When buying a home, especially for first-time buyers, navigating rules and regulations can be daunting. One of the lesser-known yet important guidelines to understand is the FHA 90-day rule for flipped houses. At Mortgage Specialists, we’re here to break down what this rule means, why it exists, and how it might impact your homebuying process. Our goal is to ensure you feel confident and informed, with access to all the resources you need to secure your dream home.
What is the FHA’s 90-Day Rule?
The FHA’s 90-day rule applies to properties being “flipped,” which means they were purchased, improved, and put back on the market in a short timeframe for a profit. According to FHA guidelines, a buyer cannot finance a property with an FHA loan if it has been owned by the seller for less than 90 days. Essentially, if a property was purchased by an individual or company and then quickly resold, it’s ineligible for FHA financing during this period.
This rule primarily aims to prevent fraudulent practices, such as artificially inflating property values through unethical “flipping.” While it protects buyers from paying inflated costs for a property with questionable value, it can also add a layer of complexity for both buyers and sellers.
How the Rule Impacts Buyers and Sellers
- For Buyers: If you’re planning to use an FHA loan, you’ll need to verify how long the seller has owned the property. If a property falls within the 90-day window, you won’t be able to secure FHA financing for it. This might limit your options, especially in competitive markets where flipped homes are common.
- For Sellers: If you’re a real estate investor aiming to flip properties, you’ll need to factor in the FHA’s 90-day restriction when determining your timeline for resale. If your buyer intends to use FHA financing, marketing the property before the 90 days are up could result in delays or complications.
Exceptions to the Rule
There are some scenarios where the FHA’s 90-day rule doesn’t apply. For example:
- HUD-Owned Properties: Homes purchased directly from the U.S. Department of Housing and Urban Development (HUD) are exempt, as these transactions often involve distressed or foreclosed properties.
- Corporate Relocations: If the seller is a relocation company or similar entity, the rule might not apply.
- Inherited Properties: Homes sold as part of an estate or inheritance may also be exempt from the 90-day rule.
Additionally, for properties sold between 91-180 days after purchase, the FHA may require additional documentation if the new sale price is significantly higher than the original purchase price. This step ensures that the appraisal is accurate and prevents over-inflated valuations.
How Mortgage Specialists Can Help
At Mortgage Specialists, we understand that FHA guidelines can feel overwhelming, especially when they impact your plans for buying a home. That’s where our team comes in. We’re dedicated to making the mortgage process as simple and stress-free as possible, guiding you every step of the way.
- Expert Advice: Whether you’re a first-time buyer using an FHA loan or an investor looking to flip properties, we’ll help you understand how the 90-day rule might affect your transaction.
- Flexible Loan Options: If the FHA 90-day rule is a roadblock for your purchase, we can help explore other financing options that suit your circumstances.
- Local Expertise: With nearly 20 years of experience in the Omaha metro area, we have an in-depth understanding of market trends and regulations, empowering you to make informed decisions.
Plan Confidently with Mortgage Specialists
Navigating the FHA’s 90-day rule doesn’t have to complicate your homebuying or selling experience. With the right information and a team of trusted mortgage professionals by your side, you can find solutions that work for you.
At Mortgage Specialists, we’re committed to treating every client with outstanding customer service. We’re available to answer your questions, day or night, ensuring you feel confident at every stage of the process. Contact us today to learn more about how we can help you finance your next home or investment property.
Together, we’ll turn the complexities of homebuying into clear, actionable steps. Your dream home is closer than you think!
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