Making an Offer on a Flipped Property: Navigating FHA, VA, and Conventional Loan Guidelines

As real estate agents, you know that flipped properties can be a great buyer opportunity. However, navigating the financing landscape for these homes can be tricky, as different loan types have unique guidelines. Understanding these nuances is crucial for helping clients make informed offers and avoid potential roadblocks. Let’s break down what you need to know about FHA, VA, and conventional loans when dealing with flipped properties:

FHA Loans:

FHA loans are popular with first-time homebuyers and those with less stringent credit requirements. However, FHA has specific rules regarding flipped properties designed to prevent predatory lending practices. Key considerations include:

• 90-Day Rule: FHA typically requires the seller to have owned the property for at least 90 days before the new buyer’s offer. This rule aims to prevent quick flips with inflated prices. Some exceptions exist, such as inherited properties or those acquired through foreclosure. We CANNOT order a case number before the 91st Day!
• Appraisal Requirements: FHA appraisers look for health and safety issues, but the appraisal process is usually
• “Anti-Flipping” Concerns: FHA is wary of “straw buyers” and other schemes. Be prepared to demonstrate that the transaction is legitimate and that the buyer intends to occupy the property as their primary residence.

VA Loans:

VA loans offer incredible benefits to eligible veterans, including no down payment requirements. Like FHA loans, VA loans have guidelines surrounding flipped properties:

• Similar to FHA: While the VA doesn’t have a specific “90-day rule,” they scrutinize flips closely. The focus is ensuring the property is safe, structurally sound, and meets their Minimum Property Requirements (MPRs).

Conventional Loans:

Conventional loans, while sometimes perceived as more straightforward, also have considerations for flipped properties:

• Seasoning Requirements: None

Important Note: While Fannie Mae doesn’t explicitly require two appraisals on every flipped property, there are situations where they might require or strongly suggest a second appraisal. Here’s a breakdown of those scenarios:

• Significant Price Increase in a Short Time:

• Red Flag: If a property is resold quickly (within a few months) for a substantially higher price than the seller originally paid, it raises concerns about potential appraisal inflation or fraudulent activity.
• Lender Discretion: In such cases, the lender might require a second appraisal to ensure market data is not artificially inflated to support the value truly. This is especially true if the price increase is significantly higher than typical market appreciation in the area.

Non-QM and Jumbo Loans:

• Take any of the above rules and slide them in there! LOL! Every lender on the Jumbo and Non-QM side has different rules for flips. The lender you are working with should look at every property, and when the property is determined to be a flip, the loan officer should send the loan to the correct place for the buyer’s needs. If your buyer is slated to go to a bank or credit union and they have strict guidelines on flip properties, then you will need to go to a lender with options. You should always send all of your clients to Augusta Financial so you don’t have these issues.

Key Takeaways for Real Estate Agents:

• Please communicate with the Lender: Talk to the lender early to understand their guidelines for flipped properties. Communication will help you avoid surprises later.
• Documentation is Crucial: If you can access documentation related to the renovations, including permits, invoices, and contractor information. Documentation can be helpful, but I would not ask for it unless the lender asks first!
• Manage Expectations: Be transparent with your buyers about the potential challenges of financing a flipped property. Prepare them for the possibility of stricter appraisal requirements and potential delays.

The Market Is Heating Up

From my vantage point, things are picking up. I am seeing more buyers putting in offers, and in many cases, rushing to do so. This level of urgency hasn’t been present in quite some time, which is a clear indicator that spring is here and things are starting to heat up! The market heating up is a promising sign for real estate professionals and buyers alike.

Final Thoughts

Now is not the time to get discouraged - it’s the time to double down. We all have to do a little extra in this market, but those who push through will see things turn their way. Stay motivated, keep grinding, and trust that your efforts will lead to success.

If you need a lender who thinks outside the box and works harder than anyone else, let’s connect. Together, we can make sure your clients get the financing they need and you get the deals closed that you’ve worked so hard to secure.

Please let me know if you have any questions or if a client needs my guidance. I’m just a call, text, or email away.

Cell: 661-714-6258

TEXT: 661-714-6258

Office: 661-260-2970 ext. 2222

Direct Line: 661-291-2222

Email: Mike@AugustaFinancial.com

2025 started, so lets make things happen. Please let me know if you would like to go over my latest marketing ideas!

But wait, there’s more…

Interest Rates

It was another rough day for interest rates again today after a good day last Thursday and Friday! Rates are what they are, but some good news is coming soon!

• We offer 12-day escrows for pre-approved buyers - Conventional/FHA/Jumbo/Bridge loans.
• We provide loans in all states, so call me with anything you need.
• Government loans (FHA/VA/USDA) are in the 5’s and 6’s.
• Conventional loans up to $806,500 are in the 6s.
• High Balance Loans from $806,501 to $1,209,750 are also in the 6’s and low 7’s.
• Jumbo loans above $1,209,750 are in the 6’s and low 7’s.
• Bank statement loans are available with 10% down again, with larger down payments in the 7’s.
• Profit and Loss Statement loans require 20% down - no bank statements needed, only a profit and loss statement!
• 0 down loans are available in the high 6s, with a minimum credit score of 620, up to $1,300,000.
• Private Money lenders offer Hard Money Loans with 35% down.
• No Ratio Loans require 30% down.
• DSCR (Debt Service Coverage Ratio) loans are available with as little as 15% down.
• Bridge Loans typically have an interest rate of 7.99% with limited fees, helping you get where you need to go!
• 3/2/1 Buydowns, 2/1 Buydowns, and 1/0 Buydowns are available at great starting rates!

Please note that interest rates are subject to change without notice, and the information above reflects LA County Loan Limits.

**Good News for Condos:** Diamond Head – YAY! Insurance is now correct!

**Bad News for Condos:** Nothing new!

The entire state of California’s naughty list will be added to my website this month! LOL! I lied and said this week, but this task is harder than I thought! Over 700 condos that are naughty per Fannie and Freddie.  

For all other issues involving condos, please check MikeMeena.com. I will post updates here, but all the information on the naughty list is available on my website. Just go there and click about to find our most updated list.

Let me know if you hear anything new about condos or townhouses.

I am available every day if you need anything.

Cell: 661-714-6258

TEXT: 661-714-6258

Office: 661-260-2970 ext. 2222

Direct Line: 661-291-2222

Email: Mike@AugustaFinancial.com

Have a great day, and an even better tomorrow! Please call me when you have a client who needs to borrow!