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FHA loan for a modular home

Nice mobile homeThe Federal Housing Administration (FHA) provides home loans for modular, manufactured and mobile homes for qualified home buyers and eligible properties.

The most common way to finance a manufactured home is with a traditional FHA home loan. The purchase usually involves the simultaneous purchase of the land and manufactured home. The home buyer(s) must meet the traditional approval guidelines. Although, the FHA home loan program is one of the easiest ways to finance a home purchase. The down payment is only 3.5% and the down payment may be "gifted" by an eligible donor (i.e. parents, siblings, and under certain conditions, a close friend). The seller is allowed to pay a percentage of the buyer's closing costs.
Read more about FHA home loans


FHA manufactured, modular and mobile home loan guidelines

Because FHA manufactured home loans are insured by the FHA, there are specific requirements that must be met. These include but are not limited to:

  1. The dwelling must be built after June 15, 1976.
  2. The minimum size to be financed is 400 square feet.
  3. The red HUD label must be affixed to each section.
  4. The home must be permanently affixed to a foundation that meets FHA standards.
  5. The lot where the manufactured home will be set must be designated or approved.
  6. The home must meet the Model Manufactured Home Installation Standards.
  7. The home must be used as a primary residence.

FHA Title I loan

The FHA promotes the purchase or refinancing of a manufactured homes with the title 1 loan program. A Title I loan may be used for the purchase or refinancing of a manufactured home, a developed lot on which to place a manufactured home, or a combination of manufactured home and lot. The home must be used as the principal residence of the borrower.

Manufactured Homes Placed on a Leased Lot

For Title I insured loans, borrowers are not required to purchase or own the land on which their manufactured home is placed. Instead borrowers may lease a lot, such as a site lot within a manufactured home community or mobile home park. When the land/lot is leased, HUD requires the lessor to provide the manufactured homeowner with an initial lease term of 3 years. In addition, the lease must provide that the homeowner will receive advance written notice of at least 180 days, in the event the lease is to be terminated. These lease terms are designed to protect homeowners in case the lessors sell the land or close the park.

Maximum Loan Amount

Manufactured home only - $69,678
Manufactured home lot - $23,226
Manufactured home & lot - $92,904

Maximum Loan Term

20 years for a loan on a manufactured home or on a single-section manufactured home and lot
15 years for a manufactured home lot loan
25 years for a loan on a multi-section manufactured home and lot
SOURCE: Department of Housing and Financing

The USDA and manufactured housing

The United States Department of Agriculture (USDA) will permit a mortgage on manufactured housing for the purchase of an eligible new unit, transportation and set-up costs, and acquisition of an eligible site (if not already owned by the applicant).

Prospective home buyers must meet the usual qualification guidelines regarding income, length of employment, credit, monthly income and monthly debt obligations. Read more about USDA qualification

When a real estate mortgage or deed of trust covers the unit and the site, a loan to
finance the following may be guaranteed.

Site development work that conforms to the standards imposed by the state and
local government.

Purchase of an eligible new unit, transportation and set-up costs, and purchase of an eligible site if not already owned by the applicant. Manufactured units must be less than 12 months old and never occupied and will include the site. The date of the purchase agreement must be within one year of the manufactured date displayed on the plat attached to the unit. The following criteria outlines an eligible unit for guarantee with the SFHGLP:

To be an eligible unit, the new unit must have a floor area of not less than 400 square feet.

The unit must meet the Federal Manufactured Home Construction and Safety Standards (FMHCSS).

The unit must be placed on a permanent foundation built to FHA guidelines in effect at the time of certification. Guidelines are presently published in the “Permanent Foundation Guide for Manufactured Housing” (HUD-4930.3G) which is found at http://www.huduser.org/portal/publications/destech/permfound.html

Certification the foundation design meets HUD Handbook 4930.3, “Permanent Foundations Guide for Manufactured Housing (PFGMH).” The foundation certification must be from a licensed HB-1-3555 13-7 (03-09-16) SPECIAL PN professional engineer, or registered architect, who is licensed/registered in the state where the manufactured home is located and must attest to current guidelines of the PFGMH. The certification must be site specific and contain the engineers or registered architect’s signature, seal and/or state license/certification number. Read more

Rotating question mark Frequently asked questions about manufactured home loans

Q. Can I get approved for a mobile home with bad credit?
A. The Federal Housing Administration (FHA) will finance a mobile home provided the structure meets the FHA guidelines (see above) and the applicant(s) meet the customary FHA credit and income criteria. The FHA will allow an applicant with a credit score as low as 500 (to 579), however, the FHA requires a 10% down payment. At 580 or greater, the minimum down payment is 3.5%.

Q. How do I get an FHA mobile home loan?
A. Simply make application to any approved FHA lender

Q. How long does it take to get approved for a mobile home loan?
A. Obtaining pre-approval or loan approval can take as little as one or two days, provided that the applicant has the necessary documents (i.e. W-2's, paystubs, bank statements, etc.).

Q. How much do you have to put down on a mobile home?
A. As stated earlier, a down payment of 3.5% is required for an applicant with a credit score greater than 580.

Q. Is it hard to get approved for a mobile home?
A. Loan approval is very easy compared to other mortgage loans

Q. Do manufactured homes qualify for FHA loans?
A. Probably. Most companies understand the FHA construction guidelines and strive to meet the specifications.