"Flip" Property Loans
"Flip" Property Loans
Loan programs to purchase homes owned less than 90 days. Best of all, VITEK can fund your "flip" loan in-house giving you faster turn times and quicker loan closings!
As many homes being sold today are bank-owned properties, more and more investors are buying up these homes, doing the needed renovations to fix them up, and then reselling them. Until recently, restrictions on popular loan programs made it challenging to purchase these “flipped” properties if the investor owned them for less than 90 days. VITEK now offers in-house lending for both conventional and FHA loan programs to purchase these flipped properties. Below are the guidelines for both conventional and FHA 90 day flip loan programs.
Conventional Flip loans (property transfer less than 90 days):
- Conforming 15-30 year fixed
- Primary Residences, Second homes & Investment properties are eligible.
- Up to 95% LTV on primary residences (subject to restrictions)
- Minimum FICO score of 620
- All transactions must be arms-length; no identity of interest between buyer, property seller or third parties.
- If any of the following factors exist, the transaction may be considered non-arm’s length and require additional documentation to establish an arms-length relationship
- There is a pattern of previous flipping activity as evidenced by multiple title transfers within 12 months.
- The property was not marketed openly on the MLS (FSBO, any sales contract identified as an “assignment of contract of sale”).
FHA Flip loans (property transfer less than 90 days):
The sales price of the property does not exceed 20% of the amount the seller paid for the property: For example: if a seller originally purchased a property for $100,000, the sales price cannot exceed $119,999 ($120,000 would not be allowed).
- The contract of sale for the purchase of the property must be fully executed and dated between Feb. 1, 2010 and December 31, 2011
- The transaction is arm’s-length, with no interest between the buyer and seller or other parties participating in the sales transaction
- Limited Liability Companies (LLCs), corporations or trusts serving as sellers were established and are operated in accordance with applicable state and federal laws
- The LLC’s Operating Agreement or documentation that reflects membership in the LLC must be reviewed to determine the transaction is non-arm’s length to ensure the borrower is not affiliated with the LLC.
- There is no pattern of previous flipping activity for the subject property, as evidenced by multiple title transfers within 12 months
- The property was openly and fairly marketed
- The property was marketed via MLS, auction, for sale by owner offering or developer marketing: NOT allowed: A sales contract that refers to an “assignment of contract of sale” (which represents a special arrangement between seller and buyer)
- Buyer’s real estate agent cannot be the seller and buyer’s real estate agent cannot be employed by, related to or affiliated with the seller
- A second appraisal may be required
The sales price of the property EXCEEDS 20% of the amount the seller paid for the property:
- Comply with all of the above items
- Second full FHA appraisal will be required
*Some restrictions do apply, so contact us for full program details.
