Can You Buy a Manufactured Home with a FHA Loan?

Buying a manufactured or mobile home can be an affordable way to achieve homeownership With factory construction bringing costs down, manufactured homes make homebuying attainable for more buyers But financing a manufactured home purchase is not the same as financing a site-built house. So an important question for prospective buyers is can you buy a manufactured home with a FHA loan?

The short answer is yes, FHA loans can be used to buy certain types of manufactured homes. But there are some specific requirements and limitations buyers should understand before applying for FHA financing on a manufactured home.

What is a Manufactured Home?

The US Department of Housing and Urban Development (HUD) uses the term “manufactured home” to refer to factory-built homes that meet HUD’s Manufactured Home Construction and Safety Standards building code. These homes are built in sections at a factory, then transported to the home site where they are joined together.

To qualify for FHA financing, a manufactured home must:

• Be built after June 15, 1976 when HUD standards went into effect
• Have a HUD label certifying it was built to code
• Be classified as personal property, not real estate

Manufactured homes meeting HUD criteria are also commonly called mobile homes. Modular homes are factory-built too, but are classified as real estate, not personal property.

FHA Loans for Manufactured Homes

FHA insures loans made by approved lenders, so lenders are more willing to finance manufactured homes Buyers can get FHA loans through two different programs

Title I Manufactured Home Loan

With a Title I loan, the home does not need to be attached to a permanent foundation. Title I loans can finance:

• Purchase of a manufactured home only
• Purchase of land or a manufactured home lot only
• Purchase of both land/lot and a home

Title I loans are limited to a maximum amount of $92,904 for home and lot combined.

Title II Manufactured Home Loan

Title II FHA loans have higher loan limits and can finance a manufactured home attached to land the buyer owns. With a Title II loan:

• The manufactured home must be on a permanent foundation.
• The home is classified as real estate, not personal property.
• Title to both home and land transfer to the buyer.
• Loan limits follow standard FHA guidelines up to $970,800.

Title II loans have stricter requirements but offer better financing options.

Manufactured Home Loan Requirements

Both Title I and Title II FHA loans have specific requirements for borrowers and properties.

Borrower Requirements

To qualify for an FHA manufactured home loan, buyers must:

• Have a credit score of at least 500
• Occupy the home as their primary residence
• Meet FHA income and debt-to-income requirements

Property Requirements

The manufactured home and property must meet standards including:

• Home was built after 1976 to HUD code
• Home and land have required title statuses
• Home is permanently attached if Title II loan
• Property has water, sewer, and utilities access
• Site meets HUD site suitability standards

Buyers should consult with lenders to ensure their property meets all requirements for financing.

Pros and Cons of FHA Manufactured Home Loans

FHA loans offer advantages for financing manufactured homes, but also have some drawbacks to consider.

Pros

• Low down payments as low as 3.5%
• Available for lower credit scores
• Lower monthly mortgage insurance
• Fixed rate loan terms up to 30 years

Cons

• Strict property requirements
• Permanent foundation required for Title II
• Loan limits on Title I loans
• Manual underwriting required
• Slower loan processing time

While FHA loans provide a feasible financing option, buyers will want to weigh the pros and cons before committing to the loan program.

Steps to Buying a Manufactured Home with an FHA Loan

If you’ve decided an FHA loan is the right option to finance your manufactured home purchase, here are key steps to follow:

1. Find the right home and land – Search for a HUD code manufactured home and suitable property meeting FHA requirements.

2. Select a lender – Compare FHA lenders and choose one that can walk you through the process.

3. Apply for financing – Complete the loan application providing all required documents.

4. Get appraisal and inspection – The lender will arrange for the home and property to be appraised and inspected.

5. Await loan decision – It may take several weeks for processing and underwriting to approve the loan.

6. Close on home and land – At closing, sign final loan documents and take ownership.

7. Move in! – After closing you can start moving into your new manufactured home.

Purchasing a manufactured home with FHA financing takes some extra steps but opens up homeownership opportunities. Connecting with a lender early on can help navigate the process smoothly.

Next Steps to Buying a Manufactured Home with a FHA Loan

Buying a manufactured home using FHA financing can make owning your own home more accessible. But qualifying for financing takes some legwork. As a first step, connect with an FHA lender who can guide you through manufactured home loan requirements. An experienced lender will explain the types of FHA loans available, property standards, and steps to getting approved.

Ready to move forward with an FHA manufactured home loan? Here are some helpful next steps:

• Check your credit so you know where you stand with scoring requirements
• Make sure your income and debts align with FHA guidelines
• Start looking at manufactured homes and property that may qualify
• Reach out to an FHA lender to discuss your financing options
• Ask the lender what documents you’ll need so you can prepare
• Get preapproved to make your home search more efficient

With the right FHA loan program and guidance from a knowledgeable lender, you can make your dream of owning a manufactured home come true. Take the first step and empower yourself to buy the home that fits your life.