USDA Manufactured Home Loan Program: Guidelines and Requirements

The USDA Rural Development agency offers a manufactured home loan program to help provide affordable homeownership opportunities in rural areas. These government-backed loans can make buying a manufactured or modular home easier for qualifying borrowers.

In this article, we’ll break down the key guidelines, requirements, and steps for obtaining USDA financing on a manufactured home

Overview of the USDA Manufactured Housing Program

The USDA Single Family Housing Guaranteed Loan Program allows approved lenders to issue mortgages for purchasing new manufactured homes in eligible rural locations. By guaranteeing the loans, the USDA provides lenders with incentive and reduced risk to offer affordable manufactured housing financing.

Some key features of the program

• Available for new manufactured home purchases only. Existing homes do not qualify.

• Requires houses be built to HUD standards and placed on permanent foundations.

• Offers 100% financing with no down payment required

• Can include land costs and eligible site development in the loan amount.

• Provides a federal guarantee to lenders of up to 90% of the loan amount.

• Allows 30-year fixed rate mortgage terms.

In addition to manufactured housing loans, the USDA also guarantees mortgages for stick-built homes and modular housing.

Manufactured Home Requirements

For a manufactured home to be eligible, it must meet the following criteria:

• Constructed after June 15, 1976 and built to HUD standards

• Placed on a permanent foundation built to code

• Have the towing hitch and running gear removed

• Minimum 400 square feet of living space

• Exterior siding, roofing, and appearance should resemble site-built housing

• Unit must be new – existing manufactured homes do not qualify

• Inspected to confirm no damage occurred during transportation

The home must be certified to comply with HUD heating and thermal standards based on climate zone. The certification label will be inside the unit.

Land and Site Requirements

USDA manufactured loans apply for rural properties. The land where the home is placed:

• Must be located in a rural area as defined by USDA maps

• Cannot be large enough to subdivide into separate plots in the future

• Should have the value of the site portion be no more than 30% of the total as-improved property value

In addition, the site must be:

• Serviced by an all-weather access road

• Have adequate utilities such as water, electric, and septic/sewer

• Not be located in a flood hazard area

• Comply with any zoning and land use regulations

Manufactured homes must be attached to permanent foundations and meet local codes and anchoring requirements. Any site development like driveways, utility hookups, or septic must be completed prior to closing.

Borrower Eligibility and Income Limits

To qualify for the USDA manufactured home loan program, borrowers must meet eligibility requirements including:

• Have household income within the applicable income limits for their area

• Have sufficient income and credit to support the loan payments

• Be a U.S. citizen or legally permanent resident

• Personally occupy the home as their full-time residence

• Not have an existing government-backed mortgage unless trading up

Income limits do vary by region, household size, and type of loan. Your lender will verify you meet the income thresholds for eligibility in your county.

How to Apply for a USDA Manufactured Home Loan

The application process involves these primary steps:

• Get pre-qualified – Work with a USDA approved lender to assess your eligibility and financing options.

• Select a home – Choose a new HUD manufactured home that meets program requirements.

• Find land – Identify a suitable site in a rural location eligible for USDA financing.

• Apply for the mortgage – Your lender will guide you through providing required income, credit, and eligibility documentation.

• Obtain approval – The lender submits your application to underwriting and USDA for approval after requirements are met.

• Close on the loan – At closing, you’ll sign final loan documents and financing will be secured.

Throughout the application process, your lender will advise you on fulfilling USDA requirements to obtain approval.

Key Facts on USDA Manufactured Housing Loans

Some important facts about the USDA manufactured home loan program:

• Offers fixed rates comparable to traditional mortgages.

• No maximum income limits, however there are minimum eligibility thresholds.

• Can be combined with down payment assistance programs for eligible borrowers.

• Credit score minimums vary by lender but are generally around 640.

• Secondary financing is allowed as long as the combined loan amounts stay within program limits.

• Loan amounts follow FHA loan limits, depending on number of units.

• Requires full real estate title and lien protections like site-built housing.

• Properties must be located outside urbanized or metro areas to qualify as rural.

• 100% financing allows no down payment for eligible applicants.

Make sure to discuss program options, guidelines, and your specific qualifications with a USDA approved lender. This can help you determine if the manufactured home loan program is the right fit for your homebuying needs and financial situation.