FHA Loan Requirements for “Flips” in California is a post from: FHA,VA and Conventional Home Loans in all 50 States

In today’s real estate market in California many investors are purchasing properties at foreclosure trustee sale auctions or buying bank REO’s in disrepair and renovating these homes to re-sell for profit.  Many times these investors will have these properties back on the market ready for sale in less than three months after these properties are acquired.  If this is the case, FHA home loan lenders will refer to these as “Flips”.  A Flip is a property being purchase by a FHA borrower that was purchased less than three months ago by the seller.

All FHA lenders have some special requirement s regarding flips.  Most if not all FHA lenders will all a borrower to get a FHA loan on a property being resold within three months without restrictions if the sales price of the property does not exceed the sellers purchase price by more than 20%.  So if an investor bought a house for say $300,000 and is reselling it for $375,000 there are no additional requirements to get a FHA loan to buy that property.  But if the seller’s price exceeds 20% of their purchase price, generally the following will be required the FHA loan underwriter:

1. A second FHA appraisal
2. An inspection of the property with any items called out by the inspector to be fixed
3. Notes from the appraiser supporting the reasons for the large increase in price in a short period

There are a few FHA home loan lenders that will not require the above unless there is a 50% or more increase in sales price from the seller purchase price, but they are rare.

So I hope this helps understand the FHA loan requirements better if you are currently searching for a home to buy and are considering investor flips on the market.  Please don’t hesitate to email me at homeloan8@gmail.com or call me at 858-922-7899 if you would like to be approved for a FHA home loan or have questions.

Below are some of the latest up-to-date highlights of FHA home loans in California:

• FHA loan down payment is only 3.5%
• The FHA loan down payment can be a gift from a relative
• FHA loan interest rates are still near 60 year lows
• FHA loan limits go up to $729,750 in many parts of California including San Francisco, San Jose, Los Angeles, Orange County and close to this in San Diego
• FHA loan credit score does not have to perfect, in many cases you can get a FHA loan down to a 600 score.  Give us a call if you have credit issues as we are experts

Regards,

Rob Chomentowski

Sr. Loan Officer (and FHA, VA, conventional, Homepath specialist)

858-922-7899

homeloan8@gmail.com

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