FHA 90 Day Rule
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Traditionally, FHA was an undesirable loan for sellers to consider when offers were made by buyers who were FHA qualified. The good news is that FHA is no longer the “F” word it used to be, but, alas, there are still some things we need to remember when making offers with an FHA loan.
One of the first and most important is that FHA requirements are more stringent then conventional appraisals, so appraisers actually have a different set of guidelines when appraising a property for an FHA loan. For instance, the roof may need a certificate from a roofing company/contractor stating that it has, for example at least a 2-year life span remaining (2-year roof cert.). That said, don’t go looking at fixer uppers when you’re looking to buy a home in Sacramento and think that it will pass FHA requirements.
The things that’s been a big problem lately for me has been this 90-day rule. With home prices in Sacramento being at an all time low, many investors have bought homes, fixed them up and now want to sell them. Well, there’s sure nothing wrong with that, now is there? But here’s the problem, FHA requires that the person who owns the home they are funding has owned it at least 90 days. Kinda dumb, if you ask me, and I’ve yet to have anyone provide an intelligent reason how and why a flipped home could possibly increase risk to the loan. Nevertheless, that’s the rule.
On a brighter side, there are some homes that are flips that have had their flip-efforts (i.e. remodeling, updates, etc.) done through a certain program and in these cases, the 90 day rule does not apply (yay!). While it may not seem like such a big deal to wait 90 days to make your offer, here is the problem: HOUSES IN SACRAMENTO AREN”T STAYING ON THE MARKET THAT LONG! Seriously, a new house hits the market, my buyers write an offer (if all requirements are met) and even at full-price, we are not always getting our house.
Quite frankly, when the sellers are banks (foreclosures) your chances of getting FHA approval isn’t as likely as a flip (that meets 90 days or the program I mentioned) or a non-distressed seller owned Sacramento house.
So, if you are a buyer who can only qualifies for FHA, look at the bright side: at least you qualify! Be sure you have an agent (like yours truly!) who knows the ropes and won’t waste a bunch of time showing you properties that you can’t qualify for. Another hint I am suggesting is this: with FHA offers, always offer full or above full price and don’t ask for concessions. This will make your offer stronger and more more competitive with cash and conventional loan offers.
Ta ta for now!
Tamara
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