Does VA Loans Have a 90 Day Flip Rule? Every Veteran Should Know

Last updated on October 29th, 2024 at 08:43 am

When buying a home with a VA loan, you might come across something called the “90-day flip rule.” So, does VA loans have a 90 day flip rule? Simply put, this rule applies when a property was bought by the seller and then sold again within 90 days. The goal is to protect buyers from overpaying on homes that might have been quickly flipped for profit at inflated prices. Knowing about this rule can help veterans avoid unexpected delays and make informed choices in the buying process.

What is 90 Day Flip Rule for Loans?

The 90-day flip rule is a regulation primarily associated with FHA loans. This rule requires that a seller must own a property for at least 90 days before selling it to a buyer who plans to use an FHA loan. The 90-day countdown begins from the date the seller takes possession of the property and ends when they enter into a contract with a new buyer.

The main purpose of this rule is to protect homebuyers from inflated prices that can occur when a property is quickly flipped for profit. In other words, it helps ensure that the sale price is a fair reflection of the property’s true market value rather than an artificially inflated price set by someone looking to profit from a quick resale.

For example, if a seller buys a home on January 1, they cannot enter into a contract to sell that home to a new buyer using an FHA loan until at least April 1. This restriction helps buyers avoid potential issues with property value and ensures that they are not overpaying for a home that has been sold multiple times in a short period.

What is the FHA 90 Day Flip Rule?

The FHA 90-day flip rule is a regulation similar to the 90-day flip rule for loans. It applies to properties that are purchased using an FHA loan and prohibits the sale of the property within 90 days of its acquisition. The rule was implemented to prevent property flipping scams and protect homebuyers and lenders from fraudulent practices.

Does VA Loans Have a 90 Day Flip Rule?

One is 90 Day Flip Rule, and another is 90 Days Rule, for your information let us tell you that both are completely different from each other.

90 Days Rule – The 90 Days Rule is such a rule that whenever a military member applies for a VA loan, his job must be at least 90 days old, only then he can apply for the loan, which is called the 90 Days Rule.

90 Day Flip Rule – There is another 90 Day Flip Rule that is often used with FHA loans. This means that any seller takes at least 90 days to resell his property, which is called the 90 Day Flip Rule.

So, the answer is that the 90 Day Flip Rule does not apply to VA loans.¹ However, there is a 90 days active service requirement for veterans to be eligible for a VA loan.² This means veterans must have at least 90 days of continuous active duty service to qualify for the loan.

Can you flip with a VA loan?

When it comes to flipping houses with a VA loan, the rules can be quite specific. Generally, VA loans are intended for purchasing homes that the borrower intends to occupy as their primary residence. This means that flipping houses for profit can be tricky. Here’s what you need to know:

Primary Residence Requirement:

VA loans are designed to help veterans and active-duty service members buy homes they will live in. This means that the borrower cannot use a VA loan for investment properties or to buy a home they don’t plan to occupy. If you flip a house, it typically implies a quick sale without residing in it, which goes against VA loan stipulations.

Seasoning Period:

The VA has guidelines that discourage quick resales. For instance, if a home is bought with a VA loan, there is often a “seasoning period” before it can be sold again. This is usually around 90 days, meaning you would need to live in the home for at least that long before considering it for resale.

Buying and Renovating:

If you’re looking to purchase a home, live in it for a while, and then sell it after making improvements, that may be permissible under VA loan rules, provided you follow all the guidelines. You must ensure that the home remains your primary residence throughout that time.

So answer is, while you can purchase a home with a VA loan and make improvements, using the loan for flipping houses is generally not allowed due to the primary residence requirement and the seasoning period.³

How the 90 day Flip Rule Affects Homebuyers and Sellers?

The loan 90-day flip rule can affect homebuyers and sellers in several ways. For sellers, the rule can limit the types of properties that can be financed with any loan company. If a property is sold within 90 days of the seller’s acquisition date, it may not be eligible for financing with any loan company.

For homebuyers, the rule can limit the types of properties they can purchase using any house loan. If a property does not meet the 90-day flip rule requirements, the buyer may need to obtain alternative financing or look for a different property to purchase.

Conclusion.

In summary, while the 90-day flip rule is a crucial regulation within the FHA loan system to protect homebuyers from inflated prices, it does not apply to VA loans. Veterans should be aware of the primary residence requirement associated with VA loans and the importance of living in a property before selling it. Understanding these guidelines can empower veterans and active-duty service members to make informed decisions when purchasing a home.

1. Veterans United [↩]
2. US Department of Veterans Affairs [↩]
3. Veterans United [↩]