Are you considering buying a mobile home but unsure how to finance it?
The answer might be an FHA loan.
That’s right; you can use an FHA loan to finance your mobile home dreams a reality. But there’s a lot to know about the process.
So, in this article, we’ll take a straightforward approach to exploring the world of FHA loans for mobile homes.
Join us as we delve into the details of FHA loans for mobile homes.
Can You Buy a Mobile Home with an FHA Loan?
Yes, just as we’ve established, the good news is that FHA loans can be used to buy mobile homes, but they must first meet some specific requirements, which we’ll discuss below.
FHA Loan for Mobile Home Requirements
The requirements for an FHA mobile home loan include:
- Credit score: You must have a credit score of at least 580 and a debt-to-income ratio of no more than 43%.
- Documentation: You must have a valid Social Security number, proof of U.S. citizenship or legal residency, and be of legal age to sign a mortgage in your state.
- Down payment: You must have a down payment of at least 3.5% of the purchase price or appraised value, whichever is less.
- DTI: The debt-to-income ratio (DTI) measures your once-a-month debt payments against your gross monthly income. For an FHA mobile home loan, the maximum DTI is 43%, although some lenders may allow up to 50%.
- Land: You must own the land on which the mobile home will sit or have leased for at least three years.
In addition, there are some property restrictions, such as:
- Build Date: The mobile home must have been erected after June 15, 1976. Why? Because the Department of Housing and Urban Development (HUD) established new standards for manufactured homes in 1976, and homes built before that date may not meet these standards.
- Foundation: The mobile house must be permanently pinned to a foundation that adheres to FHA standards. This means the foundation must be designed to resist all applicable loads, including wind and seismic loads, and be anchored to an adequate footing extending below the frost line.
Note that is it also possible to use an FHA 203k loan for a mobile home, with requirements similar to that of the FHA mobile home requirements. Additionally, the repairs or renovations must also meet FHA guidelines.
Can You Buy a Modular Home with FHA Loan?
Yes, you can buy a modular home with an FHA loan.
These types of homes, just like mobile homes are both built in a factory before being transported to their final location.
The key difference is modular homes are built in sections that are transported to the building site and assembled on a foundation whereas mobile homes are designed to be transported on their own wheels and are often located in mobile home parks.
Here are the requirements that qualify a modular home for an FHA loan. In addition to the requirements of a traditional stick-built home, modular homes must:
- Be built on a permanent foundation.
- Be classified as real property (affixed to a permanent foundation).
- Meet all local building codes and regulations.
You could also buy a mobile or modular home with a conventional loan. Although, the requirements are quite different and more sophisticated than the FHA.
Here’s a summary table that highlights the key differences and similarities.
| Requirement | Conventional Loan | FHA Loan |
|---|---|---|
| Eligible Property Types | Manufactured Homes and Modular Homes | Manufactured Homes and Modular Homes |
| Foundation Requirements | Permanent Foundation | Permanent Foundation or Piers and Tie Downs |
| Age of Home | No age restrictions | Must be built after June 15, 1976 |
| Loan-to-Value Ratio | Up to 95% | Up to 96.5% |
| Minimum Credit Score | Usually 620 or higher | 500 with 10% down payment or 580 with 3.5% down payment |
| Private Mortgage Insurance (PMI) | Required if LTV is greater than 80% | Required for the entire loan term if the down payment is less than 10% |
| Loan Limits | Varies by location and property type | Varies by location and property type |
What’s the Process of Applying for an FHA Mobile Home Loan?
The application process for an FHA mobile home loan is relatively straightforward:
- Find an FHA-approved lender: The first step in applying for an FHA mobile home loan is finding a lender approved by the Federal Housing Administration (FHA).
- Meet with a loan officer: Schedule an appointment to meet the loan officer. During this meeting, you’ll discuss your financial situation, credit score, and other important details that determine your FHA mobile home loan eligibility and how much you qualify for.
