The manufactured home loan process is more complex than financing a
traditional site-built home.
Not all lenders offer loans for manufactured homes and many who do are not proficient with this loan type. This lack of expertise often results in a less than stellar experience for a manufactured home buyer and the agents involved. These tips should help distinguish the facts from all the noise with the end result a more satisfying home purchase experience.
Below are some of the potential issues I have come across in my 30+ years of lending financing hundreds of manufactured homes-- both brand new and resale.
Missing labels and/or data plate can be an issue -- click here for more details
A foundation certification by a licensed engineer may be required--more details click here
Manufactured home must have been built on or after June 15, 1976 with Hud Tags and a data plate. Some lenders will add additional age rules and only do manufactured homes 15 or 20 years old.
The manufactured home can't be a 2-4 unit property.
Subordinate financing is NOT permitted. (no seller carryback or piggyback loan)
Loan to value on conventional primary residence purchase can't exceed 95%.
FHA maximum LTV is the standard 96.5%.
VA will allow zero down--however some VA lenders will require a down payment on a manufactured home.
USDA guaranteed loan program -only new homes purchased with the land can be financed. Typically this would be a dealer selling a home/land combo less than one year old and not previously occupied. Buying a used--over 1 year old --or previously occupied - manufactured home is not allowed in California. They are eligible in a few other "pilot program" states.
Second or vacation homes are allowed on conventional with a minimum of 10% down payment. FYI--the interest rate on this scenario will be higher than a normal owner occupied purchase.
Investment property is not eligible for financing.
Homes in mobile home parks are not eligible. Homes in approved condo projects may be eligible under certain conditions.
Foundation skirting required-- Non-load bearing skirting must be permanently attached to concrete, masonry or wood backing. Skirting must allow ventilation to the space. FHA requires perimeter enclosures to be constructed of concrete, masonry or treated wood. Vinyl skirting alone is not acceptable.
Any structural modifications to an existing manufactured home must be approved by
a licensed professional engineer or the local building department (need permits). Click for more details
Land typically must be owned by the buyer/borrower. Leasehold interest or manufactured condo projects pose a problem and many lenders will not touch these scenarios. Any manufactured condo project must be approved by Fannie or FHA
Second moves of the manufactured home -- almost always a deal killer. Homes installed at one location and then relocated and installed at a second location are ineligible for all loan programs except for VA. VA will require additional plumbing, electrical and roof inspections if a second move. FYI --- Only a handful of VA lenders will allow a second move like this.
Flood insurance required on the property. On FHA if the home requires flood insurance it can be a deal killer.
Repair escrows - lender required property repairs to be completed after closing are not allowed on conventional loans. Repair escrows may be allowed on FHA, VA and USDA.
Appraiser must have a minimum of 2 manufactured sold comps in the appraisal report on a multi wide home. For single wide homes--when a lender allows this property type--at least one sold comp must be a single wide home. If an appraiser can't include manufactured sold comps then nearly every lender will not lend on the property.
Tow hitch and running gear must be removed from the property.
Second dwelling on the property
A second additional vacant manufactured home located on a property being used strictly for storage with an inoperable kitchen typically may remain if it does not pose a health or safety risk. Financing problems may occur when this additional manufactured is hooked up to utilities or septic/sewer.
ADUs (accessory dwelling unit) can pose problems. Fannie Mae does not allow ADUs when the main home is a manufactured. Freddie will allow an ADU when the main home is a manufactured however the ADU cannot be a manufactured home. Many lenders will not accept this scenario.
FHA allows ADUs --sometimes even a second manufactured, however this is a problematic transaction and both manufactured homes must comply with FHA rules. Many lenders will not touch this scenario.