How Long After FHA Loan Can You Sell?

A couple hugs while outside their new home with a for sale signIf you've recently purchased a home using an FHA loan, you may already envision your future in that cozy abode. However, life is full of surprises and opportunities, and circumstances may arise that prompt you to consider selling your Property sooner than expected.

The burning question on your mind might then be: How long after getting an FHA loan can I sell my home? This crucial query delves into the complexities of FHA loan regulations, timelines, and potential obstacles that could expedite or delay your plans for a profitable sale. In this article, we will unravel the intricacies surrounding this topic to equip you with the knowledge to navigate the process confidently.

FHA Loan Occupancy Requirements

Understanding FHA loan requirements is vital for borrowers looking to sell their homes. One key aspect to consider is the occupancy requirement, which stipulates that borrowers must occupy the Property as their primary residence within 60 days.

Additionally, borrowers should know the potential financial implications of selling too soon after obtaining an FHA loan. Depending on market conditions, selling shortly after acquiring an FHA loan may not allow enough time for sufficient equity to build up. This could lead to challenges in covering closing costs and satisfying the outstanding loan balance during the sale process.

Therefore, understanding these requirements and planning strategically can help borrowers navigate the real estate landscape effectively when considering a home sale after securing an FHA loan.

How Soon Can You Sell a Home With an FHA Loan?

You can sell your home at any time after closing the loan. However, a property being resold 90 Days or fewer following the seller's date of acquisition is not eligible for an FHA-insured Mortgage. In other words, the buyer is not eligible for an FHA loan.

Home Sales Occurring Between 91 Days and 180 Days After the purchase (settlement)

The lender must obtain a second appraisal by another appraiser if: • the resale date of a Property is between 91 and 180 Days following the acquisition of the Property by the seller; and • the resale price is 100 percent or more over the price paid by the seller to acquire the Property.

Suppose the second appraisal supports a value of the residence that is more than 5 percent lower than the value of the first appraisal. In that case, the lower value must be used as the Property Value in determining the Adjusted Value.

The Borrower may not be required to pay for the expenses of the second appraisal.


Exceptions to Resale Time Restrictions

Exceptions to time limits on resale include:

  • Sales of Real Estate Acquired Through An Inheritance by the Seller.
  • Single-family property sales are facilitated through programs administered by other U.S. government agencies.
  • Nonprofit organizations can acquire HUD-owned single-family properties at a reduced price with resale limitations.
  • State and local governments conduct property sales.
  • Real estate transactions are sold by government-sponsored enterprises (GSE) and financial institutions chartered by the state and federal governments.
  • Property sales within PDMDAs are permitted only by issuing an exception notice from HUD.
  • HUD resales through its REO program.

A builder constructing a home for a borrower who plans to utilize FHA-insured financing or one selling a freshly built home is not subject to the abovementioned limitations or in 24 CFR § 203.37a.

You can find documentation regarding FHA underwriting guidelines in Handbook 4000.1, page 163.

Conclusion

In conclusion, the decision to sell a home after obtaining an FHA loan involves navigating various occupancy requirements and resale restrictions. FHA borrowers need to be aware of the 60-day occupancy requirement and the limitations on reselling within the first 90 days after the seller's acquisition. Selling a property between 91 and 180 days post-acquisition requires a second appraisal if the resale price is 100% or more above the original cost.

Understanding the potential financial implications of selling too soon is crucial, as market conditions and equity buildup play significant roles.

Planning strategically and being mindful of exceptions, such as sales under government programs or by certain entities, can aid borrowers in confidently navigating the real estate landscape. At the same time, there are time restrictions and exceptions, providing flexibility in specific scenarios.

Borrowers should stay informed and consider these factors when contemplating a home sale after securing an FHA loan.

SOURCE:
https://www.hsh.com/finance/government/FHA-mortgage-advantages.html
https://www.hud.gov/topics/buying_a_home

https://www.mapletreefunding.com/mortgages-home-loans/government-mortgages/FHA/

Recommended Reading

How to Qualify for an FHA Loan as a First Time Home Buyer Common Questions About FHA Loans
FHA Loan Down Payment Requirements
Comparing Conventional and FHA Loans