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Loan Options for Manufactured, Mobile and Modular Homes

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

According to the Manufactured Housing Institute, about 22 million people in the United States live in manufactured homes. With numbers like that, it doesn’t make sense that these homes are still so misunderstood.For example, many people think that manufactured homes, mobile homes and modular homes are one and the same, but that’s not true at all. There are key differences that set the three apart and affect financing options.

Read on to learn what these differences are so that you can find the right loan for you.

Manufactured, mobile and modular: What are the differences?

Manufactured homes

Manufactured homes are built in manufacturing plants and then taken to their plot of land via a permanent chassis that’s attached to the bottom of the home. They also are built in accordance to Manufactured Home Construction and Safety Standards, a safety code set by the Department of Housing and Urban Development, or HUD.

Mobile homes

“Mobile homes are manufactured homes, but the term is outdated,” said Alberto Pina, the co-founder of Braustin Mobile Homes in San Antonio, Texas.

“In 1976, the government decided to get involved in the regulation of mobile homes for people’s safety. That’s when the HUD Code — the National Mobile Home Construction and Safety Act — became effective. It’s also when mobile homes started being called manufactured homes.”

Modular homes

Like manufactured homes, modular homes are also partially constructed in a factory. However, they’re transported to the plot of land in pieces and then they’re put together on-site. Modular homes also have permanent foundations and, rather than conforming to a single HUD Code, they also have to meet he same local, state and regional building codes as traditional houses.

Financing a manufactured home

Retail installment contracts

Retail installment contracts are commonly used for manufactured homes and are slightly different from a traditional loan. In this case, rather than going to a bank or lender to get a loan for funding to buy your home, you would contract directly with the dealership from which you’re purchasing your home.

The retail installment contract is the official agreement stating that you agree to pay the dealer back over time, plus interest. However, afterward, the dealer is free to sell the contract to another lender or third party.

Title 1 loans provided by FHA-approved lenders

Title 1 loans are the Federal Housing Administration’s answer to manufactured homes. With this program, the FHA encourages approved lenders to lend to consumers by insuring the loan in case of default.

It’s used for used for the purchase (or refinancing) of a manufactured home, of a lot on which the manufactured home will be placed or a manufactured home and lot in combination, as long as the home is being used as a primary residence.

Depending on which option you choose, there will be different limits on your loan amount and loan term. They are as follows:
Maximum loan amount

  • Manufactured home only: $69,678
  • Manufactured home lot: $23,226
  • Manufactured home and lot: $92,904

Maximum loan term

  • 20 years for a loan on a manufactured home or on a single-section, or single-wide (the newer term for single-section) manufactured home and lot
  • 15 years for a manufactured home-lot loan
  • 25 years for a loan on a multi-section manufactured home and lot

Interestingly, Title 1 loans can also be used to buy a home that will be placed on a leased plot of land, provided that the initial lease term is at least three years and that the lease states that the homeowner will be given at least 180 days’ notice before the lease ends.

However, because the home is manufactured, it must meet certain requirements in addition to FHA’s normal qualifying standards. They are:

  • The home must be built after June 15, 1976
  • The red HUD label must be affixed to each section
  • Minimum size to be financed is 400 square feet
  • The home must be permanently affixed to a foundation that meets FHA standards
  • The home must meet the Model Manufactured Home Installation Standards
  • The lot where the manufactured home will be set must be designated or approved

“Buyers like this type of loan because it allows them to get a low interest rate and low down payment, as well as some of some of the sitework done, such as the base pad, skirting, decking and utilities and sewer system,” Pina said.

VA loans

If you’ve served in the military, you’re eligible for a loan through the Department of Veterans Affairs and, fortunately, you can use that benefit to buy a manufactured home. Qualifying for a VA loan for a manufactured home is much the same as using a VA loan to buy a conventional home. You’ll need to provide proof of your financials, as well as a Certificate of Eligibility, which verifies that you served.

However, some of the loan terms are different. For example, you cannot finance more than 95% of a manufactured home, even though you can finance up to 100% of a traditional home.

