FHA Now Allows Flips...No Seasoning Requirement!

Until now, purchasing a property from an investor who has owned the property for less than 90 days has required you to forego FHA financing. Late last week, HUD announced that beginning February 1st, they are waiving this 3 month seasoning requirement. As of this writing, it will stay in effectfor one year (through January, 2011). What this means is that you can now buy property flips with FHA loans.

As per FHA's rules, this waiver is limited to those sales meeting the following general conditions:

1. All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.

2. In cases in which the sales price of the property is 20 percent or more above the seller's acquisition cost, the waiver will only apply if the lender meets specific conditions.

3. The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.

This is great news and should result in more purchases this spring as prospective buyers attempt to take advantage of the $8,000 first time home buye tax credit or the $6,500 move-up buyer credit.

Mark Zaidan, Licensed Mortgage Lender
Low-Rates on McLean Home Mortgages