors who need to flip their homes in less than 90 days can only sell it to a home buyer who is approved for conventional financing and not FHA financing.

Waiting Period To Purchase Home From Property Flips

FHA Guidelines On Buying House Flips of the 90 day waiting period starts from the date the property seller has purchased the home.

  • Most home-purchase closings average 45 days
  • If the real estate investor purchased a property and took about 45 days to rehab it and if they were to have it under contract after 45 days, it will take another 45 days to close so the 90 days would be up, right?
  • Wrong!!!
  • Guidelines On Flips 90-day waiting period rule starts from the date the property owner has purchased the home
  • The date of the executed contract and not to wait 90 days to close from the time the real estate investor closed on their home purchase is the 90 day waiting period start date

Why this rule was implemented has many confused and the FHA Guidelines On Buying House Flips do not make any sense whatsoever. Unfortunately, these are the rules and until the FHA Guidelines On Buying House Flips changes, it is here to stay for the time being. We will keep our viewers updated on any changes that HUD will make with regards to FHA Guidelines in future blogs.

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