The term lengths that are offered for these loans are also different. They are as follows:

  • 15 years and 32 days for a lot purchase if you already own the home
  • 20 years and 32 days for a single-family manufactured home and lot
  • 23 years and 32 days for a double-wide manufactured home
  • 25 years and 32 days for a double-wide manufactured home and lot

Fannie Mae MH Advantage mortgage

The Fannie Mae MH Advantage program offers flexible underwriting standards and reduced pricing for manufactured homes that meet certain construction requirements. It’s a 30-year loan that allows borrowers to finance up to 97% of their loan-to-value (LTV) ratio.

As far as what requirements need to be met in order to qualify for the loan:

  • The home must be 12 feet wide and have at least 600 square feet
  • It must be built on a permanent chassis and be installed on a foundation
  • It must be titled as real estate
  • After being appraised, it must receive an “MH Advantage Sticker” that signifies that it has certain features similar to traditional homes

Single-wides, today more commonly referred to as single-section homes, are not accepted in the Fannie Mae MH Advantage program. If you were planning on buying one, or have a manufactured home that doesn’t otherwise meet the MH Advantage qualifying requirements, you can look into their standard manufactured housing program.

Chattel loans

Chattel loans are a common way to finance manufactured homes that sit on a leased lot. Because the land is leased, the home cannot be affixed to the ground, which makes it much harder to qualify for a traditional mortgage.

With a chattel loan, the manufactured home itself is treated as collateral for the loan. Initially, the lender will take ownership of the home. Then, once you finish paying it off in full, ownership is transferred to you.

Financing a mobile home

It would be difficult to get financing on a true mobile home, Pina warned.

Remember, the term “mobile home” refers to manufactured homes that were built before 1976, when the National Mobile Home Construction and Safety Act was released. The difficulty comes from the fact that the construction of these older homes was totally unregulated.

In order to receive financing, many lenders require that the mobile or manufactured home meets HUD’s standards. However, even if you make improvements to an older mobile home, HUD will not issue you a sticker signifying compliance.

“Fortunately,” Pina said, “you’re not buying one of these for more than $5,000 or $10,000, so the need to finance the purchase is rare.“

Financing a modular home

“Modular homes have the same loan options as what folks would call a traditional home,” Pina said. With that in mind, below are some of the most common options:

Construction-to-permanent loans

“Construction-to-permanent loans can be used In either manufactured or modular housing transactions,” Pina said.

Construction-to-permanent loans are unique in that they provide funds for the construction of the home upfront, but after construction on the home is completed, the balance is converted into a permanent loan, or traditional mortgage.

Traditional FHA loans

Because modular homes are secured to a concrete foundation, they’re eligible for a traditional FHA loan. This means that all the usual borrower requirements apply:

  • You must have a debt-to-income (DTI) ratio of less than or equal to 43%
  • If you have a credit score of 580 or higher, you can put as little as 3.5% down
  • If you have a credit score between 500 and 579, you must put at least 10% down
  • The home must be your primary residence
  • You must carry FHA mortgage insurance, or MIP
  • You must be able to provide proof of employment

Where to find a lender

Not all lenders work with manufactured or modular homes. But, luckily, there are many great tools at your disposal that can help you find the right lender. In particular:

  • HUD has a search tool that allows you to filter approved lenders by your area.
  • The Manufactured Housing Institute can provide you with a list of lenders and manufacturers in your state.
  • Fannie Mae also provides a list of suggested manufactured housing lenders.

Though the loan options for manufactured, mobile and modular housing are a bit different than they might be in a traditional housing scenario, qualifying for one is a small price to pay for the affordable living that these homes can provide.

If you’re interested in one of these homes, do your research. Look into some of the loan options above, talk to lenders that specialize in manufactured housing and get a few loan estimates. It won’t be long before you find the loan program that’s right for you.

This article contains links to LendingTree, our parent company.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Tara Mastroeni
Tara Mastroeni |

Tara Mastroeni is a writer at MagnifyMoney. You can email Tara here

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Guide to Getting a Federal Housing Administration (FHA) Mortgage

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Couple Celebrating Moving Into New Home With Champagne

Not all homebuyers have the money to make a traditional 20% down payment. The perception that you need one is one of the main financial obstacles that can discourage people from pursuing homeownership.

In reality, there are several options for buyers who want to get a mortgage but can only pull together a small down payment. One of the best ones, particularly for first-time homebuyers, is an FHA loan.

This article offers you a guide to getting an FHA mortgage, including details on how to qualify and the costs to consider.

