May 30, 2018
Are there really FHA home loans for manufactured housing classified as condo projects? Believe it or not, the FHA loan rules in HUD 4000.1 state that such loans are indeed available under the FHA mortgage program in addition to FHA One-Time Close construction loans, FHA Rehab loans, and other options.
How does the FHA Loan Handbook describe these mortgages?
“Manufactured Housing is a Structure that is transportable in one or more sections. It may be part of a Condominium Project, provided the project meets applicable FHA requirements.”
FHA loans for manufactured housing, regardless of whether it is part of a condo project or not, must meet certain requirements including size, purpose, and how the home is delivered to the borrower.
Specifically, manufactured housing eligible for FHA mortgage loans must be 400 square feet or larger and be considered a single-family residence.
Whether the home is classified as a condo unit or not, it must be delivered or transported directly from the manufacturer to the construction site, and it must be classifiable as real property.
That means the home must be permanently affixed to an FHA-approved foundation. No manufactured housing or mobile homes can be purchased with an FHA mortgage without being placed on a permanent foundation that meets both FHA minimum requirements and other guidelines.
Your loan officer will explain what is required in your state.
These properties must be owner-occupied as a condition of FHA loan approval; at least one borrower obligated on the mortgage must use the home as her primary residence or principal residence.
FHA home loans are offered for both “typical” condo projects and “site condos” which are defined as “Single Family detached dwellings encumbered by a declaration of condominium covenants or condominium form of ownership and do not need to be FHA-approved”, but manufactured homes for FHA loan purposes cannot be classified as site condominiums.
The usual exceptions for military members who are called away to serve outside the local area will apply.
So why don’t we hear more about manufactured housing that is considered a condo unit? That may depend greatly on the lender’s standards in this area. FHA lenders may not choose to approve loans on such properties depending on demand and other factors.
The FHA does not require the lender to offer such loans; each individual financial institution will decide which types of FHA mortgages to offer; speak to a loan officer to learn if these types of condo loans are an option in your housing market.