FHA Flip Rules

Re-sales Occurring, 90 Days or Less Following Acquisition

If a property is re-sold 90 days or fewer following the date of acquisition by the seller, the property is not eligible for a mortgage insured by FHA. FHA defines the seller' s date of acquisition as the date of settlement on the seller' s purchase of that property. The re-sale date is the date of execution of the sales contract by the buyer that will result in a mortgage to be insured by FHA

As an example, a property acquired by the seller is not eligible for a mortgage to be insured for the buyer unless the seller has owned that property for at least 90 days _ The seller must also be the owner of record.

Re-sales Occuring between 91 and 180 Days Following acquisition

If the re-sale date is between 91 and 180 days following acquisition by the seller, t h e
lender is required to obtain a second appraisal made by another appraiser if the resale price is100
percent or more over the price paid by the seller when the property was acquired"

As an example, if a property is re-sold for $80,000 within six months of the seller' s acquisition of that property for $4, 0 000, the mortgage lender must obtain a second independent appraisal supporting the $80., 000 sales price_ The mortgage lender may also provide documentation showing the costs and extent of rehabilitation that went into the property resulting in the increased value but must still obtain the second appraisal. The cost of the second appraisal may not be charged to the homebuyer.

FHA also reserves the right to revise the re-sale percentage level at which this second appraisal is required by publishing a notice in the Federal Register.