90 Day Flip Rule – FHA & Conventional Loans

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90 Day Flip Rule - FHA & Conventional Loans

In today's real estate market we see many purchases that are properties which were recently foreclosed on and now being sold by the bank. This has been a reality of a market that has at times and in certain areas seen more bank owned properties as conventional home sales. As a result of the decline in prices we have also seen an increase in properties being bought by investors, often on a cash basis, cleaned up and then put back on the market for resale, very quickly. For these particular cases, what you may have heard as, as the 90 day flip rule, comes into play.

The Federal Housing Administration has for many years had a 90 day flip rule in place, to prevent the buy and quick resale of a home within 90 days. This past year, this rule was lifted and allowed for ownership change and immediate resale of a property in the case of a property being foreclosed on and resold by a bank. So although you may have heard that the 90 day flip rule had been lifted on FHA loans, it really does not affect any homes, except for those being foreclosed and resold by the bank.

On the other hand, you have conventional Fannie Mae and Freddie Mac backed loans. And although no 90 day rule exists for conventional loans, most, if not all lenders will have restrictions on properties that have been bought and sold within 90 days. In general, lenders will allow for the immediate purchase and resale of all foreclosure homes being resold by banks, just as in FHA. However, in the case of an investor acquiring a property and then trying to resale the property within 90 days for a price higher then it was purchased for (which is often the case in a "flip" transaction), this will not be allowed, as it will be considered a flip transaction.

What this basically means for purchasers of new homes at the end of the day, is that if the home has recently changed ownership, it is important to know why and how. If the property was foreclosed on and being sold by the bank you are fine. However, if the property was bought by a third party investor and resold right away, for a higher price, then you may not be able to obtain conventional or FHA financing on the home.

For more information on home purchase loan or refinance programs for existing and potential home owners, please contact Bill Kamboukos and Carlos Felix of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com


Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Thomas Crate 09/15/2010 11:19 AM
Mortgage / Finance
fha loans
conventional loans
90 day flip rule

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Michael Lee
Frog Realty - Tallahassee, FL

Good post.  Always a good idea to be aware of those flipping.

Jun 29, 2009 10:05 AM #1
Monika Depalo
REAL ESTATE Agent/Stager

That will probably create less flipping and more living in homes for more stability in neighborhoods.

Jun 29, 2009 10:31 AM #2
Paul Tomlinson
Fox Valley Property Solutions - Montgomery, IL

As a flipper, I'm wondering if you happen to know the answer to the following question (because I do not).

If I purchase a home with cash, can I then turn around and get it under contract and closed (sold) say within 70 days? The kicker here is that although the end buyer might get an FHA loan, I will be paying with cash with no loan products whatsoever. I'm asking because I will be purchasing a property in which the property needs just a little more than a haircut and trim, so I'll have it ready to go in about 2-3 weeks tops.

Sep 18, 2009 10:13 AM #3
Misty Spitler Jenkins
Skyline Team Real Estate - Strasburg, VA
Building a Relationship one Client at a time!

Thank you for the post!  Good information. 

Oct 03, 2009 02:42 AM #4
Thomas Crate
Bank of America Home Loans - Lake Arrowhead, CA

Thanks for the post.  It was very helpful.

Sep 15, 2010 11:16 AM #5
Patrick McGann

This is a terrible rule that makes no sense. We have an empty home that no one is living in and no one wants to buy because its dated or needs too many repairs. Banks sell the majority of them to the only people who will by them Investors. Investors take the risk of purchasing, putting money into them and hopefully selling them for a profit (it doesnt always happen that way). So the Govt wants to hand cuff them for 90 days. So lets let it sit for 3 months before you can sell it. They think it takes 90 days to do improvements? What if minimum improvments are needed like changing to modern appliances and adding new carpet and new paint. We see examples of people building a whole house in a week. So investors still buy the properties and wait until the last month to do the rehab. Or they just dont get bought making the banks drop the price lower and lower until a Investor is willing to wait 90 days becuse the value is just too good to pass. This is killing the neighborhood values.

Theres nothing wrong with people buying home, making it better or livable and selling it. That increases the neighborhood values and taxes. They act like rehabbers are doing something wrong making some profit at a risk is called free enterprise.

Whats next furniture buyers. Lets make the American pickers guys wait 90 days to resale their items.  


Sep 17, 2010 09:04 AM #6
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