Will a Mortgage on a Mobile Home Disqualify for an FHA?
- A manufactured home is a factory-built unit that arrives at a site on wheels and 100 percent complete. Manufactured homes, since they are on wheels, are not real estate on their own; their status is personal property, like a car. They do not become real estate, and therefore eligible for a mortgage, until they are permanently attached to the ground by a foundation.
- Basic FHA property eligibility requirements for manufactured homes set minimum standards for the types of homes they will insure. Besides having to conform to all federal safety standards, homes must be certified for use as a dwelling. Eligible manufactured homes have a minimum size of 400 square feet with a construction date after June 15, 1976. The mortgage must cover both the home and the property it is on, and the attachment must be a permanent foundation. The entire home, including the foundation, must sit above the 100-year flood elevation.
- Manufactured homes require a more thorough appraisal than stick-built homes. Besides inspection by an FHA appraiser, who must locate and verify the certification label to be sure the property meets standards and construction date limits. A professional engineer or registered architect must also inspect the property and its foundation to certify that the home is permanently and safely anchored to the property. He also checks that the site is able to securely hold the home. This certification stays with the property unless something occurs to change the condition of the property. The U.S. Department of Housing and Urban Development (HUD) has issued a guide that outlines the standards for permanent foundations on manufactured homes, HUD 4930.3G. The home must also be protected against termites through termite control treatment or use of termite-resistant building materials.
- There is no special minimum down payment requirement for manufactured homes. They are subject to the same 3.5 percent minimum down payment that the FHA requires for stick-built homes. Borrowers can purchase manufactured homes that are already on the lot, or they can purchase land and a brand new home to be placed on the site and permanently attached.
- There may be some differences in loan amounts if the borrower has owned either the property or the manufactured home for more than 12 months. For example, the owner of a detached manufactured home may wish to buy a piece of land for the home and pay off his existing home loan with the new mortgage. If he has owned the home for more than 12 months, the lender bases the loan amount on the appraised value of the home and land, which may not be enough to pay off the existing loan. Many still choose to do this, since the lender can roll the costs of site preparation and foundation costs into the loan and the interest rate will be lower than the current private property loan and a land loan.