FHA Loan Requirements for Manufactured Homes

Buying a manufactured home with an FHA loan can be a great way for many families to achieve homeownership. FHA loans require just a 35% down payment and have flexible credit requirements However, there are specific guidelines and requirements when using FHA financing for a manufactured home. In this comprehensive guide, we will provide all the details you need to know about qualifying for and obtaining an FHA loan for your manufactured home purchase.

What is a Manufactured Home?

A manufactured home, sometimes called a mobile home, is a prefabricated house that is built in a factory and then transported to a site where it is installed on a foundation. Manufactured homes come in single, double, or triple-wide floorplans. They are an affordable homeownership option that can provide many of the amenities of a site-built home.

Manufactured homes built after June 15, 1976 and meet the HUD code requirements can be financed with an FHA loan provided they meet all the guidelines. Older mobile homes that pre-date the HUD code cannot be financed with FHA loans.

Benefits of FHA Loans for Manufactured Homes

FHA loans offer several advantages for financing manufactured homes:

• Low down payment – Only 3.5% is required for down payment. This makes manufactured homes affordable for buyers with limited funds for a down payment.

• Flexible credit – FHA has more lenient credit requirements than conventional loans. Minimum FICO scores start at 580.

• Low mortgage insurance – FHA loans require mortgage insurance. Rates start at 0.85% of the loan amount.

• Fixed rates – FHA loans come with long-term fixed interest rates. This helps keep payments affordable even when rates rise.

• Streamline refinancing – FHA streamline refinancing allows you to refinance into a new loan with lower payments without any appraisal.

FHA Loan Requirements for Manufactured Homes

While FHA insures loans for manufactured housing, there are specific guidelines and regulations that must be followed to qualify for financing under FHA’s Title II mortgage insurance program.

Home Requirements

The manufactured home must meet the following criteria to be eligible:

• Home was built after June 15, 1976 as evidenced by the HUD Data Plate or Certification Label.
• Home must be attached to a permanent foundation system.
• The home must be classified as real property, subject to state laws.
• Home must be a single family residence with minimum 400 square feet of living space.
• Home must have been built to the Federal Manufactured Home Construction and Safety Standards and have the HUD Certification Label(s).
• Home must have the proper public utilities such as water, electricity, heating, sewage connected.

Foundation Requirements

The manufactured home must be properly installed on a foundation system that meets FHA guidelines. The home’s foundation system must follow the Permanent Foundations Guide for Manufactured Housing (PFGMH).

Some key foundation system requirements per FHA guidelines include:

• The foundation system must be appropriate for the soil conditions for the site and meet local and state codes.
• Foundation must be permanently attached.
• Must have anchorage including vertical ties to ground anchors at least every 12 feet.
• Any wheel, axles, and towing hitches must be removed.
• The connection between sections of multi-section homes must be securely fastened.
• Must have perimeter enclosure from ground to bottom of home with weather-resistant material.

HUD Certification Label

The HUD Certification Label, also known as a HUD tag, proves that the manufactured home was constructed to meet the Federal Manufactured Home Construction and Safety Standards. The label will include the manufacturer name, serial number, date of manufacture, wind/roof load, and thermal zone maps.

The HUD tag must be affixed to the exterior of the home or found inside a kitchen cabinet. Each section of a multi-section manufactured home must have a HUD tag. Lenders will require photos of the HUD tag(s).

Warranty Coverage

For new manufactured homes, the builder’s one-year warranty must be provided. The warranty must cover any defects in materials or workmanship.

For existing manufactured homes, lenders will require evidence that the home complies with HUD requirements.

Eligible Properties

The manufactured home must be classified as real estate and taxed as real property, not personal property. It must be a single-family dwelling. FHA will not insure loans for manufactured homes located in condo or cooperative projects.

The land where the manufactured home sits can be owned or leased:

• Owned Land – The manufactured home can be permanently attached to land that is owned by the borrower. This is considered a purchase transaction.

• Leased Land – The home can be on land that is leased to the borrower. The lease must be for at least 3 years remaining. This is considered a refinance transaction.

Borrower Requirements

In addition to meeting the home requirements, borrowers must meet standard FHA loan eligibility:

• Minimum FICO credit score of 580 for maximum financing. Credit scores as low as 500 accepted with higher down payment.

• Total debt-to-income ratio maximum is 43%.

• Receive an approval from FHA’s TOTAL mortgage scoring system.

• Meet FHA guidelines for income, employment, and credit history.

• Complete a homebuyer education course if you are a first-time buyer.

• Make the minimum required down payment from your own funds. Gifts can be used after the borrower makes the minimum 3.5% down payment.

• Occupy the home as your primary residence. Non-occupant co-borrowers are not permitted.

• Provide proof of Social Security Number.

Manufactured Home Appraisal Requirements

Manufactured homes are valued based on the cost approach to reach the appraised value. The appraiser will evaluate the home site, physical condition of the home, and data using comparable sales.

As part of the appraisal, the appraiser must:

• Inspect the exterior and interior of the manufactured home.

• Review and analyze the sales of similar manufactured homes sited in similar locations.

• Determine soundness and structural integrity based on examination of the exterior and interior maintenance.

• Note any physical deterioration and functional or external depreciation.

• Verify that the HUD Data Plates/Compliance Certificates are present to confirm compliance with HUD codes.

• Document that the home is attached to a permanent foundation system on owned land or approved leased land.

Appraisals for manufactured homes can only be completed by appraisers who are certified to appraise manufactured homes.

How Much Can You Borrow?

The FHA loan limits for manufactured homes vary based on whether you are purchasing the home only or both the home and land:

• Home Only – The maximum loan amount for just the manufactured home purchase is $69,678.

• Home and Land – If purchasing both the manufactured home and land, the maximum loan amount is $92,904.

These limits apply to all FHA loans nationwide. Some higher cost areas may have limits set a bit higher.

Mortgage Insurance Rates

FHA loans require both upfront and annual mortgage insurance. The current rates for 2022 are:

• Upfront Mortgage Insurance Premium – 1.75% of the loan amount

• Annual Mortgage Insurance Premium – 0.85% of the loan amount

On a $70,000 loan amount, you can expect to pay $1,225 upfront and $595 per year. The annual MIP is paid monthly as part of the loan payment.

How to Find an FHA Lender

The first step is connecting with a lender who offers FHA loans for manufactured housing. Not all lenders will do FHA loans on manufactured homes, so you need to find one experienced with these types of loans.

Online lenders that operate nationwide are often a good option since they have experience with FHA manufactured home loans in many different states.

Mortgage brokers who work with multiple lenders are another good choice since they can shop your loan to various lenders to find the best rates and terms.

Look for lenders who advertise and specialize in FHA loans for manufactured and mobile homes. This indicates they are familiar with the unique requirements.

Applying for an FHA Manufactured Home Loan

Once you select a lender, you will go through their standard mortgage application process. Here is an overview of what’s involved:

• Preapproval – Get a preapproval letter to determine the loan amount and rates you qualify for.

• Documentation – Provide documentation verifying your income, assets, credit, and eligibility.

• Home appraisal – The lender will order an appraisal to determine the value of the manufactured home.

• HUD Consultant Inspection – A consultant will inspect the home to ensure it meets HUD standards for FHA financing.

• Closing – You will sign documents and the home will become collateral for the mortgage.

Expect