203(b) Loan Requirements for Manufactured Homes
Many FHA home loans, including the 203(b) loan, are available for manufactured homes— and that’s a good thing, considering that 22 million people in the U.S. live in them. And, since manufactured homes have an average new home sale price of just above $70,000, they’re considerably more affordable than traditionally built homes.
What Types of Manufactured Homes are Eligible for FHA Financing?
While manufactured homes are eligible for FHA financing, they must meet certain requirements, including:
The home needs to have been built after June 15, 1976.
The home must be at least 400 sq. ft.
The home must be intended and designed for one family
The structure needs to be built and must remain on a permanent chassis
The home may be moved only once, from the builder or dealer to the home site, and may never be moved again
The structure must be designed to be used as home with a permanent foundation
The structure needs to be classified as real estate
The home needs to have a HUD Certification Label (also known as a tag). Alternatively, the buyer must get a letter of label verification issued on behalf of HUD. This will confirm that the manufactured home was built in compliance with Federal Manufactured Home Construction and Safety Standards
Since HUD mandates that homes be moved only once, 203b loans are only available to buyers who own the land where their manufactured home is located. In general, this is because manufactured home residents who lease the land on which their home is located are vulnerable to a sudden sale of the property. This could force residents out of their homes with little to no advance notice.
Just like FHA 203(b) loans for traditionally built homes, the borrower needs to occupy the manufactured home as their primary residence, as 203(b) loan rules do not permit the loan to be used for investment properties.
FHA 203(b) Manufactured Home Down Payments
Just like other 203(b) loans, FHA 203(b) loans for mobile homes require a minimum 3.5% down payment for qualified borrowers. However, if you’re replacing an older manufactured home with a new one, and you have significant equity in the land your home is located on, you may be able to use the existing land equity in order to fully finance your down payment. In addition, you may be able to get the seller to put some funds toward your closing costs. Either way, there are several paths to achieving 0% cash down if you want to use an FHA loan to purchase a manufactured home but don’t have much cash on hand.
FHA Title I Loans Are Available for Certain Manufactured homes
While 203(b) loans may only be available for properties in which the borrower owns both the home and the land, FHA Title I loans can be used by borrowers who do not own the land that their mobile or manufactured home will occupy. To be eligible for an FHA Title I loan, a borrower must initially lease the land on which the home will be placed for at least three years, and must get a minimum of 180 days notice if their lease will be terminated, giving them adequate time to find new property to lease.
Maximum amounts for FHA Title I loans for manufactured homes include:
Manufactured homes only: $69,678
Manufactured home lots: $23,226
Manufactured homes and lots: $92,904
In addition, the maximum terms for these loans include:
Manufactured homes or home and lots: 20 years
Manufactured home lots: 15 years
Multi-section manufactured homes and lots: 25 years