Only 15.9 percent of homes that were flipped in the first quarter of 2018 were sold to those who bought them with Federal Housing Administration loans. That is the lowest rate in the last 10 years. Rising home prices are one of the reasons why first-time buyers in Georgia and elsewhere are not buying flipped properties. The median price of a flipped property was $215,000 through the first three months of 2018.
The rising prices are also what have attracted people to buy homes with the intent of rehabbing and selling them quickly. It is important to note that a person doesn’t necessarily need to be a first-time buyer to qualify for an FHA loan. Furthermore, there is no requirement for an individual to use an FHA loan to buy their first home. However, it is not uncommon for people to buy their first homes using this loan option.
This is because buyers can get a loan with a down payment of 3.5 percent and qualify with a lower credit score. In 2005, only 5 percent of flipped homes were sold to those using FHA loans as most buyers qualified for home loans. That percentage increased to 34 percent in 2010 as the economy was still feeling the impact of the 2008 financial crisis.
When buying a residential property, a buyer may need to consider his or her ability to make a down payment. Credit issues might also come into play when determining what type of loan to get. Working with a real estate agent or mortgage broker may help an individual find a loan that meets their needs. An attorney could review the terms of a loan as well as the terms of a purchase agreement prior to the deal closing.