This guide will cover the FHA guidelines on buying house flips for homebuyers. The following paragraph will cover the FHA guidelines on buying house flips.
Property flipping was extremely popular before the 2008 Great Recession and Real Estate Market Crash and has almost stopped. However, house flipping is now back in full force. Many real investors are purchasing homes such as foreclosures, rehabbing them, and flipping them for a profit. Many property flippers have large construction crews. This article will discuss and cover FHA guidelines on buying house flips for homebuyers.
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 cannot sell the rehabbed home to an FHA homebuyer. 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, hurting home buyers, sellers, and the economy.
Nothing is wrong with a real estate investor purchasing a home that needs 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 with less than 90 days of seasoning.
Setback on Real Estate Investors
FHA guidelines on flips are extreme setbacks and inconveniences for real estate investors because this rule limits the pool of home buyers for their rehabbed homes.
FHA guidelines on flips impact not just the real estate investors. It also impacts home buyers who fall in love with a rehabbed home but cannot purchase it. This is because the home is a flip and has been seasoned for 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 them to a home buyer approved for conventional financing, not FHA financing.
Waiting Period To Purchase Home From Property Flips
FHA guidelines on buying house flips off the 90-day waiting period starting 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 would take another 45 days to close, so the 90 days would be up, right? Wrong!!!
Guidelines on flips 90-day waiting period rule start 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 the house flip change, it is here to stay for the time being. We will keep our viewers updated on any changes HUD will make concerning FHA Guidelines in future blogs.