- Get pre-approved: To get pre-approved, you’ll need to provide the lender with documentation that proves your income, employment history, and creditworthiness. This may include recent pay stubs, tax returns, bank statements, and other financial documents. Your full approval should take anywhere from 30 to 45 days.
Frequently Asked Questions
Can you buy a mobile home with a 500 credit score?
Yes, you can. The FHA offers loans for mobile homes, and their minimum credit score requirement is 580 but this doesn’t mean a credit score of 500 isn’t sufficient. The only challenge here is credit scores from 500 and 579 attract a down payment of 10%, not 3.5%.
Can you move a manufactured home on an FHA loan?
Yes, moving a manufactured home on an FHA loan is possible. In addition, the new location must also meet FHA guidelines and be approved for the placement of a manufactured home. This may include requirements for zoning, utilities, and other site-specific factors.
Is it hard to get a loan for a manufactured home?
Getting a loan to purchase a manufactured home can sometimes be a challenge. The loan process can be more complex than for traditional homes, and lenders may have specific requirements for financing a mobile or manufactured home.
One of the main factors that can make it more challenging to obtain a loan for a manufactured home is that these homes are often classified as personal property rather than real estate. Personal property loans are typically associated with higher interest rates and shorter loan terms than traditional home loans.
What does FHA consider a permanent foundation for a mobile home?
When financing a mobile or manufactured home with an FHA loan, it’s important to understand the requirements for a permanent foundation, which is necessary to ensure the home’s structural integrity and ensure that it meets safety and building standards.
The FHA requires that the permanent foundation of a mobile home:
- Be able to resist lateral forces: The foundation must be designed and installed to resist lateral forces that may occur during an earthquake.
- Be constructed of durable materials: Durable materials, in this case, include concrete, mortar masonry, or treated wood.
- Be installed by qualified personnel: The foundation must be designed and installed by a licensed engineer or architect familiar with HUD standards.
What is the oldest mobile home FHA will finance?
The age of a mobile home that the FHA will finance varies based on the type of loan being sought. If you want to purchase a new mobile home, there is no age restriction as long as it meets the FHA’s minimum durability, energy efficiency, and safety standards. Other than that, there are different loans for mobile homes, including:
- FHA Title I loan: This mobile home loan is used to finance repairs or renovations on an existing mobile home; the home must be at least 20 years old and in good condition.
- FHA Title II loan: This mobile home loan is used to purchase or refinance a home and the land it sits on. The home must have been constructed after June 15, 1976, and meet the HUD manufactured-housing codes. Lenders may also have their own requirements and restrictions when financing mobile homes with an FHA loan.
What would disqualify a home from FHA financing?
Some of the factors that may disqualify a home from FHA financing include:
- Occupancy: FHA loans require that the house be occupied as your primary residence. If you plan to use the property as a rental or vacation home, it may be disqualified from FHA financing.
- Property condition: FHA loans require that the property be in good condition and meet specific minimum property standards. If the home has significant issues with its structure, foundation, roofing, or other major systems, it may not meet FHA requirements and, therefore, not be eligible for financing.
- Property location: The home must be located in an area approved for FHA loans. Some areas may be excluded from FHA financing due to environmental hazards or other concerns. Here are some areas we serve that are approved for FHA loans.
- Property type: FHA loans have restrictions on the types of properties that can be financed. For example, FHA loans cannot be used to finance investment properties or vacation homes.
- Title issues: FHA loans require that the property have a clear title with no outstanding liens or other title issues. If title issues cannot be resolved before closing, the home may be disqualified from FHA financing.
Final Thoughts
FHA loans come in handy when buying mobile homes.
Thanks to their low credit score and down payment requirements, as well as low-interest rates, they can make buying a mobile home more affordable and accessible.
If you’d like to buy a mobile home with an FHA loan, give us a call and we’ll help you detail a plan of action that is foolproof.
If you have lingering questions, however, still feel free to contact us. We’re ever happy to help.
