New lending guidelines to "Flipping" Houses

Recent Freddie Mac guidelines have changed regarding "flip transactions". A "flip transaction" is generally defined as a purchase transaction for property that has been recently acquired (in the last 12 months) by the seller and is being re-sold at a higher price. The transaction is not considered a flip if the seller is a financial institution or government entity who acquired the property through foreclosure.

Here are new guidelines for conventional financing:

1) Purchase of a primary or second home only
2) If seller has owned less than 90 days, minimum down payment is 20%
3) If owned between 90 days and 1 year standard down payments are acceptable
4) If the increase between seller's purchase price and new sales price is greater than 15%, 2 appraisals are required
5) If increase is less than 15% an appraisal must be ordered to validate the original appraised value
6) Property must be exposed to the open market through MLS, traditional auction, developer marketing (etc.)
7) Buyer and seller may not be represented by the same agent
8) No more than 1 title transfer in the last 12 months, other than financial institutions or government entities (a company hired to handle foreclosure and short sales by a lender would not count)

These guidelines apply to conventional financing. FHA guidelines are different.

Don't hesitate to ask if you have additional questions!