Can You Use an FHA Loan to Buy a Manufactured Home?

The Federal Housing Administration (FHA) offers various loan programs to help individuals purchase homes, including manufactured homes. If you're considering purchasing a manufactured home, you might wonder: can you use an FHA loan to finance this type of property?

The answer is yes, you can use an FHA loan to buy a manufactured home, but there are specific criteria that must be met. FHA loans enable borrowers to secure financing with a lower down payment and more relaxed credit score requirements compared to conventional loans, making them an attractive option for many homebuyers.

Eligibility Requirements for FHA Loans on Manufactured Homes

To use an FHA loan to purchase a manufactured home, the home must meet certain eligibility requirements:

• Type of Manufactured Home: The home must be classified as real property, meaning it is permanently affixed to a foundation. Homes on wheels or those that can be easily relocated do not qualify.
• Size and Living Space: The manufactured home must have a minimum of 400 square feet of living space. Additionally, it should comply with the local building codes and regulations.
• Home Age: The FHA typically requires that manufactured homes be built after June 15, 1976, when stricter building standards were implemented.

Financing and Down Payment Options

One of the key benefits of using an FHA loan to finance a manufactured home is the potential for lower down payment options. Borrowers may qualify for as little as 3.5% down, depending on their credit scores. This is particularly advantageous for first-time buyers or those with limited savings.

Additionally, FHA loans allow the borrower to finance both the home and the lot it rests on. This is significant because many manufactured homes are situated in mobile home parks or on privately owned land. However, it’s essential to ensure that the property meets all FHA guidelines for financing.

Credit Requirements

FHA loans are designed to help individuals with less-than-perfect credit. While the typical minimum credit score to qualify for an FHA loan is around 580, some lenders may accept lower scores, particularly if a larger down payment is made. This flexibility can open doors for many buyers who might otherwise struggle to secure financing.

Steps to Secure an FHA Loan for a Manufactured Home

1. Find an FHA-Approved Lender: Not all lenders offer FHA loans, so the first step is to secure a lender that is approved to provide these loans for manufactured homes.
2. Gather Necessary Documentation: Prepare your financial information, including proof of income, employment history, credit reports, and details about the manufactured home you wish to purchase.
3. Complete the Application Process: Once you have your documents in order, submit the application for an FHA loan and await pre-approval.
4. Secure a Home Inspection: To comply with FHA requirements, the manufactured home will need to undergo an inspection to ensure it meets safety and quality standards.
5. Finalize the Loan: After the inspection and appraisal process, work with your lender to finalize the loan and close on your new home.

Conclusion

Using an FHA loan to buy a manufactured home is not only possible but can also be a smart move for many homebuyers. With benefits like lower down payments and flexible credit requirements, an FHA loan may provide the path you need to homeownership. Just ensure that the manufactured home meets all necessary guidelines, and you can take advantage of this financing option to secure your dream home.