A reader asked recently, “Why does FHA not finance single wide mobile homes?” This question reveals one of the most common misconceptions about FHA loans-that the FHA itself will process your home loan paperwork.
It does not; instead, participating FHA lenders will furnish, process, and approve or deny your mortgage application. In some cases the lender may be required to submit this paperwork to the FHA for review before a final decision is made, but the lender is the borrower’s point of contact for the transaction.
With that in mind, let’s examine what HUD 4000.1 says about mortgage loans for mobile homes/manufactured housing:
“Manufactured Housing refers to Structures that are transportable in one or more sections. They are designed to be used as a dwelling when connected to the required utilities, which include the plumbing, heating, air-conditioning and electrical systems contained therein. Manufactured Housing is designed and constructed to the federal Manufactured Home Construction and Safety Standards (MHCSS) as evidenced by an affixed HUD Certification Label. Manufactured Housing may also be referred to as mobile housing, sectionals, multi- sectionals, double-wide, triple-wide or single-wide.”
FHA loan rules do permit mortgage loans for mobile homes and manufactured housing provided they meet FHA standards. The mobile home must be ultimately affixed to a permanent foundation as a condition of loan approval. Furthermore, FHA loan rules require the foundation to meet certain standards also. So it’s not the FHA that is the source of the reader’s frustration with the home loan process.
Participating lenders are free to offer some, all, or none of the the different types of FHA mortgage loans possible. In some cases a lender may not choose to offer loans for manufactured homes, or offer them on a limited basis. As long as the lender’s choices conform to state and federal laws such as the Fair Housing Act (and FHA regulations), the lender is free to be selective in the types of FHA loans it offers.
Another possibility is that a borrower is not financially qualified or is otherwise unable to qualify for an FHA mortgage due to certain standards not being met. We aren’t saying that is the case here, only pointing out that there are multiple reasons why an FHA loan application or pre-approval might not work out to the applicant’s satisfaction.
For more specific answers for lender standards-type questions, it’s best to ask the lender directly why a loan was approved or denied.