Financing For Manufactured and Modular Homes
What is a Manufactured Home?
A modular home is one that is manufactured in a factory. They usually come in set floor plans but with today’s advanced manufacturing there are even custom modular homes today. These homes are difficult to tell the difference from today’s ground up construction custom homes. Modular homes are becoming popular as the price per square foot is lower and the quality can be better controlled.
They are sized as single wide, double wide and triple wide. If the components are shipped in modules then they are referred to as modular. They can also be transported to other locations making them mobile homes.
Manufactured homes are often sold and transported in multiple sections to be assembled on-site.
Some buyers may wonder if the assembly of a manufactured or modular home counts as “construction”, and would such “construction” reclassify the manufactured home in the eyes of the FHA?
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The FHA defines a manufactured home differently than new or existing construction properties–what does the FHA consider different than with those new construction or existing construction of suburban homes?
According to FHA rule, a manufactured home differs from a new construction project because of the nature of its assembly. A “New” construction property is built “on-site”. FHA defines a manufactured home as “a structure that is transportable in one or more sections. In traveling mode, the home is eight feet or more in width and forty feet or more in length.”
These homes are regulated under the rules known as Federal Manufactured Construction and Safety Standards and must be labeled accordingly. To be eligible for FHA mortgage insurance, the manufactured home must be built after June 15, 1976 and there must be a certification label to prove it. Manufactured home floor space can not be smaller than 400 square feet and must be classified as real estate.
The only manufactured homes that may be classified as real estate or “real property” are those which have a permanent foundation built to FHA standards. They must be considered a “permanent dwelling” or the home is considered personal property for tax purposes and is ineligible for an 30-year FHA mortgage. According to FHA requirements, “the mortgage must cover both the manufactured unit and its site and shall have a term of not more than 30 years from the date amortization begins.”
Can I Finance My Manufactured or Modular Home?
If the home is a double wide or larger and was built after 1970 then it conforms conventional financing. FHA loans are available for Manufactured and modular homes. These allow these homes to be purchased with the benefits of FHA’s financing including low down payments.
Manufactured and Modular homes FHA mortgage loans are available for much more than just suburban homes or condominiums. FHA loans can also be used to purchase manufactured homes and/or modular homes.
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