If you're looking to purchase a home using an FHA backed loan OR you want to purchase a home to renovate and sell (also known as a fix and flip), this is GREAT news!

You might want to know what the rule was to start with. Well, if a person purchased a home, they could not sell that home to a buyer who was using FHA lending for at least 90 days.  This was to prevent people from buying, increasing price for financing, then selling to "a friend" etc. to pull cash out of the home.  This was leading to over-inflated home prices in the past.  Now, however, we need investors to buy damaged homes and fix them up for resale. The waiver was severely hampering these investors, thus, stalling the home market recovery and shutting FHA buyers out of the newly renovated homes.

In an effort to stabilize home values and improve conditions in communities where foreclosure activity is high, such as Arizona, HUD Secretary Shaun Donovan today announced a temporary waiver of the 90-day FHA waiting period. Many times, it doesn't take someone 90 days to repair a home for resale. 

"This change in policy is temporary and will have very strict conditions and guidelines to assure that predatory practices are not allowed," Donovan said.

The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.

The waiver will take effect on February 1, 2010 and is effective for one year.  This waiver is limited to those sales meeting the following general conditions:

• All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
• In cases in which the sales price of the property is 20 percent or more above the seller's acquisition cost, the waiver will only apply if the lender meets specific conditions (such as proof of the renovations costing 20%+ of the original cost)
• The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.

Specific conditions and other details of this new temporary policy are in the text of the waiver, available on HUD's website.