FHA Guidelines for Manufactured Homes

The FHA insures mortgages on manufactured homes.

Congress created the Federal Housing Administration (FHA) during the Great Depression in order to expand access to safe, affordable housing for low- and moderate-income Americans. One source of affordable housing shunned by a large share of mortgage lenders is manufactured housing, also once known as mobile homes. In accordance with its commitment, the FHA insures loans for manufactured housing to provide buyers of these homes with competitive mortgage loans.

Identification

Manufactured homes have additional guidelines above the standard guidelines for property eligibility. Like other property, a manufactured home is only eligible for an FHA loan if it is to be used as an owner-occupied primary residence. According to the Department of Housing and Urban Development (HUD), a manufactured home is one that is transported in one or more sections from the manufacturer to its resting place. To be eligible for an FHA loan, the home's floor area must be at least 400 square feet. It must conform to federal construction and safety standards for manufactured homes. There must be a label stating it is in accordance with these standards. The construction date of the home must be after June 15, 1976.

Foundation

Manufactured homes come with attached wheels and, because of this, they are classified as personal property for tax purposes, like a car or trailer. The FHA will only insure mortgages on real property, not personal property, so eligible manufactured homes must be attached to the property with a permanent, enclosed foundation. This foundation should conform to local and HUD standards. An FHA-approved appraiser, as well as a licensed professional engineer or architect, must inspect the foundation to ensure it is safe and stable, as well as above the100-year flood elevation.

Terms

FHA loans for manufactured homes have the same interest rate and 3.5 percent down payment requirement as traditional, "stick-built" homes. The only exception for manufactured homes is the loan term on them is limited to 30 years and must cover both the home and the property it sits on. Borrowers can purchase a home already sitting on a lot or they can take out a construction to permanent (CP) loan.

Construction to Permanent Loans

CP loans for manufactured homes allow a borrower to first purchase a land lot for the home. The borrower can then purchase a new or pre-existing manufactured home and include all of the moving and site preparation costs in the loan. Site preparation costs include running utilities to the site, clearing and grading the site, building a well or septic tank if necessary and any foundation work needed to attach the home to the property. Several different companies can do transport of the home and the necessary site work. All costs must be reasonable and itemized.

Termite Control

The FHA requires termite control for manufactured homes. Soil treatment of the site or a bait system can satisfy this guideline. The home itself may be termite controlled by using wood with natural resistance to termites or pressure-treated wood in the construction of the home.

References

• U.S. Dept of Housing and Urban Development: Manufactured Homes: Eligibility and General Requirements
• Federal Housing Administration: HUD 4155.2, Lender's Guide to the Single Family, Section 4.10
• Federal Housing Administration: HUD 4155.2, Lender's Guide to the Single Family, Section 2.B.8