USDA Loans for Manufactured Homes 2022

Manufactured homeA frequently asked question is whether a manufactured or mobile home is eligible for a USDA home loan. The answer is "yes", provided the borrower and manufactured home meet the USDA guidelines.

Manufactured houses are single- or multi-width units that are partly built off-site and then brought to a construction site to be finished and permanently attached to a permanent foundation. Manufactured houses are not the same as modular homes. They are constructions that adhere to the Federal Manufactured Home Construction and Safety Standards (FMHCSS).

The USDA loan may be used to pay the cost of purchasing and transporting a prefabricated house, as well as the cost of a lot.

Single-family prefabricated houses must fulfill the following requirements in order to be eligible for the Single-Family Housing Guaranteed Loan Program:

  • Site development work must conform to state and local government guidelines.
  • Foundation plan designed to meet the HUD Handbook 4960.3 Permanent Foundations Guide for Manufactured Housing.
  • The unit must be brand new and have never been installed or occupied anywhere than on the dealer's lot.
  • The unit must have a minimum floor space of 400 square feet and be permanently installed on a foundation and taxed as real estate.
  • The unit must comply with or exceed the FMHCSS criteria applicable to the geographic region in which it will be located.
  • Units cannot be older than 12 months from the date of the purchase agreement.

LOAN RESTRICTIONS

The USDA does not guarantee loans for the following purposes:

  • A unit that retains its tow hitch or running gear.
  • Except for porches, decks, or other structures constructed to engineering designs and inspected and authorized by a local building code authority, additions and changes to new or existing units are banned.
  • Furniture, which includes moveable personal property such as draperies, beds, bedding, chairs, couches, divans, lamps, tables, TVs, radios, and stereo systems. Furniture excludes wall-to-wall carpeting, refrigerators, stoves, ranges, washing machines, clothes dryers, heating and cooling equipment, and similar items.
  • Manufactured home units manufactured more than 12 months prior to the commencement of the purchase agreement contract.
  • Purchase of a unit that will be relocated from a location other than the manufacturer/dealer lot to the location where the mortgage loan will be secured.
  • Repairs that are not related to a transfer, a Real Estate Owned (REO) sale, or a unit that is already funded via a Section 502 loan.
  • The purchase of a unit without first securing a suitable location.
  • There are no swimming pools or residences located inside 100-year flood zones.

MODULAR HOMES

Home buyersModular homes are sectional prefabricated dwellings that are normally produced at a distant facility and shipped to their intended site. They are distinguished from prefabricated houses primarily by the lack of axles and frames. Modular homes are often delivered to their final location on flat-bed trucks and assembled with the aid of a crane. Modular houses are considered stick-built structures.

PERSONAL REQUIREMENTS

  • Credit score of 620+ is typically required by lenders
  • There have been no bankruptcies in the recent three years.
  • There has been no foreclosure in the recent three years.

LOAN REQUIREMENTS

Loan Term - 30 years

Down Payment Requirement - No down payment is required

Maximum Loan Amount - Determined by the borrower's income and debt liabilities (debt-to-income ratio less than 41% - 45%)

Income Limits - See USDA limits

Area Eligibility - USDA are limited to "rural" areas of the United States and U.S. Territories. Use the USDA lookup tool to determine whether the property is eligible.

SOURCE: Chapter 13: Special Property Types

Conclusion

In conclusion, USDA loans for manufactured homes are a great option for those who want to purchase a home but may not have the financial resources to do so. With low interest rates and other benefits, these loans can make homeownership a reality for many people. If you are interested in applying for a USDA loan, be sure to do your research and consult with a lender to see if this is the right option for you.