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Selling house for more than purchase price, will that affect my ability to get a loan on a new house?

I purchased my home and made extreme renovations to the house. I bough tit in 2010 December for 250k, but I believe I can make some sort of profit after the renovations (Thinking 280-320k). I have heard that there might need to be a seasoning of 12 months. Can anyone clarify this or should my flip be okay? I plan on securing a new loan for a new home while things hang in the balance. by jon.de_345_227 from Baton Rogue, Louisiana. Oct 14th 2011 Reply


Shon Atabaki (ShonAtabaki)
#48 ranked lender in Washington - 95 contributions

There are a couple of layers to your question actually. If you hold the property for less than 12 months, the gain on the sale will be treated as a short-term gain, and subject to ordinary tax.With respect to qualifying for a mortgage for a new home, the holding period will not be a factor.With respect to a buyer, there can be issues with respect to short-term flipping, but if they are working with a good lender and the extent of the renovations are well documented for the appraiser, there should be no problems for them either.Best of luck!

Oct 14th 2011
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Bert Carpenter (BertCarpenter)
#37 ranked lender in Arizona - 2,431 contributions

You are thinking of the "Flipped property rule". This should not affect the sale of your existing home. If you purchased it in December 2010, you are well past the window that FHA and most conventional lenders would look at, so the increase in sales price should not be an issue. The big potential hitch would be that if the home is not under contract at the time your new loan is in underwriting, most loan programs will require you to have sufficient income to service both homes in case the old one does not sell quickly.

Oct 14th 2011
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Joe Metzler (JoeMetzler)
#17 ranked lender in Minnesota - 4,848 contributions

Generally speaking, you are fine selling and then buying. Isn't that the American way? Buy low, sell high! Good for you. The one thing many people are unaware is that there are rules when it comes to someone getting financing to BUY your "flip" home. Too many details to cover here, but if YOU have owned the home less than 90-days, a buyer may have trouble getting a loan on the home because of silly anti-fraud rules. After 90-days... sell all you want... No problem.

Oct 15th 2011
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