Can You Get a Reverse Mortgage on a Manufactured Home?

A reverse mortgage is a financial tool allowing homeowners aged 62 or older to convert a portion of their home equity into cash. Unlike a traditional mortgage, it typically does not require monthly mortgage payments. The loan generally becomes due when the last borrower leaves the home permanently, sells it, or passes away.

A manufactured home is a dwelling constructed in a factory and built to federal building standards set by the U.S. Department of Housing and Urban Development (HUD Code). This distinguishes it from mobile homes, which were built before June 15, 1976, and from modular homes, which are factory-built but must adhere to local and state building codes, similar to site-built homes. While mobile homes are generally ineligible for reverse mortgages, certain manufactured homes can qualify.

Eligibility Criteria for Manufactured Homes

Obtaining a reverse mortgage on a manufactured home involves meeting specific borrower and property eligibility criteria. For the borrower, the most common type of reverse mortgage, a Home Equity Conversion Mortgage (HECM), requires all borrowers to be at least 62 years old. Borrowers must either own the home outright or have significant equity to pay off any existing mortgage at closing.

The manufactured home must serve as the borrower’s primary residence. A financial assessment is conducted to ensure the borrower can meet ongoing property obligations, such as property taxes, homeowners insurance, and maintenance costs. While there is no minimum credit score for a HECM, lenders review credit history to assess financial stability.

Specific property requirements for manufactured homes are rigorous. The home must have been constructed after June 15, 1976, the date when federal building standards under the HUD Code became effective. It must also bear a HUD certification label or seal, which indicates compliance with the Federal Manufactured Home Construction and Safety Standards.

The manufactured home must be affixed to a permanent foundation. This foundation must comply with HUD’s Permanent Foundation Guide for Manufactured Homes and often requires certification by a licensed engineer. This ensures the home’s stability and prevents it from being easily moved, classifying it as real property rather than personal property.

The home and the land it occupies must be titled as real estate, not personal property, and the wheels and axles must be removed. Manufactured homes located on leased land generally do not qualify. The home must be on its original site and cannot have been previously installed or occupied at another location.

Property criteria include a minimum floor area. The home must be in good condition. It also cannot be located in a 100-year flood zone.

Types of Reverse Mortgages for Manufactured Homes

Two primary types of reverse mortgages may be available for qualifying manufactured homes: the Home Equity Conversion Mortgage (HECM) and proprietary reverse mortgages. The HECM is the most common and widely recognized reverse mortgage product, insured by the Federal Housing Administration (FHA). This government backing means that HECMs for manufactured homes must adhere strictly to the FHA and HUD requirements concerning the home’s construction, foundation, and titling.

For manufactured homes, meeting the rigorous HECM criteria, particularly regarding the permanent foundation and HUD Code compliance, is essential for eligibility. HECMs offer flexibility in how borrowers receive funds, including a lump sum, regular monthly payments, or a line of credit. The FHA insurance also provides protection, ensuring that the borrower can never owe more than the home’s value.

Proprietary reverse mortgages are another option, offered by private lenders and not insured by the government. These products may have different eligibility criteria for manufactured homes compared to HECMs. These products may offer more flexibility, but their terms, fees, and requirements can vary significantly between lenders.

Application Process for Manufactured Homes

The application process for a reverse mortgage on a manufactured home begins with finding a lender experienced in this specific type of property. Not all lenders offer reverse mortgages for manufactured homes, so seeking one with specialized knowledge can streamline the process.

A mandatory part of the application is attending a counseling session with a HUD-approved reverse mortgage counselor. This session provides an unbiased overview of how reverse mortgages work, their financial implications, and available alternatives, ensuring the borrower makes an informed decision. A certificate of completion from this counseling is a required document for the loan application.

The home appraisal and inspection is a crucial step. For manufactured homes, the appraiser determines the property’s market value and verifies it meets structural and foundation requirements, including a permanent foundation and visible HUD tags. The appraiser will also confirm that the home has not been moved from its original site.

Documents include proof of age and evidence of homeownership. The property’s title must show it is classified and taxed as real property, with any previous personal property title deactivated. Financial statements are also required to assess the borrower’s ability to pay property charges.

Homeowners insurance documents are essential, as maintaining insurance is a continuing obligation. Once documentation is submitted and the home meets eligibility, the loan can proceed to closing. Funds are disbursed at closing according to the chosen payment option: a lump sum, monthly payments, or a line of credit. Borrowers remain responsible for property taxes, homeowners insurance, and home maintenance.