FHA Manufactured Home Loan Insurance
An FHA mobile home loan provides prospective mobile home owners with the opportunity to obtain a loan for the purchase of a new or used mobile home. This type of loan is accompanied by lower credit score and debt-to-income ratio eligibility requirements, in comparison to conventional loans. Additionally, an FHA manufactured home loan typically includes a longer maximum loan term and lower interest rates.
An FHA mobile home loan is insured and backed by the United States Department of Housing and Urban Development (HUD). However, the HUD does not provide the loans directly to borrowers. Instead, the HUD insures the loan for private lenders that are HUD-approved in order to reduce a lender’s risk, which in turn, allows for a greater approval rate for the loan. Therefore, it is important to learn more about this program if you are considering the purchase of a mobile home. By reviewing the program benefits, home requirements, borrower requirements, loan terms and how to apply, you will be better prepared for the application process.
What is an FHA mobile home loan?
An FHA mobile home loan has been available to mobile home buyers since 1969. The United States Department of Housing and Urban Development insures mortgages that are offered by private lenders in order to broaden the group of individuals that will meet eligibility requirements for a mobile home loan, as lenders become protected against the risk of default.
Not only does this reduce eligibility requirements, and ensure that mortgages are provide to more buyers, but borrowers will generally receive longer term and lower interest rate loans, when comparing FHA to conventional loans.
FHA Manufactured Home Foundation Requirements
If you intend to apply for an FHA mobile home loan, it is important to understand the requirements that a mobile home must meet in order to qualify for financing. If you are wondering, “What are the FHA manufactured home foundation requirements?” note that you are not required to purchase nor own the loan that the home will be – or is – placed upon.
As a borrower, you are permitted to own or lease the lot, including a lease through a mobile home park or community. However, if the land is leased, the HUD will require that community or park to provide you with an initial lease term of three years, and that the lease must provide you with advanced written notice if the lease will be terminated, such as if the land is to be sold or the park is to be closed.
How is an FHA modular home loan amount determined?
FHA mobile home loan amounts are primarily based upon the borrower’s credit history and ability to repay the loan. However, keep in mind that there are maximum loan amounts that will apply, regardless of credit history, income or debt-to-income ratios. Maximum loan amounts are based upon whether a purchase will be for a manufactured home, manufactured home lot or both.
If interested in an FHA manufactured home loan, you can learn more about maximum loan amounts by downloading and reviewing our informative guide. This guide will walk you through the maximum amounts you can expect to receive with this type of loan.
Understanding FHA Mobile Home Loan Terms
If considering an FHA mobile home loan, it is important to review the loan terms and rates that are common for this type of loan. Maximum loan amounts and term lengths are based upon whether or not the loan will be for a manufactured home, a manufactured home lot or both a lot and manufactured home.
An FHA manufactured home loan is not directly provided by the Federal Housing Administration. As such, the interest rate is negotiated between the potential borrower and the HUD-approved lender. Additionally, the borrower will be required to pay upfront and annual insurance premiums for the FHA insurance. The annual premium will be based upon the declining balance of the loan.
What type of manufactured home is eligible for an FHA mobile home loan?
In addition to FHA manufactured home foundation requirements, it is important to review the other eligibility requirements that a mobile home must meet in order to qualify for this type of mortgage. If a home does not meet these qualifications, this type of mortgage will not be your best option, as financing cannot be provided toward the purchase of a home that does not meet requirements.
As stated previously, an FHA mobile home loan can be used toward the purchase of a new or used mobile home. Eligible manufactured homes must:
- Meet Model Manufactured Home Installation Standards.
- Carry a one-year manufacturer’s warranty, only applicable if the unit is a new manufactured home.
- Be installed on a lot that meets the established local standards for site suitability. The home must also have an adequate water supply and sewage disposal facilities.
It is also worth noting that financing from this loan cannot be used toward the purchase of furniture. However, financing can be used toward the purchase of built-in appliances and equipment, as well as wall-to-wall carpeting.
Who is eligible for an FHA manufactured home loan?
To obtain an FHA mobile home loan, you must meet certain borrower eligibility requirements. These include:
- You must be able to make the minimum required down payment.
- You must be able to demonstrate that you have a high enough income to make payments on the loan, as well as meet your other expenses, referred to as a debt-to-income ratio.
- You must intend to occupy the mobile home as your primary place of residence.
- You must have a suitable site to place the manufactured home once purchased.
Additionally, when learning how to apply for an FHA loan for manufactured homes, it is important to know that the private lender with which you apply will require you to meet a minimum credit score before a loan can be finalized. However, as stated previously, these credit requirements are far lower than most conventional loans due to the FHA mortgage insurance that is provided to lenders as part of the loan.
How to Apply for an FHA Modular Home Loan
As stated previously, an FHA mobile home loan is not supplied directly by the FHA or HUD. Instead, you will need to learn how to find a lender that is approved to offer FHA loans. Additionally, you may also be able to apply for this type of loan by submitting an application directly with an approved manufactured home dealer.
To learn more about FHA mobile home loans, including loan terms and amounts, eligibility requirements and application methods, download our comprehensive guide, which includes a more in-depth look at FHA loans.