Can You Buy a Flipped Home With an FHA Loan and Seller Concessions?

The Quick Read: Yes, usually, as long as the flipper owned the home for more than 90 days before you signed the contract. Homes resold inside that window are generally ineligible for FHA financing. Seller concessions are a separate test: the seller can contribute up to 6% of the price toward your closing costs, and a flipped home gets no special limit. Both rules are subject to lender guidelines and full file review.

What Counts as a Flipped Home?

A flipped home is a house an investor buys, fixes up, and resells in a short time. Nothing in the FHA rules bans renovated homes. The rule targets quick resales at inflated prices, where a seller buys low, does little work, and lists high.

The anti-flipping rule is federal. HUD’s appraisal guide says a property resold 90 days or fewer after the seller acquired it is not eligible for an FHA-insured mortgage unless an exemption applies. Day 91 and later is generally eligible.

Think of it as a waiting period for the house, not for you. Your credit and income are judged separately.

How Do the Two Rules Work Together?

They run side by side and never blend. Rule one is about timing: when did the seller get the house? Rule two is about money: how much of your closing costs can the seller pay?

A flipped home can pass one and still stumble on the other. Keep them separate in your head and most confusion disappears.

How Is the 90-Day Clock Counted?

The clock runs from the date the seller acquired the home to the date your sales contract is executed. It does not run to closing. The Federal Register notice applies the test at contract signing and defines acquisition as the date the seller has the power under state law to transfer title.

That detail matters. A buyer who waits to sign until day 91 can still close later. A buyer who signs on day 60 may have a contract that cannot be financed with FHA.

Picture a flipper who takes title on a given date. Your contract has to be signed more than 90 days after that date. Count carefully, and ask your agent for the seller’s recorded deed before you write an offer.

The lender has to document that the seller is the owner of record. The regulation accepts a property sales history report, the seller’s recorded deed, or a tax bill, title commitment or binder. It also requires you to buy from the owner of record. A wholesaler who assigns the contract to you does not qualify.

What Happens Between Day 91 and Day 180?

Eligible, but with a closer look. This is where deals most often get surprised. The home is not off limits. The lender just checks whether the price jump is justified.

According to HUD’s knowledge base, a second appraisal from a different appraiser is required when both of these are true:

• The resale falls between day 91 and day 180 after the seller’s acquisition.
• The resale price is 100 percent or more above what the seller paid.

Miss either condition and no second appraisal is triggered. A renovated home sold on day 120 at a modest markup does not need one. A house bought cheap and resold at double the price inside six months does.

The second appraisal must document the higher value. If it comes in more than 5 percent below the first, the lower value is used to determine the adjusted value. You cannot be charged for it. The lender also has to obtain a 12-month chain of title.

The regulation is broader than the Handbook version. The eCFR text treats resales from day 91 through the end of the twelfth month as eligible, with HUD able to require supporting documentation. Resales after 12 months are eligible. For a buyer, the 91-to-180 window with the price test is the practical one.

What If the Second Appraisal Comes in Low?

You have four real options, and none is automatic.

1. Renegotiate the price. The lower value caps what the lender will finance. Ask the seller to meet it.

2. Bring more cash. You cover the gap between price and value. Know your limit first.

3. Restructure the deal. Trade price against concessions, within the rules below.

4. Walk away. A good contract carries an appraisal contingency so you can leave without losing your deposit.

Not ideal, but far better than closing on a house worth less than you paid.

How Do Seller Concessions Work on a Flipped Home?

The same way they work on any FHA purchase. Sellers, builders, agents and other interested parties can contribute up to 6% of the sales price. Across the wholesale programs Lendmire places FHA loans with, that 6% is the limit on seller and interested-party contributions. HUD Handbook 4000.1 is the agency’s consolidated source for FHA single-family policy.

Concessions can pay for:

• Origination fees and other closing costs
• Prepaid items such as insurance and tax escrows
• The upfront mortgage insurance premium, which is 1.75% of the base loan and is financed

They cannot fund your down payment. FHA requires a 3.5% minimum investment from you at a decision score of 580 or higher, with maximum financing at 96.5% of the lesser of price or appraised value. That money has to come from you, a gift, or another allowed source, not the seller.

