How to Get an FHA Loan for a Mobile Home or Manufactured Home

For many, purchasing a mobile or manufactured home is an affordable, flexible way to achieve homeownership, and an FHA loan can make this dream even more attainable.

These loans, backed by the Federal Housing Administration (FHA), are designed to help more people qualify with lower down payment requirements, flexible credit standards, and competitive interest rates.

Mobile vs. Manufactured vs. Modular Homes

Understanding the difference between mobile, manufactured, and modular homes is essential, as FHA requirements differ depending on which type you are trying to finance.

Mobile homes were built before the HUD Code was established in 1976, while Manufactured homes were built after 1976 and adhere to HUD standards. If they’re on a permanent foundation, manufactured homes are eligible for FHA loans.

Modular homes are always considered “real property” because they are built to local building codes, permanently affixed to a foundation, and typically sold with the land they sit on. On the other hand, mobile and manufactured homes are typically classified as personal property unless the owner owns the land and they are permanently affixed to it.

Can you get an FHA loan for a mobile home?

If the mobile home was built on or after June 15, 1976, you can use an FHA loan to finance it, however, HUD considers these homes “manufactured homes.”

While . the terms mobile home and manufactured home are often used interchangeably, technically, there is a key distinction based on when the home was built:

• Mobile Homes: Refers to homes built before June 15, 1976, which were not subject to federal construction and safety standards.
  
• Manufactured Homes: Refers to homes built on or after June 15, 1976, under HUD's national safety and construction standards.

In practice, many people still use "mobile home" to describe all prefabricated homes, but officially, only homes built after that date are classified as manufactured homes under federal regulations. Therefore, if you want to finance a mobile home with an FHA loan, you must follow FHA manufactured home guidelines.

FHA Manufactured Home Guidelines

Outside of general FHA loan eligibility requirements, manufactured homes have a few specific guidelines that borrowers must follow in order to be approved for financing.

• The home must be built on or after June 15, 1976, and display a HUD Certification Label (also known as a HUD tag) to confirm it meets federal safety and construction standards.
• The home must be used as the borrower's primary residence.
• The home must be a minimum of 400 square feet.
• The home must meet FHA’s minimum property standards, ensuring safety, security, and structural integrity.
• The loan must be obtained through an FHA-approved lender.
• The manufactured home and property (if applicable) must undergo an FHA appraisal to ensure it meets value and condition standards.

The home must also be within the maximum FHA loan limit amount, which varies by location.

Can I finance just the home?

FHA loans allow you to finance just a manufactured home without land using an FHA Title 1 loan. This program is designed to assist borrowers in purchasing manufactured homes, even if they lease the land where the home will be situated.

Note: not all lenders offer these loan types, so make sure you shop around.

FHA loans cannot finance modular homes without land because modular homes are treated as real property, not personal property. To qualify for FHA financing, a modular home must be permanently affixed to a foundation, and the borrower must own the land.

What is considered a foundation for a manufactured home?

For FHA approval, the manufactured home must be set on a permanent foundation that complies with HUD standards. Acceptable foundation types include piers, slabs, and crawl spaces. Setting up a home on an approved foundation can be costly, so it’s essential to budget for this if upgrading is needed.

What if the home is in a mobile park?

If your home is already located in a mobile home park, it is still possible to finance it with an FHA loan. However, additional considerations apply. The FHA requires that the manufactured homes be affixed to an approved foundation. In this case, you would not finance the land, as it remains part of the mobile park, but you must lease the land long-term to satisfy FHA’s occupancy requirements.

It should be noted that many lenders do not allow lending for leasehold properties (meaning you don’t own the land). Neighbors Bank currently will not finance a manufactured home that is located in a mobile home community.

FHA Modular Home Guidelines

Modular homes are treated the same as traditional site-built homes for financing purposes because they are classified as real property once installed on a permanent foundation.

Unlike manufactured or mobile homes, modular homes are built in sections off-site to meet local or state building codes. They are assembled on the property, making them indistinguishable from stick-built homes. This classification means they do not have additional requirements specific to modular construction when applying for an FHA loan.

With FHA loans, modular homebuyers must meet the standard qualifications for any FHA purchase loan, including minimum credit scores, debt-to-income ratios, and down payment requirements.

The property must pass an FHA appraisal, but no special HUD guidelines apply specifically to modular homes. This streamlined process makes financing modular homes through FHA loans as straightforward as financing a traditional house, giving buyers a wider range of affordable options.

Pros & Cons of a Manufactured FHA Home Loan

The pros of an FHA loan for mobile homes or manufactured homes include lower down payment and flexible credit requirements, making it accessible to a larger pool of borrowers.

However, borrowers should be aware of potential downsides, such as the requirement for FHA mortgage insurance premiums and property standards.

Get Started Today

At Neighbors Bank, we specialize in helping you navigate the process, offering personalized support to ensure you secure the best financing for your new home.

Get pre-approved today, and take the first step toward making your homeownership dreams come true.