What time frame defines a resale of a house that restricts eligibility for FHA financing?

A resale of a house that restricts eligibility for FHA financing is defined as occurring within less than 90 days. This time frame is significant due to the FHA's anti-flipping restrictions, which are designed to prevent speculative purchasing and similar practices that could inflate property values and lead to financial instability for buyers.

When a property is purchased and then quickly resold, there is often a concern that the new sale price may not reflect the true value of the home, especially if the previous owner made no significant improvements or changes. By imposing this 90-day rule, the FHA aims to ensure that homes sold within this period undergo either owner-occupancy or meaningful improvements that affirm the home's value before it can be financed through an FHA loan. Therefore, when lending practices adhere to this guideline, it helps to protect both the buyer's financial commitment and the overall health of the housing market.

This 90-day timeframe is also a response to concerns about buyers potentially overpaying for homes as sales prices may be artificially inflated due to quick resales. Thus, to mitigate these risks and to ensure a more stable housing industry, the FHA maintains this restriction on home sales within the first 90 days after a purchase.