Understanding the FHA mortgage program

FHA mortgages are insured by the Federal Housing Administration (FHA), part of the U.S. Department of Housing and Urban Development. The program is a key way that people of moderate income can become homeowners. Nearly 83% of homeowners who borrowed an FHA loan in 2018 were first-time homebuyers, according to a report from HUD.

FHA mortgages are funded by FHA-approved lenders and then insured by the government. This backing protects lenders from loss if borrowers default. Because of this protection, lenders can be more lenient with their qualifying criteria and can accept a significantly lower down payment.

You can get approved for an FHA mortgage with as little as a 3.5% down payment and a credit score of 580. You may also qualify with a credit score as low as 500, though you’ll need to put down 10% instead.

On a $200,000 home, that comes out to a down payment of $7,000 to $20,000 when taking out an FHA loan, depending on your credit score.

Keep in mind you’ll also be responsible for closing costs, which typically cost 2% to 5% of a home’s purchase price. Closing costs are necessary to complete your transaction, and include services such as appraisals and home inspections. However, you may be able to negotiate to have some of these costs covered by the seller.

Is an FHA loan right for you?

FHA loans are particularly suited for several different types of homebuyers.

First-time homebuyers, who often have lower credit scores and smaller available down payments, tend to gravitate to FHA loans. Additionally, boomerang buyers — people who lost a home in the past due to a bankruptcy, foreclosure or short sale — might also benefit from an FHA loan.

Negative credit events such as foreclosure can drop credit scores by more than 100 points in many cases, and there’s typically a waiting period of three years before you’re eligible to buy a home again. Once that’s up, the lower credit score requirements of the FHA loan program could help you become a homeowner again.

Types of FHA mortgages

The FHA offers both 15- and 30-year mortgages, each with fixed rates or adjustable rates.

With a fixed-rate FHA mortgage, your interest rate is consistent through the loan term. You know what your principal and interest payment will be for the life of the mortgage. However, your overall monthly payment may increase or decrease slightly based on your homeowners insurance, mortgage insurance premium and property taxes.

Adjustable-rate FHA mortgages start out with a low and fixed interest rate during an introductory period of time, usually five years. Once the introductory period ends, the interest rate will adjust annually, which means your monthly mortgage payments may increase based on market conditions.

A unique situation where signing up for a low, adjustable-rate FHA mortgage could make sense is if you plan to sell or refinance the home before the introductory period ends and the interest rate changes. Otherwise, a fixed-rate FHA mortgage has predictable principal and interest payments and may be the better option.

FHA loan limits

The FHA imposes a limit on the amount of money that homebuyers are allowed to borrow each year. For 2019, the FHA loan limits for one-unit properties are $314,827 in most U.S. counties and $726,525 for high-cost areas. You can find your county’s loan limit information for one- to four-unit properties by using the FHA’s lookup tool.

Qualifying for an FHA loan

Besides the low down payment, an undeniable benefit of the FHA mortgage is the low credit score requirement. You may qualify for a 3.5% down payment with a credit score of 580 or higher. You can qualify with a minimum credit score of 500, but you’ll have to make at least a 10% down payment.

Your debt-to-income (DTI) ratio is another key metric lenders use when determining whether you can afford a mortgage. DTI measures the percentage of your gross monthly income that is used to repay debt. Lenders consider two DTI ratios when determining your eligibility — the front-end (housing debt) ratio and the back-end (total debt) ratio.

Your front-end ratio is the percentage of your income it would take to cover your total monthly mortgage payment. Lenders typically like to see a front-end ratio of no more than 31%.

Your back-end ratio illustrates the percentage of your income that covers your total monthly debts. Lenders prefer a back-end ratio of 43% or less, but may approve a higher ratio if you have compensating factors, such as a higher credit score or a larger down payment.

You’ll also need to have a steady income and proof of employment for the last two years. Additionally, the home you’re purchasing via FHA must also be your primary residence, at least for the first year.

FHA mortgage insurance

At first glance, an FHA mortgage probably seems like the ultimate hack to buying a home with minimal savings. The flip side to this is you must pay mortgage insurance premiums (MIP) in exchange for your lower down payment.

Remember, FHA-approved lenders offer mortgages that require less money down and flexible qualifying criteria because the Federal Housing Administration will cover the loss if you default on the loan. The government doesn’t do this for free.

