fha loan on manufactured home

#Getting an FHA Loan for a Manufactured Home: Everything You Need To Know

Purchasing a manufactured home can be an affordable alternative to a site-built house With today’s modern construction standards, manufactured homes offer many of the same amenities and features as traditional stick-built homes If you’re considering buying a manufactured home, using an FHA loan is one financing option to make it more affordable.

In this comprehensive guide, we’ll explain everything you need to know about getting an FHA loan for a manufactured home.

What is a Manufactured Home?

The U.S Department of Housing and Urban Development (HUD) has specific standards that a manufactured home must meet to qualify for FHA financing Manufactured homes were previously called “mobile homes” but today they are built to higher construction standards than mobile homes of the past.

A HUD-approved manufactured home must:

• Be constructed at a factory in accordance with HUD’s Federal Manufactured Home Construction and Safety Standards (FMHCSS) that went into effect June 15, 1976.
• Have a red certification label attached to each transportable section to verify it meets the FMHCSS.
• Have a minimum of 400 square feet of living space.
• Be built on and transported by a permanent chassis.

Manufactured homes are transported to their site in one or more sections. They are designed to be useable as a dwelling when connected to required utilities once installed on their foundation.

What is an FHA Loan?

An FHA loan is a mortgage insured by the Federal Housing Administration (FHA). These government-backed loans make homebuying more accessible for borrowers by having lower credit score requirements and down payments than conventional loans.

Borrowers work with FHA-approved lenders when getting an FHA loan. The lender pays for the FHA insurance and that cost is passed on to the borrower through mortgage insurance premiums.

The FHA mortgage insurance protects lenders from losses if the borrower defaults. This makes lenders more willing to approve borrowers with lower credit scores who may not qualify for conventional financing.

FHA Loan Options for Manufactured Homes

The FHA has two different loan programs that can be used to finance a manufactured home:

FHA Title II Loan

• Can finance purchase of new manufactured home.
• Home must be permanently attached to land and dwelling you own.
• Follows general FHA guidelines for credit score, down payment, and loan limits.
• Can refinance existing manufactured home loan. Home must be on site for 1 year prior.

FHA Title I Loan

• Purchase new or used manufactured home.
• Finance manufactured home separately from land/lot.
• Lower credit score and down payment requirements.
• Separate borrowing limits for home vs. land.
• Home doesn’t have to be permanently attached.

FHA Manufactured Home Loan Requirements

Here are the main eligibility criteria borrowers and properties must meet to qualify for FHA financing on a manufactured home:

Down Payment

• Title II – 3.5% of purchase price
• Title I – 10% of purchase price

Credit Score

• Title II – 580 minimum
• Title I – 500 minimum

Debt-to-Income Ratio

• Maximum DTI of 43%

Mortgage Insurance

• Upfront mortgage insurance premium of 1.75% of loan amount
• Annual mortgage insurance premium between 0.45% – 0.85%

Home Requirements

• HUD code compliant
• Minimum 400 sq. ft. of living space
• Permanent chassis
• Proper utility access
• HUD certification label

Land Requirements

• Title II requires land ownership
• Title I can be on leased land

Occupancy

• Must be owner-occupied primary residence

Loan Limits

• Title II follows standard FHA loan limits
• Title I has lower maximum of $23,226 (land only) to $92,904 (home and land)

CAIVRS Database Check

• No outstanding federal debt

Finding an FHA Lender For Manufactured Homes

Not all lenders offer FHA loans for manufactured housing. Here are some tips on finding one:

• Check HUD’s list of FHA-approved lenders and search for ones in your state.

• Get loan estimates from 3-5 lenders to compare rates and terms.

• Ask about the loan officer’s specific experience with manufactured home loans. This specialized financing requires experience navigating the unique guidelines.

• Work with a lender who can walk you through the entire process and property requirements.

• Consider using a lender affiliated with a manufactured home retailer. They have extensive experience with the FHA requirements.

The Pros and Cons of FHA Loans for Manufactured Homes

Pros

• Lower downpayment of 3.5% – 10%

• More flexible credit requirements

• Low interest rates

• Lower monthly payments

• Fixed-rate loan terms up to 30 years

Cons

• Require mortgage insurance

• Limited borrowing amounts

• Home and land requirements

• Slower approval process

-Loan limits may restrict buying options

Alternatives to FHA Manufactured Home Loans

Beyond FHA loans, here are some other financing options for buying a manufactured home:

• Conventional Loans – May offer lower PMI rates for borrowers with credit scores above 700. Options include Fannie Mae and Freddie Mac conventional manufactured housing loans.

• VA Loans – For eligible military members. Require home to be attached to land owned by borrower.

• USDA Loans – For moderate income borrowers in rural locations. Can finance manufactured home and land purchase.

• Retailer Financing – Some dealers offer in-house lending or partnerships with banks to finance manufactured home purchases.

• Personal Loans – May be an option for purchasing a used manufactured home that doesn’t qualify for mortgage financing.

Ready to Move Forward with an FHA Manufactured Home Loan?

Buying a manufactured home can be an affordable way to achieve homeownership. FHA loans help make financing these factory-built homes attainable for buyers.

Let us know in the comments if you have any other questions about getting an FHA loan for your manufactured home!

Frequency of Entities:
FHA loan: 20
manufactured home: 16
home: 14
loan: 12
Title I: 5
Title II: 5
land: 5
HUD: 4
FHA: 4
down payment: 4
borrower: 3
mortgage insurance: 3
lender: 3
credit score: 3
requirements: 2
alternatives: 1
conventional loans: 1
VA loans: 1
USDA loans: 1
retailer financing: 1
personal loans: 1