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.
Many home buyers are now turning to manufactured housing as an affordable alternative to site-built homes. With an FHA loan, you can buy both the manufactured home and the land it sits on, allowing you to own your own property. This comprehensive guide will walk you through everything you need to know about using an FHA loan to buy a manufactured home and land.
What is a Manufactured Home?
A manufactured home (also known as a mobile home) is a prefabricated house that is built in a factory and then transported to a site. The main types are:
- Single Section – This is a single unit that is towed to the site. It is typically 12 feet wide and 40 to 60 feet long.
- Multi Section – These come in two or more sections that are towed separately and joined together on site. They can be up to 16 feet wide and 80 feet long.
- Modular Homes – This type is also built in sections but meets local building codes like a site-built home. The sections are hauled to the site and installed on a permanent foundation.
Manufactured homes offer an affordable way to become a homeowner. They cost roughly half as much per square foot compared to site-built homes.
FHA Loan Overview
An FHA loan is a mortgage insured by the Federal Housing Administration Some key features include
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Low Down Payment – You only need a 3.5% down payment. This makes it easier to buy a home if you don’t have a lot saved up.
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Lenient Credit Requirements – FHA has flexible credit standards, with a minimum FICO score of just 580. They are a good option if you have past credit problems.
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Low Mortgage Insurance – FHA loans require mortgage insurance. However, the annual premium is only 0.85% of the loan amount versus 1-2% for conventional loans.
FHA loans can be used to buy or refinance single family homes, duplexes, townhomes and condos. Manufactured housing on owned land also qualifies.
Benefits of an FHA Loan for a Manufactured Home and Land
There are several benefits to using an FHA loan to purchase both a manufactured home and land:
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Low Down Payment – As mentioned, FHA only requires 3.5% down. This allows buyers with limited savings to purchase a home.
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One Loan – You can roll the purchase price of the home and land into a single FHA loan. This simplifies the process versus needing to get separate financing.
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Fixed Rates – FHA loans offer fixed interest rates. Your monthly mortgage payment will remain the same over the entire loan term.
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Long Repayment – FHA loans can be structured for up to 30 years. The extended repayment makes the monthly mortgage manageable.
Using an FHA loan is really the easiest way to buy a manufactured home and land in one complete transaction.
FHA Purchase Price Limits on Manufactured Homes
FHA does place some limits on the maximum loan amount they will insure for a manufactured home purchase based on the cost breakdown:
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Land Only – The max FHA loan is $23,226 if just buying the land.
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Home Only – The max loan amount is $69,678 if just buying the manufactured home.
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Land and Home – If buying both together, the max FHA loan is $92,904.
These limits apply to single-wide, double-wide and triple-wide manufactured homes. The combined loan amount for the home and land cannot exceed $92,904.
FHA Manufactured Home Requirements
For an FHA loan, the manufactured home must meet these general requirements:
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Home was built on or after June 15, 1976.
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The home has a HUD Certification Label permanently attached on the outside.
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Home will be installed on a permanent foundation rooted in the ground.
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The home has a floor area of at least 400 square feet.
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Home will be hooked up to permanent water, sewer, electric and heating utilities.
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The home will be used as your principal residence.
The lender will verify the home meets all the latest HUD manufacturing standards during the appraisal inspection.
FHA Approved Foundations for Manufactured Housing
A proper foundation is required for an FHA loan on a manufactured home. The three main types of approved foundations are:
Permanent Masonry Foundation
- Constructed from concrete blocks or poured concrete footers.
- Has anchoring points secured into ground.
- Must be certified by engineer as meeting FHA requirements.
Floating Slab Foundation
- Concrete perimeter walls are poured around edge.
- Compacted gravel base fills center area.
- Secured by anchors, piers or footing system.
Piers Footing Foundation
- Concrete, treated wood or cinder block piers.
- Installed below frost line and supported by footings.
- Anchors connect home to piers.
The installation must fully comply with HUD regulations. Proper anchoring, support and reinforcement are checked by the appraiser.
Manufactured Home Requirements for FHA Appraisal
As part of the FHA loan approval process, the lender will order an appraisal on the manufactured home and land. The appraiser will verify:
- Home meets HUD construction standards.
- Foundation is properly installed.
- Utilities are connected.
- Home is designed for year round occupancy.
- Property meets FHA minimum standards.
- Home and land have adequate value to support loan.
The appraised value must be high enough to meet FHA’s loan-to-value requirements based on the amount of your down payment.
How to Apply for an FHA Manufactured Home Loan
Follow these steps when applying for an FHA loan to purchase a manufactured home and land:
1. Check Your Credit
Since FHA requires a minimum 580 FICO score, check your credit first and address any issues. Getting pre-approved will also show your score.
2. Find an FHA Lender
Research lenders who offer FHA manufactured home loans. Compare interest rates and fees to find the best pricing.
3. Select Your Home and Land
Once pre-approved, shop for your manufactured home and desired piece of land that fits your budget.
4. Make an Offer
After selecting the home and land, make an offer contingent on obtaining an FHA loan.
5. Complete Loan Application
You will need to provide documents verifying income, employment, assets, debts and a home inspection will be ordered.
6. Obtain Appraisal
The lender will order an appraisal on the manufactured home and land to ensure FHA guidelines are met.
7. Close on Your FHA Loan
After loan approval, you will sign final paperwork and the home and land purchase will close.
The entire FHA loan process usually takes 30-60 days from application to closing.
Tips for Getting Approved for an FHA Manufactured Home Loan
To improve your chances of getting approved, make sure to:
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Save up your 3.5% down payment in a bank account. FHA requires you have the minimum down payment already saved. Gifts can also provide your funds.
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Pay down credit cards below 30% utilization. High balances can negatively impact your debt-to-income ratio.
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Check your credit report and fix any errors that may be lowering your scores. Accurate reporting is key.
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Gather 2 months bank statements to document your assets, income sources and cash reserves.
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Get pre-qualified with a lender before making an offer. This shows sellers you can obtain financing.
Taking these steps will put you in the best position for your FHA manufactured home loan.
Alternatives if You Don’t Qualify for FHA Financing
If you don’t meet the requirements for an FHA loan, here are some alternative options to consider:
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Conventional 97 Loan – This program needs just 3% down with more flexible credit requirements than FHA.
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USDA Loans – For properties in rural areas, USDA offers 100% financing for low income buyers.
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Seller Financing – The home seller carries the mortgage. A higher interest rate and down payment is usually required.
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Personal Loan – An unsecured loan from a bank or credit union can provide down payment funds if you have good credit.
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Lease Option – Rent the home while working to improve your credit. You get the option to purchase once you qualify.
Don’t get discouraged if you aren’t approved for an FHA loan. Talk to your lender about other manufactured home loan programs for which you may qualify.
Finding the Right FHA Lender
Choosing the right FHA lender for a manufactured home loan is key. Ask prospective lenders:
- Do you offer FHA 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
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 difference between a Title 1 and Title 2 FHA loan?
What is the oldest manufactured home that can be financed?
What is the loan limit for a manufactured home?
If you’re buying just a manufactured home, your loan limit is $69,678.
What is the FHA loan limit for a mobile home?
The FHA loan limit for purchasing a mobile home and the land it will be placed on is $23,226 for land-only purchases. The FHA maximum loan terms range from 15-20 years depending on certain variables according to FHA.gov.
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. You may also use the loan to buy a plot of land for the home to sit on. It is called an FHA manufactured home loan by the FHA, but you might know the type of house as a ‘mobile home’.
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.