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Manufactured Home Loans Expanded by FHA

November 17, 2021

mobile home in a campsite

Sam Wigness reported on home.com that “Getting a loan for a manufactured home is about to get easier for people in need of a more affordable path to homeownership.”

Recently, the Federal Housing Administration (FHA) revised its policies for mortgage lenders that finance manufactured home loans.  This action was done to both streamline the process and expand eligibility requirements for borrowers.  

The FHA said in an official press release, that they will make updates to to its Title I Manufactured Home Loan Program “remove financing barriers and expand access to credit” for borrowers. “It also consolidates lender policies for the first time in nearly 40 years, eliminating more than 120 policy documents previously referred to by lenders” said Wigness.

The Title I updates will more closely align the program to the Title II FHA loan, the highly popular “standard” FHA program typically used by homebuyers.

Manufactured Home Loan New Eligibility Requirements

If you were sidelined during the 2021 run-up in home prices, you may benefit from the revised loan eligibility requirements.

“Most notable is the ability to use gift funds from eligible sources, which have played a more prominent role in homebuying as first-time homebuyers look for ways to compete against return buyers with more cash and equity” said Wigness.

A revised handbook has also been releaed by the FHA.

This will allow the FHA to expand allowable income sources to align with the following:

  • Wages, child support, alimony, and rental income;
  • Social Security or welfare benefits;
  • Retirement benefits, military and veteran’s usability benefits;
  • Unemployment benefits
  • Interest and dividend payments;
  • Lottery winnings paid over extended periods; and
  • Insurance benefits paid on a fixed schedule.

“This new revision is great because it means that borrowers can now use either their actual documented payment or 0.5% of the outstanding loan balance, pending a variety of qualifications,” said Ethan Wilson, Branch Manager and co-founder of team VA the Fairway.

Before these revisions, the FHA required lenders to assume a payment equal to 1% of the student loan balance if no payment information was available.

According to the released statement, manufactured homes will now be appraised using “enhanced value determinations that use a sales comparison approach.”

The updated terms must be implemented by lenders on loans closed on or after May 9, 2022. However, lenders don’t have to wait until that time to implement the changes, they are free to implement them immediately.

Wingess said that “the FHA also updated its Title I Property Improvement Loan Program to “make requirements for this program consistent with current lending practices.”

“Thousands of homes across the nation will now be able to make home improvements, using this financing” said Wilson.  “I’m excited to see these policy, and thing that it will be really helpful.”

These changes come after Biden called on state, local and federal government entities to boost the supply of manufactured homes, and increase access to financing.  “This nation is in an affordable housing crisis and manufactured housing will be a key part of the solution,” said Principal Deputy Assistant Secretary for Housing and the Federal Housing Administration Lopa P. Kolluri. “Our new and updated Title I policies will not only expand access to credit for borrowers seeking loans for quality and affordable personal property manufactured homes, but will also make it easier for lenders to offer financing through the Title 1 program.”

Find out today if you qualify for an FHA loan

Some references sourced within this article have not been prepared by Fairway and are distributed for educational purposes only. The information is not guaranteed to be accurate and may not entirely represent the opinions of Fairway. Fairway is not affiliated with any government agencies. These materials are not from VA, HUD or FHA, and were not approved by VA, HUD or FHA, or any other government agency.

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