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FHA 90 Day Flip Rule: Flip Flop

Justin McHood
1 min read

One of the more frustrating things regarding FHA loans right now has to do with something called the “90 day flip rule”.  In what has now become known as the FHA Flip Rule, FHA has stated that if a borrower wants to buy a house that was bought by an investor previously in order to flip the house for a profit, there are certain conditions that apply.

Sometimes people accuse HUD of speaking in riddles when it comes to these types of things – because in their best attempt at being crystal clear as to what kinds of loans they will insure and what kind they won’t – the end result is still confusion.

Some lenders will lend money to people who are attempting to get an FHA loan for a property that has been purchased by the previous owner within the last 90 days.

And some lenders won’t.

Some lenders will lend money to people who want an FHA loan for a property that has been purchased by the previous owner within the last 90 days as long as the new sales price isn’t more than 20% of the previous sales price.

And some lenders won’t.

Some lenders won’t lend money to people who want an FHA loan for a property until it has been “seasoned” and at least 90 days have expired since the last party bought the property.

But some lenders will.

So to recap:

  1. Some lenders won’t give you an FHA loan if the property you would like to purchase has been bought in the previous 90 days by someone else.
  2. Some lenders will give you an FHA loan if the property has been bought in the previous 90 days by someone else as long as the price you want to pay for it doesn’t exceed 120% of what the previous owner paid for it.
  3. And some lenders will give you an FHA loan if the property has been bought in the previous 90 days regardless of how much the previous owner paid for it.

Are you confused yet?

You should be.

And sometimes I wonder if all this confusion is by design.

What This Means To You: The Consumer

If you find a house that you would like to buy and are planning on getting an FHA loan – be ready for different lenders to tell you different things about this FHA 90 Day Flip Rule.

Those flip-floppers.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.