How to Get an FHA Loan for a Mobile Home

If you’re looking for an alternative to a traditional, site-built home, you may want to consider financing a mobile home through the FHA manufactured home loan program. Sometimes called an FHA loan for a mobile home, this government-backed mortgage option allows borrowers with imperfect credit to purchase an affordable home.

What is an FHA manufactured home loan?

An FHA manufactured home loan is a mortgage backed by the Federal Housing Administration (FHA) that you can use to purchase a home built in a factory. If you need to, you can also use the loan to buy a plot of land for the home to sit on.

You may know this type of house as a “mobile home,” but that isn’t the term used by the FHA today. FHA-eligible mobile homes are typically called manufactured homes and have to follow standards set in 1976 by the U.S. Department of Housing and Urban Development (HUD). Homes built prior to June 15, 1976, aren’t eligible for FHA financing.

You’ll need to meet FHA minimum mortgage standards as a borrower, and your manufactured home and the land it’ll sit on will have to meet special property and construction requirements.

What are my FHA manufactured home loan options?

There are two types of FHA manufactured home loans: the Title II FHA loan program and the FHA Title I program.

With the Title II FHA loan program:

• You can finance a new manufactured home, the cost of transporting it to its permanent location and any costs associated with installation.
• You can refinance an existing loan you borrowed to purchase a manufactured home, as long as the home has been installed at the site for at least a year.
• Your home must be permanently attached to land that you own.

With the FHA Title I loan program:

• You can finance a new or used manufactured home, even if you don’t own the land it’s sitting on.
• You can finance a site for a manufactured home to sit on.
• You can finance repairs or improvements to a manufactured home you already own, as long as you own the lot it sits on.
• You can refinance both a manufactured home and lot, or either one separately.
• Your home doesn’t have to be, but can be, permanently attached to land.

You can apply for a manufactured home loan directly with an FHA-approved lender or go through a dealer, who can help you apply. Much like cars, manufactured homes are usually sold through a dealer.

Construction requirements for FHA manufactured home loans

FHA-approved lenders will need to verify the following:

• The home site has access to water and sewer facilities
• The site has all-weather access
• The living area is at least 400 square feet
• The home has an approved HUD seal visible on the exterior
• Whether the home is permanently attached to land according to local building guidelines

How to qualify for an FHA manufactured home loan

Down payment

The minimum down payment is 3.5%, and the home purchase and installation costs can be added to the loan amount.

Credit score

The FHA accepts scores as low as 500 with a 10% down payment. Borrowers making a 3.5% down payment will need at least a 580 credit score.

DTI ratio

The FHA caps your debt-to-income (DTI) ratio — which measures the portion of your gross monthly income that goes toward debt payments — at 43%. This will include your new FHA mortgage payment. However, you may still qualify with a higher DTI if you have a high credit score or extra cash reserves.

Mortgage insurance

FHA manufactured home loans require two types of FHA mortgage insurance: an upfront mortgage insurance premium (UFMIP) and an annual mortgage insurance premium (MIP). The UFMIP is equal to 1.75% of your loan amount and can be paid in full at closing or rolled into the loan amount. The annual MIP ranges from 0.15% to 0.75% of the loan amount and is added to your monthly payments in 12 installments each year.

Loan limits

HUD sets different lending guidelines for each loan program.

• For Title II loans, the FHA loan limits that apply to all FHA loans also apply. These are set each year based on national median home prices. In 2024, the FHA loan limit is $498,257 for a single-family home in most U.S. counties.
• For Title I loans, your loan limit depends on what you’re buying with the loan:
  • If you’re buying a home and land, your loan limit is $92,904.
  • If you’re buying just a manufactured home, your loan limit is $69,678.
  • If you’re buying just a lot, your loan limit is $23,226.

Land requirements

An FHA manufactured home can be placed on land you own, but it’s not required. If you’re leasing land, the lease typically needs to be for three years or longer. The lease must also stipulate that you’ll receive at least 180 days notice if the landlord plans to terminate your lease.

Occupancy

The home must be your primary residence for at least one year.

CAIVRS check

The government maintains a database of borrowers with delinquent federal debts called the Credit Alert Interactive Verification Reporting System (CAIVRS). Your lender will run a CAIVRS check to ensure you don’t owe any outstanding debts to the federal government. If you do, you’ll be ineligible for an FHA manufactured home loan.

How to find lenders for FHA manufactured home loans

You may need to shop around to find an FHA-approved lender that offers loans for manufactured homes. Follow these three tips:

1. Search for FHA-approved lenders in your area using the HUD lender list.
2. Get loan estimates from three to five lenders and compare the terms they’re offering.
3. Talk to lenders and ask about the loan officer’s experience working with FHA manufactured home loans. This loan type can be complex, and you’ll want someone who can help you successfully jump through all the hoops.

Alternatives to FHA manufactured home loans

• Conventional loansA loan that’s not government backed can be a good choice for borrowers with solid credit, since private mortgage insurance (PMI) can be cheaper than FHA mortgage insurance for borrowers with high credit scores. Here are a few conventional options that can be used to buy a manufactured home:
  • Fannie Mae MH and MH Advantage® loans. Manufactured homebuyers only need a 3% to 5% down payment for these loans. They may also be eligible for reduced PMI to help keep monthly payments as low as possible.
  • Freddie Mac Home Possible® loan. This program requires a 3% minimum down payment, but it’s only for borrowers who make less than 80% of their area’s median income. You can check your eligibility using Freddie Mac’s online tool.
  • Freddie Mac CHOICEHome® loan. You’ll need a 5% down payment to qualify, and the home must have features similar to a site-built home — like a roof with eaves, a covered porch and a garage or carport — to be eligible for financing.
• VA loansThe U.S. Department of Veterans Affairs (VA) guarantees mortgages on manufactured homes for eligible military borrowers with a 5% down payment. VA loans for manufactured homes also require proof that the home is attached to land you own.
• USDA loansIf you’ve found a plot of land in a rural area, you may be able to install a manufactured home on it with a USDA loan backed by the U.S. Department of Agriculture (USDA). No down payment is required, but you’ll need to stay within local USDA income limits.