Property Flipping Anti-Predatory Rules 2026: FHA and When Dual Appraisals Apply

The FHA anti-flipping rule, codified in HUD regulations and updated periodically through Mortgagee Letters, is designed to prevent predatory schemes where a property is rapidly resold at an inflated price using a fraudulent appraisal. The rule restricts FHA financing based on how long the seller has owned the property, not the buyer's creditworthiness or the property's condition.

The 90-Day Rule

• ✦FHA will not insure a mortgage on a property if the seller has owned it for fewer than 90 days. The clock starts from the seller's date of acquisition as evidenced by title recording.
• ✦The 90 days must have passed before the buyer signs the FHA purchase contract. If the contract is signed on day 89 after the seller acquired the property, FHA financing is unavailable even if closing occurs after day 90.
• ✦This rule applies to the seller's ownership period, not the property's age or the nature of any renovation.

The 91 to 180-Day Dual Appraisal Trigger

• ✦When the seller has owned the property for 91 to 180 days and the resale price is more than 100 percent of the seller's acquisition price, FHA requires a second appraisal from a different FHA-approved appraiser.
• ✦The lender must order and pay for the second appraisal. The lender cannot charge the borrower for the second appraisal as a closing cost.
• ✦If the two appraisals differ, the lower value must be used. The borrower may not be required to pay for the second appraisal.
• ✦This does not mean the transaction is prohibited. It means the appraisal process is more rigorous.

Exemptions to the Anti-Flipping Rule

• ✦HUD REO properties: exempt from the 90-day rule. FHA will insure loans on HUD-owned properties regardless of how recently HUD acquired them.
• ✦Properties inherited: if the seller inherited the property, the 90-day rule does not apply.
• ✦Newly constructed homes sold by the builder: builder sales of new construction are exempt.
• ✦Certain government or nonprofit programs that resell foreclosures in targeted areas may also qualify for an exemption.