Does an FHA Loan Cover Manufactured Homes?

Manufactured homes, also known as mobile homes, provide an affordable housing option for many buyers. With a manufactured home, you can own a spacious residence without spending a fortune. However, financing a manufactured home can be tricky. Thankfully, FHA loans offer a solution.

What is a Manufactured Home?

A manufactured home is a prefabricated house constructed in a factory before being transported to your property. It is also commonly called a mobile home. To qualify for FHA financing, the home must:

• Be built after June 15, 1976 according to HUD code
• Have a HUD certification label attached
• Have at least 400 sq ft of living space
• Be attached to a permanent foundation
• Have access to water, sewer, and utilities

Manufactured homes come in single, double, or triple wide floor plans. They provide an affordable way to own a home, often ranging from $50,000 to $100,000.

FHA Loan Options for Manufactured Homes

FHA loans help make manufactured home ownership possible for buyers with low down payments and lower credit scores. There are two types of FHA loans that apply to manufactured housing:

FHA Title I Loan

• Can finance a used manufactured home without land ownership
• Maximum loan amount is $92,904
• Requires 10% down payment for borrowers with credit scores below 580
• Loan term up to 20 years, or 25 years with an extension

FHA Title II Loan

• Requires the home be placed on land owned by the borrower
• Lower down payment of 3.5% with a minimum 580 credit score
• Maximum financing up to $970,800 depending on local limits
• 30 year loan term

With either loan program, the manufactured home must be on a permanent foundation and classified as real estate. Foundation inspections are required prior to loan approval.

Manufactured Home Loan Requirements

Here are some key criteria to qualify for an FHA manufactured home loan:

• Credit score – Minimum 500 credit score required, with higher scores receiving better terms
• Down payment – 10% down with credit scores below 580, or 3.5% down with 580+ credit
• Debt-to-income ratio – Maximum backend DTI of 43%
• Occupancy – Must be owner-occupied as primary residence
• Home requirements – Home must be built after 1976 and have HUD certification label
• Foundation – Home must be permanently fixed on a foundation on land owned by borrower

As with all FHA loans, you’ll need to pay an upfront mortgage insurance premium and ongoing monthly premiums. But this provides access to low down payment options.

Pros and Cons of FHA Manufactured Home Loans

Pros

• Low down payments, starting at 3.5%
• Available for lower credit scores
• Loan amounts up to $970,800 in certain areas
• Long term loans up to 30 years

Cons

• Require mortgage insurance premiums
• Limited availability from some lenders
• Slower financing process than conventional loans
• Lower appraised values than site built homes

While FHA financing opens doors for buyers, manufactured homes may be harder to resell later. They often appreciate slower than site built homes.

Tips for Getting Approved

If you’re considering an FHA loan for a manufactured home, here are some tips:

• Shop with lenders familiar with manufactured housing – Not all lenders approve these loans, so look for ones experienced with FHA programs
• Highlight stability – Underwriters want to see a stable job history and income
• Get your paperwork ready – Having payroll stubs, W2s, and statements prepared makes approval faster
• Inspect the home carefully – Be sure the home meets HUD standards and is properly installed
• Check your foundation – Confirm proper foundation and inspections are complete

With the right lender, an FHA loan can make your dream of owning a manufactured home come true. These affordable residences provide a stepping stone to homeownership.

Finding an FHA Manufactured Home Lender

The first step is connecting with lenders comfortable doing FHA loans for manufactured housing. While FHA approves these loans, each lender makes their own policies.

Look for lenders like FHA Lenders and Rocket Mortgage who regularly work with manufactured home buyers. They understand the FHA guidelines and property requirements.

Reach out to discuss your scenario and property. They can provide custom quotes for both FHA Title I and Title II loans. Then you’ll know exactly what loan programs you qualify for.

Owning a home is possible even on a modest budget. With an FHA manufactured home loan, you can finally stop renting and enjoy your own affordable house. Let a specialized lender guide you through the process.