FAQ: How is FHA Property Transfer Eligibility Handled?

Overview

When a loan’s purpose is Purchase, FHA requires a review of how long the seller has owned the property before it can be sold to a buyer using FHA financing.

The FHA Property Transfer Eligibility Check helps ensure compliance with FHA’s property flipping guidelines. Charlie automatically evaluates this rule using key property and loan data.

Purpose of the Check

The FHA Property Transfer Eligibility Check prevents property flipping by verifying that sufficient time has passed between when the seller acquired the property and when it’s sold to a new buyer.

Depending on how long the seller has owned the property and whether any exemptions apply, FHA financing may be:

• Eligible,

• Eligible with conditions (second appraisal required), or

• Ineligible.

How It Works in Charlie

Charlie automatically evaluates several fields to determine FHA property transfer eligibility.

Key Inputs

• Loan Purpose – Must be Purchase

• Mortgage Type – Must be FHA

• Acquisition to Sale Days – Days between seller acquisition and buyer contract

• Sales Contract Amount – Current purchase price

• Seller Acquisition Amount – Amount the seller originally paid

• Exemption Type – Determines if the transaction qualifies for FHA exceptions (e.g., government agency, relocation, nonprofit, disaster area, builder sale, etc.)

Eligibility Logic

Charlie applies the following logic in order:

Step 1: Check for Exemptions

If the Exemption Type is anything other than Not Exempt, the property is marked:

✅ Eligible – Due to Exemption

If blank, Charlie defaults the value to Not Exempt and continues.

Step 2: Verify Ownership Duration

If the property has been owned for 90 days or less, FHA considers it ineligible for purchase using FHA financing.

❌ Result: Ineligible – Resale less than 90 Days

If more than 90 days, Charlie proceeds to Step 3.

Step 3: Evaluate Price Change

If the property has been owned between 91–180 days, Charlie compares the resale price to the seller’s acquisition price:

• If the resale price is double or more, a second appraisal is required.

• If the resale price is less than double, no second appraisal is needed.

If ownership exceeds 180 days, the property is fully eligible:

✅ Result: Eligible – Resale greater than 180 Days

Output Values

The FHA Property Transfer Eligibility Check result displays as one of the following:

• Ineligible – Resale less than 90 Days

• Eligible – Only with 2nd Appraisal

• Eligible – 2nd Appraisal Not Required

• Eligible – Resale greater than 180 Days

• Eligible – Due to Exemption

• Unknown (if required data is incomplete)

Troubleshooting

If the Transfer Eligibility Result shows “Unknown” or “Error”, review the following:

• ✅ Loan Purpose – Must be Purchase

• ✅ Mortgage Type – Must be FHA

• ✅ Acquisition to Sale Days – Must be populated and greater than 0

• ✅ Sales Contract Amount and Seller Acquisition Amount – Must not be blank

• ✅ Exemption Type – Ensure value is entered or defaults to Not Exempt

Once all required fields are complete, Charlie will automatically re-run the eligibility check and update the result.

Key Takeaways

• FHA’s flipping rule applies to all purchase transactions using FHA financing.

• The Property Transfer Eligibility Check runs when FHA conditions are met.

• Results clearly identify whether the property is eligible, requires a second appraisal, or is ineligible based on ownership duration and pricing.

• Missing data will pause the calculation until all inputs are provided.