If you are looking to buy a manufactured home, you may be wondering what types of loans will help make your dream of homeownership a reality.
The Federal Housing Administration’s (FHA) home loans are an affordable option for people with complicated financial histories. They can give people the hope and means to establish roots for their families. Everyone deserves a home they love, and FHA loans can assist you in reaching that goal.
Learn more about getting an FHA loan for a manufactured home.
What Is an FHA Manufactured Home Loan?
The FHA is a division of the Department of Housing and Urban Development (HUD). It is an agency that insures mortgage loans that approved lenders issue. These loans help make homeownership affordable by offering low down payments and accepting lower credit scores than other options. This type of loan is attractive to low-income individuals and first-time homeowners.
You can get an FHA home loan for manufactured homes with a HUD Certification Label that abides by certain regulations set forth by the Manufactured Home Construction and Safety Standards (MHCSS).
How Can You Get an FHA Loan for a Manufactured Home?
FHA manufactured home loans are very similar to FHA loans for traditional homes. With that said, there are special FHA property and construction requirements for getting the loan, in addition to needing to meet minimum mortgage standards.
Minimum Mortgage Requirements for FHA Loans
You need to meet certain prerequisites from FHA for mortgage loan eligibility. The following are the minimum requirements for any kind of FHA home loan:
- Credit score: While FHA loans are ideal for people without a perfect credit history, there are some guidelines for how your score impacts your down payment. Individuals with a FICO score of 580 or higher get a 3.5% down payment program.
- Debt-to-income ratio: Your debt-to-income ratio must be lower than 43%.
- Mortgage insurance premium: FHA requires you to have a mortgage insurance premium (MIP).
- Proof of income: As a buyer, you need both a steady stream of income and to be able to prove your employment.
- Primary residence: The home has to be the buyer’s primary residence to qualify for FHA loans.
Property Requirements for FHA Manufactured Home Loans
When it comes to FHA manufactured home guidelines, there are some requirements that the property you plan on buying must meet in order to be eligible for the loan.
FHA-approved lenders will inspect your plot for the following to ensure it meets the minimum requirements:
- There must be access to sewer and water facilities.
- The home must classify as real estate.
- You must remove towing hitches and running gear.
- An approved HUD seal must be visible on the home’s exterior.
- The home has to be permanently attached to the land in accordance with local building guidelines.
- Your home must have a living area of at least 400 square feet.
- The property must have access to an all-weather road.
Construction Requirements for FHA Manufactured Home Loans
There are special FHA manufactured home requirements for new construction. If you plan on buying this type of home with land, you can often combine the costs with any transportation expenses for the total loan amount. However, there are some conditions regarding these loans and construction, including:
- You need to get itemized construction costs from a professional contractor.
- Buyers must prove they own the land.
- The foundation of the home needs to meet special standards.
- You’ll need to prove the home is real estate and taxed as such.
Pros and Cons of FHA Loans
Whether an FHA loan is right for you depends on your unique financial situation. There are both advantages and disadvantages to this type of home loan.
These are some of the pros of receiving an FHA loan:
- Lenders can accept lower down payments.
- Buyers can qualify despite having a history of financial challenges or bankruptcy.
- You can roll closing costs into your loan total.
- You can qualify with a lower credit score than many other types of loans.
While FHA loans are very attractive, there are some drawbacks too, including:
- You will have upfront and annual mortgage insurance premiums, despite the amount of money you spent on your down payment.
- FHA borrowers have fewer exclusive standards, making it harder to be a competitive buyer.
- Loan maximums associated with FHA can be restrictive.
Alternatives to FHA Manufactured Home Loans
For anyone who qualifies for 100% financing or has an especially high credit score, there are other manufactured home loan options that you may want to consider.
The following are three types of loans that are alternatives to FHA options:
- Conventional loans: Buyers can look into loans from government-sponsored agencies like Fannie Mae and Freddie Mac for low rate financing and low down payments.
- U.S. Department of Agriculture (USDA) loans: If you are looking to install your manufactured home on a plot of land in a rural region, you may be able to get a loan backed by the USDA.
- U.S. Department of Veterans Affairs (VA) loans: Eligible veterans and service members can get a manufactured home with no down payment and better interest rates.
Can You Get an FHA Loan for a Modular Home?
Yes! FHA modular home requirements are very similar to those of manufactured homes. Modular homes must be built after June 15, 1976, to qualify. The home will need to meet all Model Manufactured Home Installation Standards and be permanently attached to the lot. It will also need to have proper water and sewage systems.
Interested in Applying for a Manufactured Home Loan?
At CIS Home Loans, we understand the value of helping people down the path of the American dream through affordable homeownership.
Our knowledgeable team can help you through our simple application process so that you can receive the loan option that is right for you and your home. All loans are subject to approved credit.
Contact us today or check out CIS Home Loans for our FHA loan offerings.