FHA Financing a Flip - Posted by Jeff(PA)

Posted by Christen on August 22, 2003 at 21:20:48:

I’m not exactly sure my mortgage broker explained it to me that I couldn’t have the purchase price exceed 100% over the purchase price and rehab costs. I really didn’t give it much atttention because mine never fall into that category. for example by for 30-40K put in 5-10K they are worth 65-70K, I don’t mind dropping it a few grand if I have to get the deal done.

FHA Financing a Flip - Posted by Jeff(PA)

Posted by Jeff(PA) on August 21, 2003 at 12:52:27:

Can anyone confirm that FHA will not finance someone who wants to buy a rehab that was purchased within 12 months, ie, i but a foreclosure and rehab it and sell to someone via FHA mortgage within 12 months?

Thanks

Jeff

Re: FHA Financing a Flip - Posted by jasonrei

Posted by jasonrei on August 21, 2003 at 21:48:13:

http://edocket.access.gpo.gov/2003/pdf/03-10778.pdf shows the final rule, I believe.

I just sold a home FHA that I’d bought at the very end of April 2003. I bought for $34,700 and sold for $69,900. That’s over 100% markup. I did pay for the second appraisal.

Re: FHA Financing a Flip - Posted by Christen

Posted by Christen on August 21, 2003 at 20:34:39:

the final rule is 3 month no exception and the purchase price cannot exceed 100% of the aquisition and rehab. so you buy a house for 40 put 10 into it you have to sell it for less than $100K. It’s 3 months from the date you close on the property to the date the sales contract is executed and FHA Insurance goes into effect. so it takes us 1 month to rehab, 2 weeks to find a buyer and 6 weeks to close, voila there’s are 3 months.
hope I helped
chris

Re: FHA Financing a Flip - Posted by yshNJ

Posted by yshNJ on August 22, 2003 at 14:36:42:

Hi Christen,

>>…and the purchase price cannot exceed 100% of the aquisition and rehab.

Based on what I’ve read I don’t think that this is the absolute truth. I think what is meant is that if the purchase price exceeds by %100 the prior sale price than additional restrictions may apply. One restriction cited is the need for additional documentation supporting the new price of the house. Your opinion?