Can You Do a Reverse Mortgage on a Manufactured Home?

A reverse mortgage allows homeowners aged 62 and older to convert a portion of their home equity into cash. This financial tool can provide funds for various needs without requiring monthly mortgage payments. While commonly associated with traditional houses, a reverse mortgage is generally possible on a manufactured home, provided specific conditions are met.

Specific Manufactured Home Requirements

For a manufactured home to qualify for a reverse mortgage, it must meet specific physical and legal criteria. The home must be permanently affixed to a foundation that complies with Federal Housing Administration (FHA) and U.S. Department of Housing and Urban Development (HUD) guidelines. This foundation must be engineered and anchored, often involving a concrete slab or pier-and-beam system, capable of transferring all loads to the underlying soil or rock. Homes on leased land or in mobile home parks are ineligible, as the home must be permanently joined to the land.

The manufactured home must also be classified as real property, not personal property. This often requires converting the home’s title to a real estate title, legally joining it to the land. The home must have been built to HUD Manufactured Home Construction and Safety Standards, indicated by a visible HUD tag or label. Homes built before June 15, 1976, are generally ineligible.

Lenders also consider the age and structural condition of the manufactured home. The property must be in good repair and meet HUD’s requirements for safety and structural integrity. An FHA-approved manufactured home needs a minimum floor area of 400 square feet. An engineer’s certification may be required to confirm the foundation meets FHA requirements, especially for existing homes.

General Reverse Mortgage Eligibility

Beyond manufactured home requirements, all reverse mortgage applicants must meet standard eligibility criteria. The borrower must be at least 62 years old to qualify for a Home Equity Conversion Mortgage (HECM), the most common type of reverse mortgage insured by the FHA. If there are multiple borrowers, the youngest borrower’s age determines the loan amount.

Borrowers must possess substantial home equity. While no specific minimum equity percentage is mandated, industry practice suggests at least 50% equity. The home must also serve as the borrower’s primary residence.

Lenders conduct a financial assessment to ensure the borrower can meet ongoing property obligations. This assessment evaluates income, credit history, and debts to confirm their ability to pay property taxes, homeowner’s insurance, and any homeowner association (HOA) fees. A mandatory step is attending a HUD-approved reverse mortgage counseling session. This counseling provides borrowers with a comprehensive understanding of the loan’s terms, costs, and obligations. Borrowers cannot be delinquent on federal debt, such as federal income taxes or student loans.

The Reverse Mortgage Application

The reverse mortgage application process involves several distinct stages once eligibility is confirmed. After mandatory counseling, obtaining the counseling certificate is a prerequisite for submitting the formal loan application. Borrowers then submit their application to a chosen lender, providing necessary documentation such as identification, proof of income, and property details.

The appraisal process determines the manufactured home’s value. This appraisal also verifies the home meets all FHA and HUD standards, including its permanent affixation to the foundation. Following the appraisal, the loan moves into underwriting, where the lender evaluates the application, financial assessment results, and all property documentation. This review ensures all requirements are met before a loan is approved, potentially with conditions requiring additional documentation or property repairs.

Once underwriting is complete and final approval is granted, the loan status changes to “clear to close.” The closing involves signing various loan documents, including the HUD-1 Settlement Statement and deeds of trust. Borrowers have a three-business-day right of rescission, allowing them to cancel the transaction after signing. After this period, funds are disbursed according to the chosen payment option. Post-closing, borrowers retain ongoing responsibilities, which include maintaining the home in good condition and diligently paying property taxes and homeowner’s insurance.