FHA mortgage borrowers must “put money in the pot” to cover the cost of this backing through upfront and annual mortgage insurance premiums. The upfront insurance premium costs 1.75% of the loan amount and can be rolled into your mortgage balance.

The annual mortgage insurance premium is divided into 12 installments and paid monthly as part of your mortgage payment. The annual premium ranges from 0.45% to 1.05%, based on your loan term, loan amount and loan-to-value ratio (LTV).

Your LTV is a metric that compares your loan amount to your home’s value. It also represents the equity you have in the property. For example, putting 3.5% down means your LTV would be 96.5%. In other words, you have 3.5% equity in the home, and your loan is covering the remaining 96.5% of the home value.

Here’s the annual MIP on a 30-year FHA mortgage (for loans less than or equal to $625,500):

  • LTV over 95% (you initially have less than 5% equity in the home) – 0.85%
  • LTV under 95% (you initially have more than 5% equity in the home) – 0.8%

As you can see, starting off with a smaller down payment will cost you more in mortgage insurance premiums. Additionally, in most cases, you’ll pay annual MIP for the life of your loan.

However, if your LTV was less than or equal to 90% at time of origination — meaning you made a down payment of at least 10% — you can cancel MIP after 11 years.

FHA loans vs. conventional loans

Government-backed home mortgages like the FHA loan are special programs serving borrowers who might not qualify for a traditional mortgage.

Conventional mortgages are offered by lenders and banks and typically follow Fannie Mae and Freddie Mac’s mortgage standards. Fannie and Freddie are government-sponsored enterprises that buy loans from mortgage lenders and banks that fit their requirements.

The qualifying criteria bar for conforming loans is usually set higher. For instance, you typically need to have at least a 620 credit score to qualify for a fixed-rate conventional loan. However, credit score minimums vary by lender, but in any case, a score above 620 will be necessary for the most competitive interest rates.

A misconception about conventional mortgages is that borrowers must have 20% for a down payment to qualify. Mortgage lenders may accept less than 20% down for a conventional mortgage if you have a high credit score and pay their version of mortgage insurance premiums, which is called private mortgage insurance (PMI).

Similar to FHA mortgage insurance, PMI is a private insurance policy that protects the lender if you default. Be careful not to confuse the two types of insurance policies.

If you have PMI on a conventional mortgage, you’re able to request the removal of those insurance payments when you build up 20% equity in your home. On the other hand, the mortgage insurance premiums for most new FHA mortgages can’t be removed unless you refinance.

When to choose a conventional mortgage instead

Choosing an FHA loan can be a shortcut to homeownership if you don’t have much cash saved or the credit history to get approved for a conventional mortgage. Still, the convenience comes at a price that can follow you for the entire loan term.

Furthermore, putting a small sum down on a home means it will take you quite some time to build up equity. A small down payment can also increase your monthly payments and interest rate.

Homebuyers with a strong credit score should consider saving a bit more money and shopping for a conventional home loan first before thinking an FHA mortgage is the only answer to a limited down payment.

If you plan to put down at least 5% toward your home purchase and have a good or excellent credit score, it might make sense to borrow a conventional mortgage instead. A conventional home loan with PMI may not require the same upfront insurance payment as the FHA home loan, so you can find some savings there. Plus, you’re capable of getting rid of PMI without refinancing.

There are a few conventional mortgage programs that allow a 3% down payment, including Fannie Mae’s HomeReady program and Freddie Mac’s Home Possible program. These products also have cancellable mortgage insurance.

Shopping for an FHA loan

So, you’ve reviewed all the information and determined that an FHA loan is right for you. Once you’re ready to start the homebuying process, one of the most important things on your to-do list is shopping around.

Gather quotes from multiple FHA-approved lenders to find the most competitive rate. If you’re unfamiliar with the approved lenders in your area, you can use the HUD’s lender list search to locate them.

Comparison shopping for the best mortgage rate can save you thousands in interest over the life of your loan, according to research from LendingTree, which owns MagnifyMoney. Be sure you also compare the various other costs associated with borrowing a mortgage, including lender fees and title-related expenses.

Don’t rush to a decision. If you’re still not sure which mortgage type will be the most cost-effective for you, ask each lender you shop with to break down the costs for a comparison.

