Get an FHA Loan on a Mobile Home: What You Need to Know

Will the FHA finance a mobile home?

Mobile homeTitle I lenders provide loans to qualifying borrowers to finance the purchase or refinancing of a prefabricated home. The lender is protected against loss by the FHA if the borrower defaults on the mobile home loan. Credit approval is based on an applicant's credit history and ability to repay the loan in regular monthly payments.

As previously stated, the Federal Housing Administration (FHA) does not lend money to either the borrower or the lender; rather, the FHA simply insures the loan against default.

An FHA Title I loan may be used to purchase or refinance a mobile home, an improved lot on which to construct a manufactured home, or both. The prefabricated home must be the borrower's primary residence. Manufactured homes must comply with the Model Manufactured Home Installation Standards and any applicable state or local rules governing the installation and design of the manufactured home foundation system.

FHA Requirements for a Manufactured Home

  • Meet the Installation Standards for the Model Manufactured Home Installation (MMHI).
  • If the unit is new, the manufactured home must come with a one-year manufacturer's guarantee.
  • The unit must be placed on a location that complies with established local site suitability criteria and provides necessary water supply and sewage disposal facilities.
  • The home must have been constructed after June 15, 1976. Even if an older building is modified to comply with current rules, you will be unable to obtain a loan through the FHA program.

Manufactured Homes on Leased Land

Mobile home interiorBorrowers are not required to own their prefabricated home or the land on which it is built in order to qualify for a Title I insured loan. Borrowers may lease a site lot inside a manufactured home community or mobile home park, as permitted by the FHA.

When the land/lot is leased, HUD/FHA requires the lessor to provide the manufactured homeowner with a three-year initial lease term. Additionally, the lease must offer the homeowner with at least 180 days' written notice prior to terminating the lease. The lease clauses safeguard residents in the event that the lessors sell the property or shut the park.

FHA Manufactured Home Loan Limits

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

The maximum loan amounts are subject to adjustment in locations with high prices; maximum loan amounts for lot loans and combination loans may be increased by up to 85 percent in certain areas.

FHA Manufactured Home Loan Terms

  • 25 years for a loan on a lot and multisection manufactured home
  • 20 years for a loan on a lot and manufactured home or on a single-section manufactured home
  • 15 years for a manufactured home lot loan

Borrower Eligibility Requirements for a Manufactured Home

  • Have sufficient funds to make the required minimum down payment.
  • Demonstrate that they have an enough income to cover the loan payments and other obligations. The borrower must provide evidence of income and maintain a debt-to-income ratio that does not exceed the maximum 41 percent permitted under FHA guidelines.
  • Intend to live in the prefabricated house on a permanent basis.
  • Possess an appropriate location for the modular house. The house may be located on a rental site in a mobile home park if the park and leasing agreement comply with FHA criteria. The house may be located on a borrower-owned or -leased home site.

Conclusion

In conclusion, an FHA loan on a mobile home can be a great option for those looking to buy a home. The process is simple, and the rates are competitive. If you are interested in buying a mobile home, be sure to check out the FHA loan program.