Do FHA Loans Cover Manufactured Homes?

The Federal Housing Administration (FHA) offers government-backed mortgage insurance to expand homeownership. FHA loans are known for their accessible qualification criteria, including lower down payments and flexible credit standards. FHA loans can cover manufactured homes, providing a pathway to homeownership.

Eligibility for FHA-Insured Manufactured Home Loans

FHA-insured manufactured home loans require specific property and borrower criteria. The home must meet U.S. Department of Housing and Urban Development (HUD) Manufactured Home Construction and Safety Standards, often known as the HUD Code. A certification label, typically a red metal plate on the exterior, verifies compliance, indicating the home was built on or after June 15, 1976.

The manufactured home must be permanently affixed to a foundation that meets FHA guidelines, classifying it as real property. A permanent foundation typically includes reinforced poured concrete footings, solid material piers, a self-supporting perimeter wall with an access opening, and adequate tie-downs.

The home must be a minimum of 400 square feet and designed for year-round residency. It must be located on land the borrower owns or will own at closing. The home must also be connected to essential utilities, including water, sewer, and electrical systems, and be deemed safe, sound, and sanitary through an FHA appraisal.

Borrower qualifications mirror those for site-built homes. A credit score of at least 580 is typically needed for a 3.5% down payment. Scores between 500 and 579 may require a 10% down payment. Lenders assess debt-to-income ratio, which should not exceed 43%. The manufactured home must serve as the borrower’s primary residence.

Applying for an FHA Manufactured Home Loan

The application process begins by identifying an FHA-approved lender experienced in manufactured home financing. After initial contact, borrowers undergo pre-qualification or pre-approval, where the lender assesses financial standing to determine the maximum loan amount.

The loan application requires documentation to verify financial stability and identity. This includes proof of income, such as recent pay stubs and W2 forms, or two years of tax returns for self-employed individuals. Borrowers must also provide proof of funds for the down payment and closing costs, often through bank statements. A valid government-issued identification is also necessary.

Specific property documentation is crucial for manufactured homes. This includes the manufacturer’s certificate of origin and evidence of the home’s permanent foundation installation, often requiring a licensed engineer’s certification. An FHA-approved appraiser must confirm the home’s market value and compliance with FHA Minimum Property Standards. This appraisal evaluates the home’s structure, foundation, utilities, and overall condition.

Underwriting involves a comprehensive review of all submitted documents and the appraisal to make a final loan decision. Upon approval, the loan proceeds to closing, where all necessary legal documents are signed. Borrowers should anticipate closing costs, including fees for appraisal, loan origination, and mortgage insurance premiums.

Distinguishing Features of FHA Manufactured Home Financing

FHA financing for manufactured homes includes distinct programs: FHA Title I and FHA Title II loans. Understanding their differences is essential, as they dictate the type of property that can be financed and associated requirements.

FHA Title I loans finance the manufactured home itself, a lot, or a home and lot combination. The home does not need to be permanently affixed to land, making it suitable for homes on leased land or in manufactured home communities. These loans typically have lower loan limits and shorter repayment terms, often up to 20 years.

FHA Title II loans are more common and require the manufactured home to be permanently affixed to a foundation on land owned by the borrower, classifying it as real property. This financing is subject to standard FHA loan limits and offers longer repayment terms, similar to site-built homes. Title II loans are preferred for long-term, permanent residences integrated with the land.

The appraisal process for manufactured homes has specific considerations. FHA-approved appraisers use Form 1004C to assess the property. Appraisers consider the home’s age, potential depreciation, and must use at least two comparable sales of other manufactured homes to determine market value. If land is included, its value is assessed as part of the overall appraisal.

All FHA loans, including those for manufactured homes, require mortgage insurance premiums. This includes an Upfront Mortgage Insurance Premium (UFMIP) of 1.75% of the loan amount, payable at closing or rolled into the loan. An Annual Mortgage Insurance Premium (MIP) is charged monthly, typically ranging from 0.15% to 0.75% of the loan amount. Standard homeowner’s insurance is required, with coverage equaling the loan amount or replacement cost. Flood insurance is mandatory if the home is in a flood-prone area.