This article contains links to LendingTree, our parent company.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Crissinda Ponder
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Crissinda Ponder is a writer at MagnifyMoney. You can email Crissinda here

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2019 FHA Loan Limits in Wyoming

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

If you’re looking to buy a house in Wyoming, you probably already know the state boasts the nation’s smallest population and the lowest population density. Its rural nature makes Wyoming the perfect place for homeowners who want to enjoy the natural wonders of the West without living right on top of their neighbors.Wyoming is also a state where homeownership is a reality for a large portion of the population: The U.S. Census Bureau estimates that more than 69% of the homes in the state are occupied by their owners.

So how do you make your Wyoming homeownership dreams come true? One popular option is a loan backed by the Federal Housing Administration (FHA). Last year, 0.23% of the nation’s FHA loans originated in Wyoming, where buyers took advantage of the federal backing to access benefits like lower interest rates and smaller down payments.

But keep in mind that FHA loans are subject to limits on the amount you can borrow. Those limits change every year to keep up with housing prices across the country. This year, FHA loan limits have climbed in Wyoming, allowing potential buyers who qualify for an FHA loan to borrow up to $314,827 for a single-family home.

Wyoming FHA Loan Limits by County

County NameOne-FamilyTwo-FamilyThree-FamilyFour-FamilyMedian Sale Price
ALBANY$314,827 $403,125 $487,250 $605,525 $239,000
BIG HORN$314,827 $403,125 $487,250 $605,525 $139,000
CAMPBELL$314,827 $403,125 $487,250 $605,525 $228,000
CARBON$314,827 $403,125 $487,250 $605,525 $174,000
CONVERSE$314,827 $403,125 $487,250 $605,525 $207,000
CROOK$314,827 $403,125 $487,250 $605,525 $199,000
FREMONT$314,827 $403,125 $487,250 $605,525 $77,000
GOSHEN$314,827 $403,125 $487,250 $605,525 $159,000
HOT SPRINGS$314,827 $403,125 $487,250 $605,525 $157,000
JOHNSON$314,827 $403,125 $487,250 $605,525 $225,000
LARAMIE$314,827 $403,125 $487,250 $605,525 $243,000
LINCOLN$314,827 $403,125 $487,250 $605,525 $253,000
NATRONA$314,827 $403,125 $487,250 $605,525 $215,000
NIOBRARA$314,827 $403,125 $487,250 $605,525 $165,000
PARK$314,827 $403,125 $487,250 $605,525 $241,000
PLATTE$314,827 $403,125 $487,250 $605,525 $175,000
SHERIDAN$314,827 $403,125 $487,250 $605,525 $253,000
SUBLETTE$314,827 $403,125 $487,250 $605,525 $235,000
SWEETWATER$316,250 $404,850 $489,350 $608,150 $259,000
TETON$726,525 $930,300 $1,124,475 $1,397,400 $789,000
UINTA$314,827 $403,125 $487,250 $605,525 $206,000
WASHAKIE$314,827 $403,125 $487,250 $605,525 $173,000
WESTON$314,827 $403,125 $487,250 $605,525 $184,000

How are FHA loan limits calculated?

FHA loans are backed by the federal government, and it sets the loan limits.

The government sets a floor limit, which is the maximum amount that buyers are allowed to borrow in areas deemed “low cost.” It also sets a ceiling limit, the maximum amount an eligible buyer can access in an area that’s considered “high-cost.”

The FHA bases its figures on the conforming loan limit — the biggest loan that Fannie Mae and Freddie Mac will buy — with the floor set at 65% of the conforming loan limit, and the ceiling at 150%.

All 23 counties in Wyoming are considered low-cost, and therefore have the loan limit of $314,827.

These are the limits that the FHA has set for low-cost areas across the United States this year:

  • One-unit: $314,827
  • Two-unit: $403,125
  • Three-unit: $487,250
  • Four-unit: $605,525

These are the limits set for high-cost areas across the USA in 2019:

  • One-unit: $726,525
  • Two-unit: $930,300
  • Three-unit: $1,124,475
  • Four-unit: $1,397,400

Are you eligible for an FHA loan in Wyoming?

Of course, just buying a house in Wyoming won’t guarantee you a $314,827 mortgage, nor does it grant you access to an FHA loan. There are requirements to meet regarding your credit score, debt-to-income ratio and other factors. You can find out more in MagnifyMoney’s complete guide to FHA loans.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Jeanne Sager
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Jeanne Sager is a writer at MagnifyMoney. You can email Jeanne here

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