203(k) Loan for Manufactured Homes

More and more people in the United States are choosing manufactured homes as their housing option. In case you are not familiar with the term, manufactured housing refers to homes that are built in a factory and then transported in sections to be assembled on a fixed foundation at the desired location.

However, when it comes to finding information about financing options for manufactured homes, it can be a bit challenging. As a 203(k) contractor based in Philadelphia, we often receive questions about whether a 203(k) loan can be used to finance these homes. So, let’s dive into this topic and explore how you can use a 203(k) loan for manufactured homes. We will also discuss other financing options provided by the FHA that are available for manufactured homes. Let’s begin!

A Closer Look at Manufactured Homes

Manufactured homes also called mobile housing, sectionals, multi-sectionals, double-wide, triple-wide, or single-wide homes are designed to be just as comfortable as traditional houses.

Once you bring them to the site, you can connect the sections together on a fixed foundation in a shorter time compared to on-site construction. When they are connected to plumbing, heating, air conditioning, and electricity, they provide a cozy living space. These homes follow the federal Manufactured Home Construction and Safety Standards (MHCSS), and you can easily identify them by the HUD Certification Label attached to them.

When it comes to financing manufactured homes, there are two scenarios to consider:

1. Buying a new manufactured home directly from the factory and setting it up on a fixed foundation.

2. Purchasing an existing manufactured home.

Now, let’s explore how to use a 203(k) loan for manufactured homes.

FHA Title ꠱ Program

The FHA offers a home mortgage financing program called Title II. Title II mortgages are insured by the FHA, which means that the lender is protected if you default on your loan. This makes it easier for people with less-than-perfect credit to get a mortgage.

To qualify for this program, the manufactured home must meet certain requirements, including:

• It must be designed as a single-family dwelling.
• The home must have a floor area of at least 400 square feet.
• The home must have the HUD Certification Label or a letter of label verification issued by HUD, confirming that it meets the Federal Manufactured Home Construction and Safety Standards and was built after June 15, 1976.
• It must be classified as real estate (although it does not have to be treated as real estate for state taxation purposes).
• The home must be built on a permanent chassis and have a permanent foundation constructed according to the Permanent Foundations Guide for Manufactured Housing (PFGMH).
• It must have been directly transported from the manufacturer or dealership to the site.

So you can get a loan under the FHA Title II program to finance the costs of buying a manufactured home.

Now you might wonder why we are talking about these loans. The reason is that a 203(k) loan falls under the Title II program and you might be able to finance the cost of a manufactured home using a 203(k) loan. How?! Read on to find out.

FHA 203(k) Loan for Manufactured Homes

In order to qualify for the 203(k) loan, the property you are considering must already be built and completed for at least a year before the case number is assigned. This means you cannot use a 203(k) loan to buy a manufactured home and put it together on an existing foundation.

However, you can use a 203(k) loan to purchase and renovate a manufactured home if the renovations you plan will not affect the structure of a manufactured home that meets the Federal Manufactured Home Construction and Safety Standards, and meets all the other requirements for manufactured housing. So, to sum it up, a 203(k) loan can be used to finance the purchase and renovation costs of a manufactured home that was built at least a year before the case number is assigned.

FHA Title ꠰ Manufactured Home Loan Program

If you are considering buying a new manufactured home and a lot to place it on, the FHA has a special program just for you!

It is called the Title I manufactured home loan program. With this program, you can purchase or refinance a manufactured home, a lot to place the home on, or a combination of a manufactured home and a lot.

Tables 1 and 2 show the maximum loan amount and loan terms for this loan.

Table 1

Table 2

For more information about the Title I program for manufactured housing, read here.  

Choosing the Proper Loan for a Manufactured Home

By far you have noticed that there are different types of FHA loans available for buying a manufactured home. However, each loan has its own specific requirements and is designed for a particular purpose. For instance, if you are interested in purchasing both a lot and a manufactured home, the FHA Title ꠰ Manufactured Home Loan Program would be a good choice. On the other hand, if you want to buy an existing manufactured home and renovate it, you can consider the 203(k) loan.

Regardless of the FHA loan you choose, there are standard requirements set by the FHA for borrowers and the property you want to buy. Additionally, each loan option has its own specific requirements. You need to take some time to review these requirements and talk to your lender to make the best decision.

Conclusion

In a nutshell, if you are interested in purchasing an existing manufactured home and renovating it, a 203(k) loan could be a great choice. A 203(k) loan for manufactured homes allows you to finance both the purchase and the renovation costs. However, it is important to carefully consider the requirements and discuss your options with your lender. They can guide you in determining which loan option is best suited for your needs.

If you decide to pursue a 203(k) loan, having an experienced contractor by your side to handle the renovations is necessary. If you live in Philadelphia, Matrix Company Solutions Corp. is your ultimate choice for your 203(k) project. Contact us today for a FREE consultation, and we will be more than happy to help you achieve your goals.