There is a Federal Housing Administration program that allows for the financing of a mobile home.
It is called the Title I program, and it allows FHA approved lenders to make loans from their own funds to eligible borrowers to finance the purchase or refinance of a manufactured home and/or lot.
FHA insures the lender against loss if the borrower defaults. Credit is granted based upon the applicant's credit history and ability to repay the loan in regular monthly installments.
FHA explains that they do not lend money; instead FHA insures loans in order to encourage mortgagees to lend. Title I manufactured home loans are not Federal Government loans or grants.
The interest rate, which is negotiated between the borrower and the lender, is required to be fixed for the entire term of the loan, which is generally 20 years on a mobile home vs. the traditional stick built home term of 30 years.
A Title I loan may be used for the purchase or refinancing of a manufactured home, a developed lot on which to place a manufactured home, or a manufactured home and lot in combination. However, to qualify for the Title I program, the home must be used as the principal residence of the borrower.
Another interesting distinction is that Title I insured loans do not require borrowers to purchase or own the land on which their manufactured home is placed. Instead borrowers may lease a lot, such as a site lot within a manufactured home community or mobile home park.
When the land/lot is leased, HUD requires the lessor to provide the manufactured homeowner with an initial lease term of 3 years. In addition, the lease must provide that the homeowner will receive advance written notice of at least 180 days, in the event the lease is to be terminated. These lease terms are designed to protect homeowners in case the lessors sell the land or close the park.
The maximum loan amount for Title I backed mobile home financing is:
- Manufactured home only - $69,678
- Manufactured home lot - $23,226
- Manufactured home & lot - $92,904
Lauren Bunting is a Broker with Keller Williams Realty of Delmarva in Ocean City, Maryland.
