Can You Get a Reverse Mortgage on a Mobile Home?

A reverse mortgage is a financial tool allowing homeowners aged 62 or older to convert a portion of their home equity into cash. This provides funds without requiring monthly mortgage payments, as the loan is repaid when the last borrower permanently leaves the home. While commonly associated with traditional stick-built houses, it is possible to obtain a reverse mortgage on certain mobile homes, provided they meet specific criteria.

Eligibility Requirements for Mobile Homes

For a mobile home to qualify for a reverse mortgage, it must meet specific physical and legal requirements. The term “manufactured home” is used for homes built after June 15, 1976, when HUD established national construction and safety standards. Mobile homes constructed before this date do not qualify.

A manufactured home must be permanently affixed to a foundation that meets FHA guidelines. This involves removing transport elements like wheels and axles, securing the home to an approved concrete or masonry foundation, and may require engineer certification. The home must also be classified and taxed as real estate, not personal property. This involves surrendering the home’s original title and recording it with the land deed.

The homeowner must own the land on which the manufactured home is situated; homes located on leased land or in mobile home parks are generally not eligible. Additional requirements include the home having a minimum floor area, typically 400 square feet, though some lenders may require a double-wide unit with a minimum of 800 square feet. The home must also display its HUD tags, indicating compliance with federal construction standards, and must serve as the borrower’s primary residence.

Understanding Reverse Mortgage Options

Two primary types of reverse mortgages are available. The most common option is the Home Equity Conversion Mortgage (HECM), insured by the Federal Housing Administration (FHA) and backed by the U.S. federal government. HECM loans require the manufactured home to adhere strictly to HUD guidelines, including permanent foundation, real property classification, and construction date requirements.

Proprietary reverse mortgages, sometimes referred to as jumbo reverse mortgages, are offered by private lenders and are not federally insured. These loans typically cater to homes with higher values that may exceed FHA loan limits. While proprietary loans offer more flexibility in terms of property value and sometimes borrower age, their specific eligibility criteria for manufactured homes can vary by lender. Regardless of the loan type, the manufactured home must meet the characteristics of real property.

The Reverse Mortgage Application Process

The application process for a reverse mortgage involves several distinct steps. The initial stage often includes an informal consultation with a lender to discuss specific eligibility and loan options. This helps ascertain if the homeowner and property align with the lender’s criteria.

Following this, all prospective borrowers are required to complete a mandatory counseling session with a HUD-approved independent counseling agency. During this session, the counselor explains how reverse mortgages function, including financial and tax implications, available payment options, and associated costs. A certificate of participation is issued upon completion, necessary for the loan application.

After counseling, the formal application is submitted, which involves providing personal and financial documentation. An appraisal of the manufactured home is then conducted to determine its current market value and confirm its adherence to the permanent foundation and other structural requirements. The loan file then proceeds to underwriting, where the lender reviews all submitted information before approving the loan. The final step is closing, where all loan documents are signed and funds are disbursed according to the chosen payment option.

Financial Considerations

The amount of money available through a reverse mortgage on a manufactured home depends on several factors, including the borrower’s age, the home’s appraised value, and current interest rates. Older borrowers and homes with higher values generally qualify for larger loan amounts. Any existing mortgage on the property must be paid off using the reverse mortgage proceeds, which will affect the net amount the homeowner receives.

Various costs are associated with a reverse mortgage, which are typically added to the loan balance. These include origination fees, FHA mortgage insurance premiums for HECMs, and standard closing costs such as appraisal and title fees. These fees are often financed into the loan, reducing immediate out-of-pocket expense.

Borrowers have several options for receiving funds, which can be tailored to their financial needs. These include a single lump sum payment, regular monthly payments (either for a fixed term or for as long as the borrower lives in the home), or a line of credit that grows over time. The loan does not require monthly mortgage payments, but interest accrues on the outstanding balance. The loan becomes due and payable when the last borrower dies, sells the home, or permanently moves out for more than 12 consecutive months. Borrowers are still responsible for property taxes, homeowner’s insurance, and maintaining the home in good condition.