Can you use FHA loans for fix and flip?

Rehabbing & House Flipping
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Can you use FHA loans for fix and flip?

Arash Vafa
Financial Advisor · Los Angeles, CA · Member since 2018 · 6 posts · 2 votes
Hi, I recently started learning about REI and have been in the education phase so far. I have decided to focus on fix-n-flip and buy-n-hold(rental) properties. My main concern is the capital. Given my financial situation, I do qualify for FHA loans. Can I flip houses with FHA loans? Any advice/input and source of education concerning this would be appreciated. Best!
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  • Mark Bookhagen
    Buffalo, NY · Member since 2014 · 371 posts · 146 votes
    7y

    FHA appraisals have strict inspection requirements. So to answer the questions, in 99% of cases, no.

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  • Nicole Pettis
    Flipper/Rehabber · St. Louis, MO · Member since 2008 · 489 posts · 300 votes
    7y

    @Arash Vafa while you can't use FHA loans to fix & flip, you can use them to house hack. FHA has a program called FHA 203k where you can purchase a distressed property(owner occupant only) and use the 203k funds to fix it up. You have to live in the house for a year, but you've now gained equity in your home. There are some restrictions to the loan, but overall it covers majority of repairs.

    Many will say its a pain to deal with, but I had no problems when we did ours. My GC didn't have any issues either. However you do have to find a lender that does the FHA 203k loan program & a GC that knows how to do the paperwork for the loan. 

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  • Josh Cook
    Rental Property Investor · Minneapolis, MN · Member since 2017 · 106 posts · 39 votes
    7y
    @Arash Vafa yeah I would also say no. There is another federal loan program you can use though. It’s the 203(b) I think? Which is similar to FHA in requirements.
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  • Matthew PorcaroBusiness Member
    Lender · Long Island, NY · Member since 2016 · 456 posts · 336 votes
    7y
    @Arash Vafa Hi Arash - it is possible to use an FHA loan, especially a 203k, to house hack and jumpstart your REI career. This is what I did, and as long as you follow the guidelines and have a strategy mapped out, it’s the best way out there in my personal opinion. In my case, I bought a duplex, that needed a ton of work. I got approved for a 203k to cover the home + rehab, and only needed 3% down for closing. After a long rehab, and living in it for a month with a tenant, I was able to refinance out into a conventional loan, and now I rent out both units for 2k a month in cash flow. In addition to that, my rehab built 120k of equity into the house (also why I was able to refinance). Patience is key with this. Best advise I can give. If you’d like to talk more feel free to reach out. Good luck!
    The 203k Way
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