Buying a Flipped Home
A renovated home that recently changed hands is financeable, but the clock on the seller’s ownership drives the file. The date the seller bought it matters as much as the date you are buying it.
The Clock Starts With the Seller
Not with your offer, and not with the listing date
- The timeline is measured from the date the seller acquired the property
- An FHA resale within ninety days of the seller’s acquisition is not eligible
- The handbook sets out a defined list of exceptions to that restriction
- Resales between ninety-one and one hundred eighty days can proceed with added review
- A second appraisal by a different appraiser is required when the resale price is at or above double what the seller paid
- On conventional financing, a resale within one hundred eighty days involving a non-arm’s-length relationship and an increase in value is not eligible
On an FHA file, the first line is drawn at ninety days
Resales Inside the First Window
Exceptions Are Defined, Not Argued
The Second Appraisal Trigger
A Different Appraiser Is Required
Relationship Between the Parties
How the Timeline Is Measured
Everything below is measured from the day the seller acquired the property.
Property flipping rules exist because a home that changes hands twice in quick succession at a much higher price invites questions about whether the second price is real. The rules do not prohibit buying a renovated home. They set out when the file needs more evidence and when it cannot proceed at all.
Two things decide how a renovated resale underwrites. The first is timing, measured from the day the seller acquired the property rather than from anything on your side of the transaction. The second is the size of the price increase and the relationship between the parties, which is where FHA and conventional rules diverge. Both are knowable before you write an offer, and both are far cheaper to check then than to discover in underwriting.
On an FHA loan, a resale occurring within ninety days of the date the seller acquired the property is not eligible, apart from a defined list of exceptions in the handbook. Between ninety-one and one hundred eighty days, the loan can proceed, but a second appraisal from a different appraiser is required when the resale price is at or above double what the seller paid.
What to Check Before You Write the Offer
Six things worth knowing before a renovated listing becomes a contract.
When the Seller Bought It
The recorded acquisition date is the anchor for every rule on this page. It is public record and it is worth pulling before you write an offer, not after.
What the Seller Paid
The relationship between the seller’s purchase price and your contract price is what determines whether a second appraisal is triggered on an FHA file.
Whether an Exception Applies
The handbook lists specific circumstances that fall outside the ninety day restriction. Exceptions are a defined list rather than a judgment call, so the question is whether your transaction is on it.
Who the Parties Are to Each Other
Conventional financing treats this differently. A resale within one hundred eighty days involving a non-arm’s-length relationship and an increase in value is not eligible.
How the Renovation Is Documented
A large jump in price is easier to support when the work behind it is documented. Permits, invoices, and a clear scope of work help the appraisal tell a coherent story.
How Much Time You Have
If a resale sits just inside the ninety day window, the answer is sometimes simply a later closing date. Knowing that early is far better than finding out in underwriting.
Hear From Homeowners Like You
Frequently Asked Questions
The questions that come up on a renovated resale.
Often, yes. The rules restrict specific timing rather than renovated homes generally. A resale occurring within ninety days of the date the seller acquired the property is not eligible for FHA financing, apart from a defined list of exceptions. Past that point the loan can proceed, sometimes with an added review step.
On the day the seller acquired the property, which is the recorded date on their purchase, not the day the home was listed and not the day you wrote your offer. Pulling that date early tells you which set of rules your file falls under.
The handbook sets out specific circumstances that fall outside the restriction. It is a defined list rather than a judgment call, so the useful question is whether your particular transaction appears on it. That is something we can check against the file rather than guess at.
On an FHA resale occurring between ninety-one and one hundred eighty days after the seller acquired the property, a second appraisal is required when the resale price is at or above double what the seller paid. A more modest increase in price does not trigger it.
No. When a second appraisal is required, it has to be performed by a different appraiser. The purpose of the requirement is an independent look, so the same appraiser reviewing their own work would not satisfy it.
Conventional rules are structured differently. A resale within one hundred eighty days is not eligible where there is a non-arm’s-length relationship between the parties combined with an increase in value. The relationship between buyer and seller carries more weight there than the size of the price change alone.
Sometimes the answer is a later closing date. If the property is a few weeks short of the threshold, adjusting the timeline can move the file out of the restricted window entirely. It is a much easier conversation to have while the contract is being written.
Find out what you qualify for
Whether you have found a renovated listing or you are just trying to understand what you would run into, it helps to check the seller’s acquisition date before you are under contract. Start a pre-qualification today.
Get Pre-Qualified*Loan amounts, rates, terms, and down payment requirements are subject to credit approval, income and asset verification, and program eligibility. Property flipping and resale restrictions are set by FHA under HUD Handbook 4000.1 and by agency guidelines for conventional financing, and are subject to the rules in effect at the time of application. Eligibility depends on the seller’s acquisition date, the relationship between the parties, the contract price, and appraisal review. This is not a commitment to lend. All loans are subject to credit approval, underwriting, and property qualification. Saxton Mortgage, LLC, NMLS #1717191. Equal Housing Lender.