The cap is a ceiling, not a target. Contributions above your actual allowable costs, or above 6%, count as an “inducement to purchase.” An inducement lowers the price dollar for dollar when the lender computes adjusted value, before the loan-to-value percentage is applied. That shrinks your loan amount and raises the cash you need.

A seller’s agent commission customarily paid by the seller is generally not counted as an interested-party contribution. Confirm how your lender treats it.

Why Flips Make Concessions Trickier

Flippers often price high and have room to give. Buyers see a generous concession offer and assume it is free money. It isn’t always.

Here is the thinking:

• A big concession on an already-stretched price invites a closer appraisal.
• If the appraisal lands below the price, the concession and the price both come back to the table.
• A concession above allowable costs trims your adjusted value, which cuts the loan amount.

This one’s a genuine tradeoff. A lower price with fewer concessions can be cleaner than a higher price with concessions that get clawed back. Lendmire’s piece Seller Concessions vs a Price Cut for an FHA Loan Buyer: What Decides walks through that choice. Run both versions past your loan officer before you sign.

Who Is Exempt From the 90-Day Rule?

Several sellers are. The 2006 Federal Register rule set out the exemptions, and the regulation lists them. They include:

• HUD real estate-owned (REO) sales
• Sales of single-family assets in revitalization areas
• Sales by government-sponsored enterprises, certain financial institutions, certain nonprofits, and state and local governments
• Initial sales of newly built homes by a builder
• Disaster-area sales, but only with a HUD notice of exception

Inherited homes are commonly cited as exempt too. Don’t rely on that without your lender confirming it against the Handbook.

You may hear that FHA once suspended the 90-day rule. That was a temporary waiver in the early 2010s. It is no longer in effect, so don’t count on it.

Is Condition a Problem on Cosmetic Flips?

It can be. FHA is not just a price test. The home also has to meet HUD’s minimum property standards, and the appraiser flags safety and soundness issues.

Fresh paint and new floors can hide problems. Before you commit:

• Ask whether permits were pulled for any structural, electrical or plumbing work.
• Hire your own inspector. The appraisal is not an inspection.
• Look at the roof, the foundation, and the systems behind the walls, not just the kitchen.
• Write your contract so the inspection and appraisal give you a way out.

Can an Investor Use This Path?

No. FHA single-family programs are limited to one- to four-unit owner-occupied principal residences, per HUD’s Handbook modernization table. You have to live there.

Your Step-by-Step Timeline

1. Find the listing and ask your agent for the seller’s purchase date and recorded deed.

2. Compare the seller’s purchase date to your planned contract date, since lenders look at how recently the seller acquired the property.

3. Check the price history. A large price increase over a short ownership period points to a second appraisal.

4. Decide your concession ask, keeping it inside allowable costs and the 6% cap.

5. Sign a contract with financing, appraisal and inspection contingencies.

6. Complete the inspection and appraisal. If a second appraisal is required, the lender orders it and you do not pay for it.

7. Review your Loan Estimate and Closing Disclosure for the concession and the financed premium.

Key Terms Defined

Anti-flipping rule: The FHA restriction that bars financing on homes resold 90 days or fewer after the seller acquired them.

Interested-party contribution: A payment toward your costs from the seller, builder, agent or anyone else with a stake in the sale.

Inducement to purchase: A contribution above actual allowable costs or above the cap, which lowers the price used for underwriting.

Chain of title: The recorded history of who owned the property and when.

Adjusted value: The price or value the lender uses after subtracting inducements, before applying the loan-to-value percentage.

If you are buying a home and want to see whether a flipped listing fits an FHA file, Lendmire can help you compare the options and what each one asks of the file. Start with Lendmire’s FHA loan programs page. Every figure here is subject to lender guidelines and full file review, and nothing is a commitment to lend.

For your own numbers, request a scenario review with Lendmire.

About Lendmire

As a mortgage broker (NMLS# 2371349), Lendmire helps homeowners and home buyers in 16 states with FHA, VA, conventional and jumbo purchase and refinance loans arranged through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and the agency guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. HUD – Logging an Appraisal (FHA Connection resource)

2. The Federal Register notice

3. Cornell LII – 24 CFR 203.37a

4. eCFR – 24 CFR Part 203 Subpart A (§203.37a)

5. HUD Handbook 4000.1

6. Federal Register – 2006 final rule on property flipping

7. HUD’s Handbook modernization table