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.
Purchasing a manufactured home can be an affordable way to become a homeowner. With an FHA loan, you may be able to finance a manufactured home purchase even if you have less-than-perfect credit or limited funds for a down payment. In this comprehensive guide, we’ll walk through how FHA loans work for manufactured homes, eligibility requirements, pros and cons, and more.
What is Considered a “Manufactured Home” for FHA Loans?
The U.S. Department of Housing and Urban Development (HUD) has specific standards that a home must meet to qualify for an FHA loan. A HUD-approved “manufactured home” is built offsite in accordance with HUD’s Manufactured Home Construction and Safety Standards building code.
Key requirements include
- Built after June 15, 1976 when HUD standards went into effect
- Constructed on a permanent chassis
- Bears a red certification label on each transportable section
- Minimum 400 sq ft of living space
- Removed towing hitch and axles
- HUD-approved exterior seal
Manufactured homes meeting HUD’s criteria are sometimes referred to as “mobile homes” but are different from travel trailers or motorhomes that are not meant for permanent residence.
How Do FHA Loans Work?
FHA loans are government-backed mortgages insured by the Federal Housing Administration. Although you work with an FHA-approved lender, the FHA protects the lender from losses if you default. This security allows lenders to offer financing to borrowers who may not qualify for conventional mortgages.
Key features of FHA loans
- Down payments as low as 3.5% with a credit score of at least 580
- Lenient debt-to-income ratio requirements
- Accepts credit scores as low as 500
FHA loans offer flexible underwriting to help more people become homeowners. You work with a participating FHA lender and must meet eligibility requirements.
Getting an FHA Manufactured Home Loan
The FHA Title I and Title II programs insure loans for manufactured homes. Here’s an overview:
FHA Title I
- Home does not need to be attached to a permanent foundation
- Land can be leased instead of owned
FHA Title II
- Home must be placed on land permanently owned by the borrower
- Foundation and site requirements
Most lenders, including Rocket Mortgage, offer FHA financing for manufactured homes under the Title II program.
FHA Loan Requirements for Manufactured Homes
To qualify for an FHA manufactured home loan, the home and land must meet FHA criteria.
Home Requirements
- Constructed per HUD code with certification label(s)
- Affixed to a permanent foundation
- Connected to utilities
- Minimum 400 sq ft of living space
- Inspected per FHA guidelines
Land/Site Requirements
- Land owned by borrower (not leased)
- All-weather road access
- Connection to public sewer/septic and water
Borrower Requirements
- Minimum 580 credit score
- Debt-to-income ratio typically below 43%
- Primary residence occupancy
Meeting these requirements allows you to take advantage of benefits of FHA financing.
Pros and Cons of FHA Loans for Manufactured Homes
FHA loans offer nice perks if you’re buying a manufactured home, but there are a few potential drawbacks to consider.
Advantages
- Low down payments, starting at 3.5%
- More flexible credit score and debt requirements
- Lower mortgage insurance premiums than conventional loans
- Can wrap closing costs into loan amount
Disadvantages
- Requires upfront and ongoing mortgage insurance payments
- Slower processing times than conventional mortgages
- Loan limits may cap the amount you can borrow
- Must be owner-occupied as primary residence
Even with a few cons, FHA loans are a great financing solution for many manufactured home buyers.
What is the Loan Process for an FHA Manufactured Home Loan?
The loan process follows standard FHA guidelines. Here’s how it works:
- Pre-approval – Confirm loan eligibility and interest rate
- Home search – Work with a real estate agent to find your manufactured home
- Offer – Make an offer once you find the right home
- Inspections – Appraisal, foundation inspection, termite inspection etc.
- Underwriting – Submit documents for approval
- Closing – Sign final paperwork and receive loan funds
- Possession – Move into your new manufactured home!
The process takes about 30-45 days in total if you have a complete loan application and there are no hangups.
What Are the Steps to Getting Pre-Approved for an FHA Manufactured Home Loan?
Getting pre-approved jumpstarts the home buying process and shows sellers you’re serious. Here are the steps:
- Apply and provide financial documents
- Authorize a credit check
- Supply your desired home specifications
- Complete a telephone interview
- Get an official pre-approval letter with loan amount
The lender will verify employment, income, debts, and credit score to confirm your loan eligibility.
What is the Maximum Loan Amount for FHA Manufactured Home Loans?
FHA loans have mandatory loan limits that cap the amount you can borrow. Maximum loan amounts for manufactured homes under FHA Title II financing are:
- 1-unit home – Up to $970,800
- 2-unit home – Up to $1,243,050
- 3-unit home – Up to $1,502,475
- 4-unit home – Up to $1,867,275
These conforming loan limits apply for 2023 in most U.S. counties. Higher limits exist in more expensive real estate markets.
The limits are based on the type of home and number of units, not the fact that it’s a manufactured house. These max amounts also apply to traditional site built FHA loans.
What Are Current FHA Manufactured Home Loan Interest Rates?
FHA interest rates are tied to mortgage rates overall and fluctuate daily. Here are sample 2023 rates:
| Loan Term | Interest Rate |
|---|---|
| 15-year fixed | 6% |
| 20-year fixed | 6.25% |
| 25-year fixed | 6.50% |
| 30-year fixed | 6.75% |
Rates depend on your personal finance profile, including credit score, debt, and income. Get pre-approved to receive current rates tailored for your situation.
Is FHA Financing the Best Loan Option for a Manufactured Home?
FHA loans are one of the few mortgage programs that allow financing for manufactured homes. Key perks include:
- Low downpayment of 3.5%
- More flexible underwriting than conventional loans
- Interest rates competitive with conventional mortgages
- Fixed-rate loan options up to 30 years
Unless you have excellent credit and available funds for a 20%+ down payment, an FHA loan will likely be your best bet for buying a manufactured home.
Work with a Trusted Lender to Get Started
Frequency of Entities:
fha loan manufactured home: 16
fha: 13
loan: 17
manufactured home: 14
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.
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.
FHA Mobile Home Requirements
FAQ
Will an FHA loan cover a manufactured home?
What is the oldest manufactured home for FHA?
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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Why is it hard to get a mortgage on a manufactured home?