Qualifiying your Buyer on a Flip Project may get harder

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As many of you might know, when flipping a home to an FHA buyer, you will need to be on title for 90 days.

This 90 day title seasoning requirement means you cannot go into contract or order an appraisal until the 91st day when dealing with an FHA buyer.

There have been new rules for conforming loans (Fannie and Freddie) that require title seasoning if an owner wants to do a refinance of their property. The new rules require that the owner be on title for 6 months before they can refi. Keep in mind, if you hold title as an LLC this seasoning may also apply to you. It really just depends on how the lender looks at it. But that is another story...

Many lenders are adding this guideline to purchases as well. Which is absolutely ridiculous in my opinion. The only exception is if the home is a bank owned home.

I have had this come up in a recent file where an investor bought a home in January at an auction then rehabbed it and went into contract last week with a non FHA Buyer.

We had to search high and low for a lender who did not have the overlay (self imposed) guideline in place in order to place the borrower into a loan program. I suspect.. since many major lenders are imposing this rule... others will follow.

Something to watch out for if you plan to flip a home in today's market!

By the way.. if you take a home down with cash and think you are going to refi right out of it... you might want to think about a plan b if you are going conventional financing.

Fun fun! Happy Hunting!

opps. I meant qualifying for the subject line.