How to Get an FHA Loan for Land and a Manufactured Home

If you’re looking for an alternative to a traditional, site-built home, you may want to consider financing a mobile home through the FHA manufactured home loan program. Sometimes called an FHA loan for a mobile home, this government-backed mortgage option allows borrowers with imperfect credit to purchase an affordable home.

Buying land to place a manufactured or mobile home on can be an affordable way to purchase a home. With an FHA loan, you may be able to finance both the land purchase and the manufactured home with a low down payment. In this article, we will explain the step-by-step process for getting an FHA loan to buy land and a manufactured home.

FHA Loan Overview

An FHA loan is a government-backed mortgage insured by the Federal Housing Administration (FHA). Some key features include:

Low down payments – Only 3.5% down required for buyers with credit scores of 580 or higher.
Lenient credit guidelines – FHA approves borrowers with credit scores as low as 500
Low mortgage insurance – Upfront mortgage insurance premium of 1.75% of loan amount plus ongoing annual premiums.

These features make FHA loans ideal for buyers who may not qualify for conventional mortgages. The FHA sees manufactured homes as an important source of affordable housing.

FHA Requirements for Manufactured Home Loans

To be eligible for an FHA loan, the manufactured home must meet certain criteria:

Built after June 15, 1976 and comply with HUD construction standards
Have a permanent chassis and be classified as real property
Minimum 400 sq ft of living space
Have HUD certification label(s) attached
Be placed on a permanent foundation inspected by an engineer

The land and home must be purchased together as the primary residence. FHA has limits on the maximum loan amount based on the value of the home and land.

How to Buy Land and a Manufactured Home with an FHA Loan

Follow these steps to buy land and a manufactured home with one FHA-insured mortgage:

1. Find Land and Select a Home

Search for land to purchase in the area you want. Look at all zoning and deed restrictions to ensure a manufactured home is allowed.

Once you have an option on land, select the manufactured home you want and get a purchase agreement from the dealer.

2. Get Preapproved for an FHA Loan

To get preapproved, you’ll need to complete a full mortgage application with an FHA lender and provide documents to verify income, assets, and credit. This shows sellers you are a serious buyer.

3. Make Offers and Negotiate Contracts

Make offers on the land and manufactured home. Use FHA-approved contracts that include contingencies for financing and appraisal.

Negotiate price, closing date, repairs, and other terms acceptable to both parties.

4. Get an FHA Appraisal

Your lender will order an appraisal to ensure the combined value of the home and land supports the purchase price and loan amount.

The appraiser must inspect the foundation and verify the home meets FHA certification standards.

5. Complete Loan Underwriting

In underwriting, your lender will evaluate your credit, income sources, assets, and overall ability to repay the mortgage. Conditional approval means you’ve met FHA requirements pending any outstanding conditions.

6. Finalize Land Purchase

During the closing process, the land purchase must occur first before the home can be delivered and installed. Your lender will disburse funds to the land seller at closing.

7. Install Home and Final Closing

After installing the home on the foundation, the lender will complete a final inspection to ensure it is properly attached before releasing the remainder of funds to the home seller.

And that completes the manufactured home loan process! With an FHA-insured mortgage, you can buy land and a factory-built home for a low 3.5% down payment. Just be sure to find an FHA lender experienced with manufactured home loans.

Pros and Cons of FHA Loans for Manufactured Homes

FHA financing has advantages but also some potential drawbacks to consider:

Pros

Low down payments from 3.5%
Purchase land and home together
Lower credit score requirements
Fixed interest rates

Cons

Require mortgage insurance
Limited borrowing amounts
Slower process than conventional loans
May be harder to resell later

Even with additional costs and work, an FHA loan can make buying land and a manufactured or mobile home affordable when other financing may not be available.

Alternative Loan Options

Beyond FHA, here are a couple other financing options for manufactured homes:

USDA loans – Similar to FHA but for rural properties; may offer 100% financing
Conventional loans – Require higher credit scores and down payments but no mortgage insurance
Chattel loans – Financing for the home only (not the land) through specialty lenders

Shop around to find the best loan program and rates for your situation. USDA and FHA loans are government-backed options to consider if you don’t qualify for conventional mortgages.

