A flipped property is to real estate what the certified used car car is to automobiles. When done right, flipped Phoenix area homes are great move in ready properties. An investor bought a run down property, rehabbed it and sold it as “new” and shiny. However, the financing of a flip can be complex.
Financing a Flipped Home is Different
Buying a flipped property differs from purchasing a non-flip. Mortgage rules for flipped homes vary based on the home loan type used to finance it. Ultimately, home loan flip rules protect the end buyer and the market as a whole.
Mr. Rogers neighborhood may have been built by upstanding “flippers” but the rest of the world was not. Ultimately, flippers flip homes for profit. In fact, that alone can lead to cutting construction corners and/or inflating final sales prices.
As a result, flip rules seek to detect devious investors squeezing out unjust profits. Commonly, home loan rules make flipped properties season for a period of time and/or require a more thorough analysis of the home’s appraisal. Almost every type of home loan takes a different stance on financing a flip. In contrast, some loans are aggressively restrictive while others have no special flip rules at all. For example:
FHA Flip Guidelines
FHA requires a home be owned by the current seller for at least 90 days (sometimes more) in order to finance it.
Conventional Flip Guidelines
Financing a flipped home using Conventional financing is allowed. However, underwriting may require a list of improvements made and cost as well as additional appraisal analysis.
VA Flip Guidelines
VA has no special flip guidelines.
USDA Flip Guidelines
USDA has no special flip guidelines.
JUMBO Loan Flip Guidelines
Jumbo flip rules vary from investor to investor.
By Jeremy House