Can you flip houses with a FHA loan?

11 Replies

Is it possible to flip a single family home with a FHA loan?

yes, 203k renovation loan up to 30k in repairs and 230k stream line up to 100k in repairs

not sure what the question is. A house with a an existing FHA loan, or using an FHA loan to flip. Yes to the first(it'll have to be paid off at som point), no to the second as they are for owner occupied purchases only.

@Wayne Brooks Thanks I was talking about the second one. I wasn't sure if it had to be owner occupied like Fannie Mae.

@Nikolai Lee  http://www.bankrate.com/finance/mortgages/fha-waives-rule-against-house-flipping-1.aspx. <---- This may help you.

you can flip a house you live in. live in it for a year while you renovate, then move on to the next. Although using loans for flipping is very expensive. It is better to go in with all cash.

The link above posted by @Nikolai Lee is very helpful.  Note it does give an upper limit as a percentage of sales price to the end buyer.

"If the price that the buyer agrees to pay for the home is more than 20 percent higher than the price the investor paid to purchase it, the sale will be subject to extra scrutiny to ensure that the value hasn't been inflated"  This is quoted from Bankrates's article.



That article has to do with the end buyer. The OP is asking about using an FHA loan to buy a house, rehab, then flip.

As @Account Closed has shown in the link, there are some regulations in place preventing you from routinely using an FHA loan to flip properties.

It's my understanding that FHAs are for OWNER OCCUPANTS. FHAs can be used for investment purchases. 3.5% down on a quad while you are renting out 3/4 of the unit can be a sweet deal if the numbers work out right!

@Wayne Brooks  I must of glanced past your post too quickly. So the bankrate article refers to the end buyer? That makes sense, but I'd still be weary of using FHAs for purchases that don't meet the necessary guidelines!

Agreed.  You'll hit a 2 year wait for the next one.

Something I take into account are the fees associated with each loan. I'm living in my house while renovating then hopefully selling at the two year mark. When comparing FHA vs conventional the fees were higher for FHA. The way I see it, the money I spend on fees are cost I won't recoup. Conventional I paid 5% down then a minimal fee. I also took a slightly higher interest rate with a slightly higher payment. In the end it will be cheaper than paying points down on the loan for a lower rate due to my short term financing.

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