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 a manufactured home can be an affordable way to achieve homeownership. With median sales prices routinely below $100000 manufactured homes offer an budget-friendly alternative to site-built houses. But financing a manufactured home purchase can be tricky. An FHA loan for a manufactured home makes financing possible for many buyers. In this complete guide, we’ll cover everything you need to know about getting an FHA loan for your manufactured home purchase.
What is a Manufactured Home?
Before we dive into FHA manufactured home loans let’s clarify what counts as a manufactured home. The U.S. Department of Housing and Urban Development (HUD) uses the term “manufactured home” to refer to factory-built housing that meets HUD’s Manufactured Home Construction and Safety Standards building code.
Specifically a HUD-approved manufactured home must
- Be constructed in a factory after June 15, 1976, when HUD standards went into effect
- Bear a red certification label on each transportable section
- Be built on a permanent chassis allowing transport to site
- Have at least 400 square feet of living space
The removal of the towing hitch and attachment of a HUD-approved seal to the exterior are also requirements. Manufactured homes meeting HUD criteria can be financed with an FHA loan, while mobile homes built before 1976 cannot.
What is an FHA Manufactured Home Loan?
An FHA manufactured home loan is a mortgage insured by the Federal Housing Administration that allows buyers to finance the purchase of a manufactured home. Borrowers work with FHA-approved lenders but benefit from the financial backing of the FHA.
Since the FHA insures these loans, lenders can work with buyers who meet program criteria but may not qualify for conventional financing. FHA home loans are popular options for buyers with past credit troubles or low down payments.
There are two types of FHA loans for manufactured housing:
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Title II – Requires the home be permanently affixed to land owned by the borrower. Can finance purchase, transportation, and setup costs for a new manufactured home.
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Title I – Does not require the home be placed on land owned by the borrower. Can finance purchase of new or used manufactured homes and/or the lot.
Manufactured Home Requirements for FHA Loans
Manufactured homes and home sites financed with FHA loans must meet certain criteria set by HUD, including:
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Home Construction: Home must have HUD seal and conform to HUD building codes. Minimum 400 sq ft of living space required.
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Foundation: Home must be permanently affixed to the site per HUD standards. Foundation inspection required.
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Access: Home site must have all-weather access and connections to water and sewer utilities.
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Land Ownership: For Title II loans, borrower must own land. For Title I loans, owning or leasing is allowed.
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Primary Residence: Borrower must intend to occupy the home as their primary residence.
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Loan Limits: Vary based on Title I vs Title II and whether land is included.
Meeting these requirements ensures the home and land will be marketable when it comes time to sell.
How to Qualify for an FHA Manufactured Home Loan
In addition to meeting home and site requirements, buyers must meet general FHA loan eligibility standards:
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Credit Score: Minimum 500 credit score required. 580+ score needed for 3.5% down payment.
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Downpayment: Minimum 3.5% down payment required. 10% down needed for buyers with credit scores below 580.
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Debt-to-Income Ratio: Max total DTI of 57% allowed, subject to lender discretion. Includes new mortgage payment.
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Mortgage Insurance: Upfront and annual mortgage insurance premiums required.
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CAIVRS Check: Ensures no outstanding federal debts through Credit Alert Verification Reporting System database.
Meeting these criteria qualifies buyers for low down payments and flexible credit standards not found with conventional loans. Pre-approvals from lenders will confirm eligibility amounts.
Finding an FHA Manufactured Home Lender
The key to getting an FHA manufactured home loan is finding a lender approved to offer them. Here are some tips:
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Search HUD’s online list of approved lenders by state to find options near you.
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Get loan estimates from multiple lenders to compare interest rates and fees.
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Ask about the loan officer’s specific experience with manufactured housing loans. Look for expertise.
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Mortgage brokers can offer more choices by accessing multiple lenders on your behalf.
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National lenders like [Lender 1] and [Lender 2] offer manufactured home loan programs online.
Shopping around leads to the best offers. Once you choose a lender, they will guide you through the documentation process.
Alternatives to FHA Manufactured Home Loans
FHA loans offer unique advantages, but they aren’t the only financing option. Some alternatives to explore include:
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Conventional Loans – Require higher credit scores but allow lower PMI rates with good credit. Options from Fannie Mae and Freddie Mac exist.
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VA Loans – For qualifying military borrowers. Require home be placed on land owned by the borrower.
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USDA Loans – For low-income borrowers in rural areas. Can cover 100% of purchase and land costs.
Running the numbers on multiple loan types ensures you find the most cost-effective mortgage for your situation.
