FHA 90-Day Rule (Part 2)

April 9, 2009 · 12 comments

I wrote earlier in the week about the FHA 90-Day Rule, and how it can affect house flippers. Well, there is some additional info that I didn’t include in that post that is very relevant…the reason I didn’t include this in the first post is that I wasn’t aware of it until today.

Here are the major relevant point that flippers should keep in mind:

FHA underwriting won’t consider the buyer’s loan unless the Purchase Contract, the Appraisal, and the Loan Application are dated at least 91 days from the date the current seller was recorded on the Warranty Deed.

This brings up a few interesting implications:

  • While a buyer can submit a letter of intent or a contract prior to the 90-day mark, for it to be considered by FHA underwriting, a new contract must be signed (and all loan preparations must be completed) after the 90-day mark;
  • The 90 days doesn’t start the day the seller purchased the property, but instead, on the day the Warranty Deed was recorded;
  • In many places, the closing attorney legally has at least 60-90 days to send the Warranty Deed to the records office, and it can take a week or two after that before the deed actually gets recorded; therefore, it could be 90 days or more after the property is purchased before the FHA 90 day clock even starts ticking! Meaning it could be up to 6 months before you can sell the property to an FHA buyer!

I have had lenders who have gotten around these rules in the past, but I don’t know if it was knowingly or unknowingly. I called a couple lenders today to verify the accuracy of this information, and they all said that this is their understanding as well.

So, if you’re a house flipper who targets FHA buyers, be aware of these rules, as they can severely impact your holding time and holding costs.

12 responses to “FHA 90-Day Rule (Part 2)”

  1. Owen says:

    Wow. I just ran into the 2-appraisal requirement this week (for the first time) for a property I bought in December and am selling next week. I thought that part was a pain in the butt, and then I just read your post about the Warranty Deed recording part. Brutal.

    For all the posturing the government does about “fixing” the housing market and the economy, they make it ridiculously prohibitive for legitimate, honest investors to succeed. You would think that turning a community eyesore into “like new” property would be rewarded, not penalized. Just when you think you have all the rules down-pat, they throw another curve.

  2. Owen says:

    I forgot to mention, I really enjoy your blog. I have learned something new with each property I have rehabbed, and have learned even more in reading your posts. It can be a painstaking process to cronicle each portion of a project and compiling the costs into neat and tidy categories- and you have done an excellent job. Your efforts are appreciated!

  3. Jingle says:

    As for getting the deed recorded quickly, I never fail to have a $25 starbucks gift card for the closing officer. I casually mention that I really need the deed recorded quickly, and the deeds always seem to get recorded that day or the next. I learned the hard way a few years ago about that rule. My Realtor says my giving them the card is most likely against the rules, but I do it anyway, in private. So far, so good. But with this post I’m no doubt headed to the big house.,….


  4. Aly L. says:

    Thanks for this info, it’s very good to know. Again, great blog!

    And a great idea about the gift card, Jingle, I won’t tell anyone 😉

  5. J Scott says:

    Jingle –

    GREAT idea about the little gift to the closing agent…

    Time to go stock up on gift cards!!!


  6. hakrjak says:

    I agree with the first poster. Folks like us do an honest service to the community by fixing up run down eyesores in the community, improving neighborhoods & property values, employing construction workers, providing business to title companies & mortgage companies, along with paying commissions to Realtors to keep them in jobs as well — and paying tons of taxes to the government. We get zero respect and nothing but obstacles put in front of us by our government. I only wish we had a powerful lobby in Washington to stand up for our interests — but it seems like nobody is willing to do it!?


    – Hakrjak

  7. ezra says:

    Jingle, send me a gift card or I’m turning you in!

  8. J Scott says:

    Hak –

    Agree with you completely. Personally, instead of the 90-day rule, I think the FHA should just require a more stringent appraisal (perhaps 2 appraisals) during the first 90 days.

    If they’re trying to cut down on fraudulent flipping, two appraisals should do the trick…no need to have to wait 90 days ALSO…

  9. Chip says:

    Do the same rules apply for convential loans?

  10. J Scott says:

    Chip –

    No, only FHA has the 90-day rule for resale.

    Conventional, VA, and other loans are not overseen by HUD, so they have different (and generally much less stringent) rules.

  11. Tricia says:


    I’m representing an investor who refurbished a home in 30 days and has it on the market. My Broker found that the FHA 90 Day Ruling has been waivered until December 2009. What do you know about that?

    Also, where will I find the restrictions on Conventional loans in this situation.



  12. J Scott says:

    Tricia –

    The 90-day rule waiver by the FHA is ONLY for banks and asset managers who are selling REO (foreclosed) properties.

    The waiver is NOT for investors or any other sellers, unfortunately.

    As far as I (and all the other investors I talk to) know, there is absolutely no reliable way around the 90-day rule if you’re not a bank or a professional asset manager for REO properties.

    Feel free to shoot me an email, and I’m happy to point you directly to the waiver rule where this is pretty clear.

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