Overview of FHA's Property Flipping Policy
- Only owners of record may sell properties that will be financed using FHA-insured mortgages;
- Any resale of a property may not occur 90 or fewer days from the last sale to be eligible for FHA financing; and
- Resale's that occur between 91 and 180 days where the new sales price exceeds the previous sales price by 100 percent or more, FHA will require additional documentation validating the property's value.
FHA also has flexibility to examine and require additional evidence of appraised value when properties are re-sold within 12 months.
Exceptions to 90-day Restriction
The following sales are exempt from the time restrictions provided by §203.37a:
- Sales by HUD of its Real Estate Owned
- Sales by other United States 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 sellers by inheritance.
- Sales of properties purchased by employers or relocation agencies in connection with relocations of employees.
- Sales of properties by state and federally charted financial institutions and Government Sponsored Enterprises.
- Sales of properties by local and state government agencies.
- Upon FHA's announcement of eligibility in a notice (i.e., Mortgagee Letter), sales of properties located in areas designated by the President as federal disaster areas, will be exempt from the restrictions of the property-flipping rule. The notice will specify how long the exception will be in effect and the specific disaster area affected.