Great news! FHA loan limits for the major counties in Georgia increased from $320,850 to $342,700 for all new FHA sales contracts written on or after Jan. 1, 2015. This gives homebuyers the opportunity to buy a home with a 3.5% down payment (all from a gift) and FHA has relaxed qualifying guidelines on homes $21,850 more expensive than last year.
The bad news is that the FHA Anti-Flipping Waiver expired on Dec. 31, 2014. Some folks might say, “What Anti-Flipping Waiver?” Many thought a seller had to have owned the home for 90+ days before selling it to a new buyer using FHA financing.
Well, you’re not totally right or wrong. Even though HUD introduced the Anti Flipping Waiver in February 2010 and extended it to December 2014, many FHA lenders and banks ignored the waiver guidelines and continued to require that the seller hold title to the home a minimum of 90 days before re-selling it to a buyer using FHA financing. Since HUD (FHA) only insures loans and FHA approved Lenders actually lend the money, FHA Lenders often have different guidelines than HUD’s guidelines for FHA Insurance purposes.
The bottom line is that the Anti-Flipping Waiver has expired and the old Anti-Flipping rules are back in full force for everyone. Here’s what you need to know for sales taking place on or after Jan. 1, 2015 where a buyer is getting an FHA loan.
HUD/FHA – 90-181 Day Anti-Flipping Rule
- 90 Day Rule – The current Seller of Record must have owned the home 90 days or longer at contract date or its not eligible for FHA financing.
- 91-180 Day Rule – If the current seller has owned for 91-180 days, a second appraisal is required and borrower isn’t allowed to pay for the second appraisal. This generally means that the seller would need to pay for the second This should be negotiated in the initial sales contract so there are no surprises.
Also, be aware that if the seller has owned the home less than 180 days and is selling the home for more than they paid, the FHA Underwriter will require you to provide documentation of the renovations or improvements that justify the increase in the sales price. This could include invoices, receipts and other documentation.
A major red flag that the FHA Underwriter will be looking for is multiple sales and title transfers on the property in the last 12 months. If the property has been sold and re-sold and then re-sold again, this will likely cause the buyer not to be able to obtain financing unless the price hasn’t increased.
FHA is still a great financing option for homebuyers, and with these recent updates, more buyers than ever will be looking at this option when purchasing their new home.