Everything You Need to Know About FHA Title 1 Manufactured Home Loans

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 or mobile home can be an affordable way to become a homeowner With an FHA Title 1 manufactured home loan, you can finance the purchase or refinance of a manufactured home with little money down In this comprehensive guide, we’ll explain what an FHA Title 1 loan is, who is eligible, and how the program works.

What is an FHA Title 1 Manufactured Home Loan?

An FHA Title 1 loan is a mortgage insured by the Federal Housing Administration (FHA) that allows borrowers to finance a manufactured or mobile home with flexible underwriting and low down payments. Title 1 loans can be used to:

Purchase a new or used manufactured home
Refinance an existing manufactured home loan
Buy the land or lot for a manufactured home
Buy both a manufactured home and land/lot in one loan

With an FHA Title 1 loan, you work with FHA-approved lenders who fund the mortgage The FHA insures these lenders against losses if a borrower defaults This insurance encourages lenders to provide affordable financing to buyers of manufactured homes.

Key Benefits of FHA Title 1 Loans

FHA Title 1 manufactured home loans offer several advantages for eligible borrowers

Low down payments – You can qualify for a loan with as little as 3.5% down. This makes financing more accessible for buyers with limited funds for a down payment.
Flexible credit requirements – FHA guidelines are more flexible than conventional loans. You may qualify even with a low credit score or limited credit history.
Lower interest rates – Interest rates on Title 1 loans may be lower than other manufactured home financing options.
Longer repayment terms – You can take up to 20 years to repay a Title 1 manufactured home loan. This results in lower monthly payments.
Can finance home and land – Title 1 loans allow you to buy both the manufactured home and land in a single mortgage.
Purchase assistance – These loans may be combined with down payment assistance programs offered by state and local governments.

FHA Title 1 Loan Requirements

While FHA Title 1 loans are more flexible than conventional mortgages, you still need to meet certain eligibility standards:

Credit score – Most lenders require a minimum credit score of 500-600 for approval. The higher your score, the better your loan terms will be.
Debt-to-income ratio – Your total monthly debt payments, including the new loan payment, must not exceed 43% of your gross monthly income.
Cash investment – You’ll need to contribute a minimum cash investment of 3.5% of the purchase price. Gift funds are allowed.
Occupancy and use – You must intend to use the manufactured home as your primary residence. Investment properties are not eligible.
Home requirements – The manufactured home must meet HUD construction standards and be properly installed.

As long as you meet these requirements, you can qualify for an FHA Title 1 loan even if you don’t have perfect credit or extensive financial resources.

How Much Can You Borrow?

FHA Title 1 loans have maximum loan limits based on the type of manufactured home and loan purpose:

For a single section manufactured home only, the max loan amount is $105,532
For a multi-section manufactured home only, the max is $193,719
For a single section manufactured home and lot, max loan amount is $148,909
For a multi-section manufactured home and lot, max loan amount is $237,096
For a manufactured home lot only, max loan amount is $43,377

In addition to these nationwide limits, the maximum loan amount will depend on your minimum cash investment, credit score, loan-to-value ratio, and other factors. Loan amounts may also be capped based on a percentage of the home’s purchase price.

What is the Loan Term and Interest Rate on an FHA Title 1 Loan?

FHA Title 1 manufactured home loans come with the following terms:

Loan term – Typically 20 years for a manufactured home or single section home and lot. Up to 15 years for a manufactured home lot only.
Interest rate – The interest rate is negotiated between you and the lender. It is fixed for the entire loan term. Rates are generally lower than other manufactured home financing.
Mortgage insurance – You’ll pay an upfront insurance premium of 1% of the loan amount, plus an annual premium between 0.5-1% of the loan balance.

Always compare interest rates from multiple FHA-approved lenders to find the best deal. Your personal financial situation will impact the rate you are offered.

Buying Land for a Manufactured Home

One of the best features of an FHA Title 1 loan is the ability to purchase the manufactured home and land in one mortgage. However, you don’t have to buy land to get financing.

If you want to rent a lot for your manufactured home, that is perfectly acceptable with an FHA loan. You can place your home in a mobile home community or park. The park must meet FHA standards and provide you with a long term lease.

Purchasing the land and home together results in easier financing, but renting a lot provides more flexibility if you may need to relocate the home.

How Do You Apply for an FHA Title 1 Manufactured Home Loan?

