September 28, 2023

Demystifying the FHA Flip Rule and the 90-180 Day Rule: What Homebuyers Need to Know

Author: Beka Pierce

Keywords: Bock Realty Group

The world of homebuying comes with its fair share of rules and regulations, and one that often confounds both buyers and sellers is the FHA Flip Rule, sometimes referred to as the "90-180 Day Rule." In this blog post, we'll break down the FHA Flip Rule, explore its nuances, and explain the 90-180 Day Rule within it.


The FHA Flip Rule: What Is It?

The FHA Flip Rule is a regulation put in place by the Federal Housing Administration (FHA) to mitigate the risks associated with property flipping. Property flipping involves buying a home and reselling it quickly for a profit, which can sometimes lead to inflated prices and unstable markets.


The 90-180 Day Rule

The 90-180 Day Rule is a specific provision within the FHA Flip Rule that outlines the following: 

 1. **90 Days Ownership Requirement:** 

A property seller must have owned the home for at least 90 days before selling it to a buyer who intends to finance the purchase using an FHA-insured loan.

 2. **Between 91 and 180 Days:**

 If a seller has owned the property for more than 90 days but less than 180 days, the buyer can still use an FHA loan, but additional documentation and an additional appraisal may be required. This is to ensure that the property's value has not been artificially inflated through quick flips. 


Why the FHA Flip Rule Matters

The FHA Flip Rule aims to protect both lenders and buyers from predatory flipping practices. By imposing waiting periods and additional scrutiny for rapidly flipped properties, it helps maintain the integrity of the FHA loan program and promotes responsible homebuying.


Impact on Homebuyer

Homebuyers seeking to purchase a flipped property using an FHA loan should be aware of the 90-180 Day Rule. While it doesn't necessarily prohibit the purchase, it may introduce some delays and paperwork. Buyers should work closely with their real estate agents and lenders to ensure a smooth transaction.


Exceptions and Considerations

It's important to note that there are exceptions and considerations within the FHA Flip Rule. For example, certain types of properties, such as those acquired through inheritance or sold by government agencies, may be exempt from these rules. Additionally, investors who purchase properties with cash may not be subject to these restrictions.


The FHA Flip Rule, including the 90-180 Day Rule, is a crucial regulation for both buyers and sellers in the real estate market. Understanding its provisions and potential impacts can help buyers make informed decisions and sellers navigate the process successfully. In the complex world of real estate, knowledge is power. By grasping the nuances of regulations like the FHA Flip Rule and its 90-180 Day Rule, homebuyers can embark on their homeownership journey with confidence and clarity.