FHA Financing Ideal For Those With the Ability to Pay, But May Have Had Past Credit Challenges
The U.S. Department of Housing and Urban Development (HUD), under the FHA Title 1 Program, approves lenders to make loans from their own funds to eligible borrowers to finance or refinance a manufactured home loan and/or lot. The FHA insures lenders against loss if the borrower defaults.
FHA manufactured home and modular home loans represent a popular option for home buyers who currently have the ability to repay a mortgage, but have had credit challenges in the past.
Maximum loan amounts:
Manufactured Home Only – $69,678
Manufactured Home Lot – $23,226
Manufactured Home and Lot – $92,904
The maximum dollar limits for lot loans and combination loans may be increased up to 85% in designated high cost areas.
Maximum Loan Term
The maximum loan term is 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
Minimum Down Payment Requirement
- 3.5% of total consideration. The government maintains certain standards relating to borrower eligibility. For example, applicants must have sufficient funds to make the down payment and show they have enough funds remaining after other expenses to handle the monthly mortgage bill.
- Current fixed interest rate is 3.75%. Note that because FHA mortgage providers are willing to take on borrowers who have a slightly higher risk profile, homeowners fund the insurance benefit by paying both an upfront mortgage premium and an annual premium on top of their loan amount. This makes these loans slightly more expensive than others.
Manufactured homes placed on a leased lot are eligible for FHA financing. For Title 1 insured loans, borrowers are not required to purchase or own land on which their manufactured home is placed. Instead, borrowers may lease a lot, such as a site within a manufactured home community or mobile home park. When the land/lot is leased, HUD requires the lessor to provide the manufactured home owner with an initial lease term of 3 years. In addition, the lease must provide that the homeowner will receive 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 lessor sells the land or closes the park.