Manufactured home - loan tips

The manufactured home loan process is more complex than financing a

traditional site-built home.

Manufactured loan red flags

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 guidelines for manufactured housing loans based on loan type.

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Purchase loan to value for Primary residence

• Conventional --95% LTV --Minimum down payment is 5% (MH Advantage allows for 97% but the home must have been built as a MH Advantage Home)

• FHA-- 96.5% LTV--Minimum down payment is 3.5%

• VA --100% LTV -- no down payment required (some lenders will require a downpayment based on their underwriting overlays)

• USDA-- 100% LTV -no down payment required

• Second home-- 90% LTV for conventional only--minimum of 10% down payment--- multi-wide only

• Investment property-- is not allowed on any of the traditional loan programs. Some Non-QM loan programs may allow, but they are difficult to find and carry higher rates

Additions/structural modifications to the property

• All loan programs except USDA -- Any structural modifications to an existing Manufactured Home must be approved by a licensed professional engineer or the local, State, or federal authority.

• USDA - Additions and modifications are prohibited except for porches, decks, or other structures built to engineered designs, inspected, and approved by a local building code official.

Foundation certification letter

• Conventional --No-- unless appraiser notes concerns. On new construction Freddie Mac will require a engineer's foundation certification letter.

• FHA--yes - Or a copy of the foundation certification from a previous FHA- insured Mortgage, provided there are no alterations and/or observable damage to the foundation since the original certification.

• VA--Only required if the Appraiser notes concerns.

• USDA- yes-a foundation cert letter is required. USDA is silent on the use of a previous foundation cert letter unlike FHA-so each lender may deal with this differently.

Foundation skirting

• All agencies must comply with HUD codes. Non-load bearing skirting must be permanently attached to concrete, masonry, or wood backing and must allow for ventilation of space. (HUD Model Manufactured Home Installation Standards, HUD Review of Manufactured Housing Installation Standards and Instructions, Mortgagee Letter 2009-16)

HUD certification label- HUD seal or tag

HUD Data Plate and HUD Certification Label -- is a 2" x 4" aluminum plate located at one end of each section of the house, approximately one foot up from the floor and one foot in from the roadside, or as near that location on a permanent part of the house's exterior as practicable. It contains a certification label number. Label numbers are not required to be sequential on a multi-section house. The Appraiser will note the number(s) on the appraisal. In addition to providing the numbers from the HUD Data Plate and Certification Label(s) affixed to the manufactured home, the Appraiser must also provide photos of this information. A duplicate HUD Data Plate from the Institute for Building Technology and Safety (IBTS) may be available.

• Conventional -- Fannie Mae CHOICE Home^® and Freddie Mac MD Advantage^® have stickers indicating that the home meets their standards. Existing Construction - Only require one form of certification to confirm a manufactured home is eligible (HUD Data Plate or HUD Certification Label).

• FHA, USDA and VA-- if the HUD labels on the outside of the home are missing or illegible this can be a problem with many/most lenders.

Manufactured date

• On or after June 15, 1976 -- Except USDA -- Must have a manufacture date that is within 20 years from the date of loan closing and meets or exceeds the Federal Manufactured Home Construction and Safety Standard (FMHCSS) as evidenced by both an affixed HUD Certification label and HUD Data Plate. The manufacture date can be found on the data plate located inside the home.

Minimum size

Conventional

• 400 sq. ft. & at least 12 ft. wide

• Single & Double-wide

• MH Advantage^® Must have a MD Advantage Sticker or the Freddie Mac CHOICE Home label.

• Second home dwellings (multi-width only)

FHA and USDA

• 400 sq. ft

• Single, Double, Triple-wide

VA

• 400 sq. ft. for a Single-wide

• 700 sq. ft. for a Double-wide

Second moves of the units

• The structure can only be moved from the factory to the current site. If the property has been moved since the original installation, it is not eligible for financing.

• VA only -- Moved homes are allowed subject to additional plumbing, electrical, heating, and roof inspections. Each lender may have additional requirements and many will not allow second moves even though VA guidelines allows.

Sales comparables for the appraisal

On Conventional and FHA the Appraiser must use a minimum of 2 comparable sales that are manufactured homes. VA and USDA guidelines are silent, however many lenders will require a minimum of 2 manufactured sales comps. If an appraiser can't find at least 2 comps to use the loan would be rejected by nearly all lenders.