Monthly Archives: March 2015

FHA 90-day seasoning requirement is back for flips

Be careful if you are buying a property that the seller is trying to flip. WIth a flip, the seller buys a distressed or foreclosed property, fixes it up and then quickly resells it. If you are getting an FHA mortgage to buy a  property being flipped, you will not be able to sign a contract to purchase the property until 90 days after the seller has owned the property.

The 90 day time period is measured from the date the seller acquired the property (closed on the property)  to the dale the seller signs a contract with the new FHA buyer.
The purpose of this FHA “seasoning” rule is to prevent sellers from acquiring a property, doing cosmetic repairs and then reselling it at an inflated price. For the past few years, during the depressed real estate market, FHA waived this rule and allowed the buyer to sign the contract earlier than 90 days, but that changed on January 1, 2015.
But now, FHA is back to enforcing the seasoning requirement.
I have also found that many lenders will require two appraisals to be done if the buyer is buying a flipped property. This will often delay closing because the parties have to wait for the second appraisal.