FHA waives 90-Day Flipping Rule for San Jose, California Mortgages

Great news for San Jose First Time Home Buyers - FHA is eliminating the 90 day flipping rule for mortgages on San Jose & rest of California homes. With certain exceptions, FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. Currently such homes are mostly bought by investors with large down payments or an all cash transaction. Due to lack of financing options California First Time Home Buyers were not able to make offers on such homes.


This temporary waiver will give FHA borrowers access to a broader array of recently foreclosed properties. The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.


The waiver is effective for one year starting Feb 1, 2010. To protect FHA borrowers against predatory practices of "flipping" where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general conditions:

  • All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
  • In cases in which the sales price of the property is 20 percent or more above the seller's acquisition cost, the waiver will only apply if the lender meets specific conditions. These specific conditions include but not limited to ordering 2nd appraisal and/or a Property Inspection Report.
  • The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (Also called HECM or Reverse Mortgage) for purchase program.

If you are a First Time Home Buyer in the San Francisco (SF) Bay Area and would like to know more about how FHA loans can help you realize the dream of Home Ownership, please call me at 408.905.6261 or email me at Shashank@ArcusLending.com


Shashank Shekhar

Mortgage Broker/Banker | San Jose, CA

(408) 615-0655 | Shashank@ArcusLending.com

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Comment balloon 6 commentsShashank Shekhar • January 17 2010 02:09AM


Great Info Thank you

Posted by Abraham Valentino, Founder CEO SOLARIT®, iMetros, Nummus® (SOLARIT®) over 10 years ago

You are welcome. Glad you liked it!

Posted by Shashank Shekhar, San Jose, CA Mortgage Broker/Lender (Arcus Lending) over 10 years ago

That's a good thing, if a home appraises there shouldn't be any restrictions period in my opinion.

Posted by Ross Quintana, Real E Smarter Real Estate Coach - 509-362-1966 (Real E Smarter) over 10 years ago

Good news--a buyer missed out on a home she loved due the flipping rule--seemed like an arbitrary government guideline slowing market recovery.

Posted by Norma Toering Broker for Palos Verdes and Beach Cities, Palos Verdes Luxury Homes in L.A. (Charlemagne International Properties) over 10 years ago

@Ross - You are correct. However, note that there are certain restrictions if the seller is selling for more than 20% of the acquisition cost.

Posted by Shashank Shekhar, San Jose, CA Mortgage Broker/Lender (Arcus Lending) over 10 years ago

@Norma - I have had buyers missing out on properties too because of this rule. This will also help investors who could now buy a property and be confident that they would be able to sell in less than 90 days. Overall, good news for all parties.

Posted by Shashank Shekhar, San Jose, CA Mortgage Broker/Lender (Arcus Lending) over 10 years ago