Follow these steps when applying for an FHA Title 1 manufactured home mortgage:

Check your credit and get pre-qualified – This helps you understand what rate and loan amount you may qualify for.
Compare multiple lenders – Research FHA approved lenders and compare interest rates and fees to find the best loan offer.
Select your home – Once pre-qualified, you can pick out the manufactured or mobile home you want to buy. It must meet HUD requirements.
Make a purchase agreement – Work with the home seller or retailer to make an official purchase agreement.
Apply for financing – Submit your FHA loan application and required documents to the lender.
Get an appraisal – The lender will order an appraisal to determine the value of the home.
Receive loan approval – If approved, you’ll receive a loan estimate detailing your loan terms, closing costs, and monthly payment.
Close on your home – At closing, you’ll sign final loan documents and receive the keys once funds have transferred.

Work closely with your lender and real estate agent throughout the process to ensure everything goes smoothly.

5 Tips for Getting Approved for an FHA Title 1 Loan

As an FHA borrower, you want to put yourself in the best position for loan approval. Here are some top tips:

Shop around for the best rates – Compare multiple lender quotes to find the lowest interest rate and fees.
Work to improve your credit – Maintaining good credit and lowering debts can help you qualify for better loan pricing.
Save up for a larger down payment – The higher your down payment, the better your interest rate and chances of approval.
Lower your DTI – Keep monthly debts low relative to income. This demonstrates you can afford the new mortgage payment.
Pick an affordable home – Selecting a lower priced manufactured home will make loan approval easier.

Alternatives to an FHA Title 1 Manufactured Home Loan

An FHA Title 1 loan is a great financing option for a manufactured home, but it’s not your only choice. Some other options include:

Conventional loans – You may be able to qualify for a traditional mortgage with a down payment as low as 5%.
Chattel loans – Financing that treats the home as personal property rather than real estate. Typically shorter terms and higher rates.
USDA loans – For low to moderate income buyers in rural areas, USDA guaranteed loans offer 100% financing.
Personal loans – Banks and credit unions may offer shorter term consumer financing for manufactured homes.
Seller financing – Some sellers provide in-house loans for buyers who can’t obtain traditional financing.

Compare all your options before deciding on the best loan program for your situation. An FHA Title 1 loan provides a great balance of low rates, low down payments, and flexible credit requirements for buyers.

The Bottom Line

FHA Title 1 loans unlock affordable financing for buyers of manufactured and mobile homes. With low down payments, flexible credit guidelines, and loan terms up to 20 years, they allow more buyers to achieve the dream of homeownership. If you’re looking to buy a manufactured home, explore your options and see if an FHA Title 1 loan is the right solution for you.

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.

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

FHA Mobile Home Requirements

FAQ

Will an FHA loan cover a manufactured home?

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.

What is the difference between FHA Title 1 and Title 2?

What is the difference between Title I and Title II lender ID? A8: A Title I lender ID is issued to lenders that process or service loans for property improvements and the purchase of manufactured housing. Lenders who are issued a Title II lender ID process or service loans for single family homes.

Who is the best lender for manufactured homes?

Company	Starting Interest Rate	Loan Terms (range)
Manufactured Nationwide Best Overall	Varies	15, 20, or 30 years
ManufacturedHome.Loan Best for Good Credit	Varies	Varies
21st Mortgage Corporation Best for Bad Credit	Varies	Varies
eLend Best for Low Down Payment	Varies	Varies

What is an FHA Title II loan?

An FHA Single Family Title II is a type of mortgage insured by the FHA under Title II of the National Housing Act of 1934 for a single family. Title II loans are a low-risk proposition for lenders because the government insures them against a borrower defaulting on the mortgage.

What are the different types of FHA manufactured home loans?

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.

What is the maximum term for an FHA loan for a mobile home?

The maximum loan term for an FHA loan for a mobile home depends on the type of home and lot.According to **HUD.gov**, the maximum loan term for a mobile home or a single-section home and a lot is **20

Can I get a title 1 loan if I have a manufactured home?

Unlike other FHA loans, Title 1 loans don’t require you to live in the home as your primary residence unless the property in question is a manufactured home. Must use an approved lender. Only FHA-approved lenders can issue Title 1 renovation loans. If your current lender isn’t on the list, you can’t use them. Must pay an insurance premium.

Can a FHA loan be used for a manufactured home?

As mentioned previously, there are two types of FHA loans that 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. You can use these loans to buy a home, a property lot or both at the same time.