Property Flipping Rules – Comparison Chart

posted in: Blog, Real Estate Investing | 0

 

 

In our market, many of the properties have been purchased by investors and are resold within a short time period. Therefore, it is important to know the “flipping” rules for different programs. Below is a quick summary. Please feel free to contact us with any questions you have regarding these rules.

 

 

FHA

When the Resale is within 90 Days:
  • Ineligible for FHA financing
When the Resale is between 91 days and 180 Days:
  • Obtain 2nd appraisal if resold between 91 to 180 days after acquisition
  • Obtain 2nd appraisal if resale price is double price paid by seller (or more)
  • If there is more than 5% difference in the values, the lower value must be used
  • Borrower cannot pay for 2nd appraisal
Exceptions to FHA Flipping Rules: 
  • Property purchased by an employer or relocation company due to relocation of an employee
  • Sales by builders selling a new home
  • HUD Resales – REO program
  • Sales of properties by local or state governments
  • Sales by other government agencies (i.e., IRS, court-ordered, DEA, etc.)
  • Sales of non-profit agencies approved to purchase HUD properties
  • Sales of Inheritance properties
  • Sales of properties by federally chartered financial institutions
  • Sales of properties by GSE’s
  • Sales of properties in federally declared disaster areas

NOTE: Landmark Mortgage Planners will be required to obtain a 12-month chain of title to document time restrictions above. 

VA

  • No Flipping Rules – Overlays may apply or at Underwriter’s discretion 

USDA

  • We would be required to document that any recently sold property’s value is strongly supported when a significant increase between sale and purchase occurs.
  • We would be required to document that the appraisal value is supported with validated comps. 

Fannie Mae

  • No Flipping Rules – Overlays may apply or at Underwriter’s discretion 

Freddie Mac

  • No Flipping Rules – Overlays may apply or at Underwriter’s discretion