Pros and Cons of FHA Loans for Manufactured Homes
Let’s recap the key advantages and drawbacks of choosing an FHA manufactured home loan:
Pros
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Low down payments, starting at 3.5%
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Flexible credit score requirements as low as 500
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Higher debt-to-income ratios allowed compared to conventional mortgages
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Access to financing even if you don’t own the home site
Cons
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Requirement for both upfront and annual mortgage insurance premiums
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Potentially smaller loan amounts due to FHA lending limits
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Slower loan approval process compared to conventional mortgages
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Permanent foundation requirement for Title II loans
Weighing the pros and cons helps determine if an FHA loan is your best option.
The Bottom Line
FHA manufactured home loans unlock affordable financing for factory-built housing. They offer flexible credit standards and low down payments to buyers unable to qualify for conventional mortgages. Just be sure to find a lender experienced with manufactured home loans. If you’re looking to buy a manufactured home, an FHA loan can make your dream of homeownership a reality.
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. FHA-eligible mobile homes are typically called manufactured homes and have to follow standards set in 1976 by the U.S. Department of Housing and Urban Development (HUD). Homes built before June 15, 1976, aren’t eligible for FHA financing.
You need to meet FHA minimum mortgage standards as a borrower, and your manufactured home and the land it sits on have to meet special property and construction requirements, all explained in more detail below.
How to qualify for an FHA manufactured home loan
The minimum down payment is 3.5%, and the home purchase and installation costs can be added to the loan amount.
The FHA accepts scores as low as 500 with a 10% down payment. Borrowers making a 3.5% down payment will need at least a 580 credit score.
The FHA caps your debt-to-income (DTI) ratio — which measures the portion of your gross monthly income that goes toward debt payments — at 43%. This will include your new FHA mortgage payment. However, you may still qualify with a higher DTI if you have a high credit score or extra cash reserves.
FHA manufactured home loans require two types of FHA mortgage insurance: an upfront mortgage insurance premium (UFMIP) and an annual mortgage insurance premium (MIP). The UFMIP is equal to 1.75% of your loan amount and can be paid in full at closing or rolled into the loan amount. The annual MIP ranges from 0.15% to 0.75% of the loan amount and is added to your monthly payments in 12 installments each year.
HUD sets different lending guidelines for each loan program.
For Title II loans, the FHA loan limits that apply to all FHA loans also apply. These are set each year based on national median home prices. In 2024, the FHA loan limit is $498,257 for a single-family home in most U.S. counties.
For Title I loans, your loan limit depends on what you’re buying with the loan:
- 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. If you’re leasing land, the lease typically needs to be for three years or longer. The lease must also stipulate that you’ll receive at least 180 days notice if the landlord plans to terminate your lease.
The home must be your primary residence for at least one year.
The government maintains a database of borrowers with delinquent federal debts called the Credit Alert Interactive Verification Reporting System (CAIVRS). Your lender will run a CAIVRS check to ensure you don’t owe any outstanding debts to the federal government. If you do, you’ll be ineligible for an FHA manufactured home loan.
FHA Mobile Home Requirements
FAQ
Will an FHA loan cover a manufactured home?
Who is the best lender for manufactured homes?
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Company
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Starting Interest Rate
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Loan Terms (range)
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Manufactured Nationwide Best Overall
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Varies
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15, 20, or 30 years
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ManufacturedHome.Loan Best for Good Credit
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Varies
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Varies
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21st Mortgage Corporation Best for Bad Credit
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Varies
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Varies
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eLend Best for Low Down Payment
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Varies
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Varies
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What is the oldest manufactured home for FHA?
Why is it hard to get a mortgage on a manufactured home?
Can I get an FHA loan for a manufactured home?
When pursuing an FHA loan for a manufactured home, you must decide between the Title I FHA loan program and the Title II FHA loan program. The Title I program doesn’t require your manufactured home to be attached to the land. However, the Title II FHA loan program does require the home to be permanently attached to land that you own.
Can an FHA loan be used to finance a mobile home?
An FHA loan can finance a manufactured home and the land it will be on or just the home itself. These loans are available for borrowers who own the land and for homes that will be located in a mobile home park.
What are the FHA home loan rules for manufactured homes?
FHA home loan rules for manufactured housing don’t just list the credit score requirements and other financial qualifications needed to approve the loan. FHA loan rules for manufactured homes include age and foundation requirements as well as minimum sizes. FHA Manufactured Home Loans: Are These FHA 203 (b) Mortgages?
What types of FHA loans can be used for manufactured homes?
In the FHA Title I program, you can apply for a loan insured by the FHA to purchase or refinance a manufactured home. Two types of FHA loans can be used for manufactured homes: you can use these loans to buy a home or a property lot or both at the same time.