Loans for Manufactured Homes
Under the Title I program, FHA approved lenders make loans from their own funds to eligible borrowers to finance the purchase or refinance of a manufactured home and/or lot. FHA insures the lender against loss if the borrower defaults. Credit is granted based upon the applicant’s credit history and ability to repay the loan in regular monthly installments.
FHA does not lend money; FHA insures loans in order to encourage mortgagees to lend. Title I manufactured home loans are not Federal Government loans or grants. The interest rate, which is negotiated between the borrower and the lender, is required to be fixed for the entire term of the loan, which is generally 20 years.
Purpose of the Loan
A Title I loan may be used for the purchase or refinancing of a manufactured home, a developed lot on which to place a manufactured home, or a manufactured home and lot in combination. The home must be used as the principal residence of the borrower.
Manufactured Homes Placed on a Leased Lot
For Title I insured loans, borrowers are not required to purchase or own the land on which their manufactured home is placed. Instead borrowers may lease a lot, such as a site lot within a manufactured home community or mobile home park. When the land/lot is leased, HUD requires the lessor to provide the manufactured homeowner with an initial lease term of 3 years. In addition, the lease must provide that the homeowner will receive advance 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 lessors sell the land or close the park.
Maximum Loan Amount
- Manufactured home only – $69,678
- Manufactured home lot – $23,226
- Manufactured home & lot – $92,904
Maximum Loan Term
- 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
Locating a Dealer
Manufactured homes are usually purchased through dealers or retailers that sell the homes. The names of lenders in your area which specialize in financing manufactured homes can be obtained from local retailers. These retailers are listed in the yellow pages of your telephone directory. They have the required application forms.
Manufactured homes must comply with the Model Manufactured Home Installation Standards, and all applicable state and local requirements governing the installation and construction of the manufactured home foundation system.
HUD provides two types of consumer protection. The borrower must sign a HUD Placement Certificate agreeing that the home has been installed and set-up to their satisfaction by the retailer before the lender can give the loan proceeds to the retailer. After moving in, the borrower can call HUD at (800) 927-2891 to get assistance about the problems with construction of the home.