Finding an FHA Lender for Manufactured Home Loans

The key is connecting with lenders familiar with FHA’s rules on manufactured housing:

Ask friends for referrals to lenders they’ve worked with.
Search online for lenders advertising manufactured home loan programs.
Contact local banks and credit unions about their experience with FHA manufactured home loans.
Consider mortgage brokers who work with multiple lenders to get you the best rates/terms.

Be upfront about buying land and a manufactured home when speaking to lenders to confirm it’s something they are comfortable handling. It takes extra effort but the right FHA lender can guide you through the entire process.

The Bottom Line

Purchasing land and having a manufactured or mobile home installed on a permanent foundation can be an affordable way to buy a home. Although extra steps are required, FHA loan programs allow you to finance the land and manufactured home together with a low down payment. Just be sure to find an FHA lender with proven experience handling manufactured home loans.

Construction requirements for FHA manufactured home loans

FHA-approved lenders will need to verify the following:

The home site has access to water and sewer facilities
The site has all-weather access
The living area is at least 400 square feet
The home has an approved HUD seal visible on the exterior
Whether the home is permanently attached to land according to local building guidelines

What are my FHA manufactured home loan options?

There are two types of FHA manufactured home loans: the Title II FHA loan program and the FHA Title I program.

With the Title II FHA loan program:

You can finance a new manufactured home, the cost of transporting it to its permanent location and any costs associated with installation.
You can take steps to refinance an existing loan you borrowed to purchase a manufactured home, as long as the home has been installed at the site for at least a year.
Your home must be permanently attached to land that you own.

With the FHA Title I loan program:

You can finance a new or used manufactured home, even if you don’t own the land it’s sitting on.
You can finance a site for a manufactured home to sit on.
You can finance repairs or improvements to a manufactured home you already own, as long as you own the lot it sits on.
You can refinance both a manufactured home and lot, or either one separately.
Your home doesn’t have to be, but can be, permanently attached to land.

You can apply for a manufactured home loan directly with an FHA-approved lender or go through a dealer, who can help you apply. Much like cars, manufactured homes are usually sold through a dealer.

FHA Loan for Land

FAQ

Will an FHA loan cover a manufactured home?

With the FHA Title I loan program: You can finance a new or used manufactured home, even if you don’t own the land it’s sitting on. You can finance a site for a manufactured home to sit on. You can finance repairs or improvements to a manufactured home you already own, as long as you own the lot it sits on.

Can you get an FHA loan twice?

Can You Get an FHA Loan More Than Once? You can get multiple FHA loans in your lifetime. But while you don’t need to be a first-time homebuyer to qualify, generally speaking, you can only have one FHA loan at a time. This prevents potential borrowers from using the loan program to buy investment properties.

What documentation does FHA require to indicate that a manufactured home’s foundation is in compliance with the permanent foundations guide?

A licensed professional engineer’s seal and signature (certification) is required to indicate compliance with the Foundation Guide. The lender should furnish the appraiser with a design engineer’s inspection of the foundation prior to the appraisal.

What is considered a permanent foundation for mobile home?

Permanent foundations include basement, crawl space, and slab with block skirting foundations. Non-permanent foundations, on the other hand, can be detached from your home. However, if you choose a non-permanent foundation, you may not be able to receive real estate loans or financing.

What is the loan limit for a manufactured home?

If you’re buying a home and land, your loan limit is $92,904. If you’re buying just a manufactured home, your loan limit is $69,678. If you’re buying just a lot, your loan limit is $23,226. An FHA manufactured home can be placed on land you own, but it’s not required.

What is an FHA manufactured home loan?

An FHA manufactured home loan is a mortgage backed by the Federal Housing Administration (FHA) that you can use to purchase a home built in a factory. If you need to, you can also use the loan to buy a plot of land for the home to sit on. You may know this type of house as a “mobile home,” but that isn’t the term used by the FHA today.

Can a mobile home be approved for an FHA loan?

Mobile home loans guaranteed by the FHA loan program have some unique requirements. One of them? The manufactured-by rule; HUD 4000.1 states that mobile homes manufactured before June 15, 1976 cannot be approved for an FHA mortgage. Then there’s a size restriction–your new home cannot be too small.

What is the maximum FHA mobile home loan amount?

The maximum FHA mobile home loan amount is $92,904. The FHA has two loan programs for manufactured homes: one for borrowers who own the land that the home is on, and another for homes located in a mobile home park. With an FHA mortgage, the government insures a loan provided by an approved private lender.