BiggerPockets

The "C" buyer can and could always be an FHA buyer. What you are likely concerned about is the 90 day restriction meaning you had to hold title for 90 days before the FHA lender would fund your "C" transaction.

That restriction was lifted for now but there have been some wrinkles as posted by some in this thread:


http://www.biggerpockets.com/forums/312/topics/42286-what-is-the-seasoning-rule-with-fha-loans-

The short answer is- YES.
The long answer is- Check the above mentioned thread. The End Buyer can be using FHA, but their Lender MUST be fully disclosed of what is happening and they also must understand and feel comfortable with the transactions.

In CA you can flip to a FHA buyer however there are strict lender guidelines. You may want to consult with a loan originator in your area to recieve a list of the guidelines.

FHA buyers are eligible under the new guidelines for more than a 20% spread with a second appraisal and a home inspection. I have heard of one approved well above 20% after the client paid for a third appraisal. Although ok within guidelines, most lenders are likely to have real heartburn.