HUD FLIP GUIDELINES

HUD Guidelines to Flip Properties

If the re-sale date (date of the fully executed sales contract that will result in an FHA loan) is 91 days to 180 days following the date the seller acquired the property, a copy of the title binder from the purchase transaction is required and documentation showing the seller’s purchase price. If the seller’s HUD-1 indicates that the sales price for the current purchase transaction is 100% or more greater than the seller’s purchase price, additional documentation is required. This documentation includes the following: 1) A second full appraisal supporting the value from an FHA Roster Appraiser. The value used for the transaction must be the lower value of the two appraisals. (Required) FHA will not accept an AVM. (Note: The borrower can not be charged for the second appraisal. Either the seller or the lender must pay for the second appraisal.)  Optional- Documentation supporting the increase in value was the result of a renovation of the subject property (the second appraisal is still required.) The appraisal must not the improvements/rehabilitation(s) that were made. Renovation costs are documented with one of the following: executed construction contract, lien waivers, canceled checks with corresponding paid receipts for valid construction expenses. Valid construction expenses include: materials, architectural fees, supplies, labor, liability insurance on laborers, installation costs for water, sewer, well, ect., permits, non-recurring costs of obtaining financing including origination fees, discount points, title search, recording fees. This documentation should be scanned under the CRDTPKG doc type (separator sheet).