How to Obtain Manufactured Home Loans Using the Title I Program

It is possible to obtain manufactured home loans through the Federal Housing Administration’s Title 1 program. Manufactured homes are homes that are preassembled and installed on a lot. The FHA Title 1 loan is a program which allows lenders to provide funds for the purchase or refinance of a manufactured home. The FHA does not actually provide any funding directly, but instead guarantees the loan, in case the borrower defaults. While funds from this loan cannot be used in the purchase of furniture or like items, appliances and built-in equipment may be purchased. The FHA limits the amount that lenders can offer on manufactured home loans. In high-cost areas, however, lenders are permitted to loan as much as 85 percent, more for lots, or for lot and manufactured home combination loans.

Qualifying

To qualify for the Title 1 loan, the manufactured home must be the borrower’s primary residence. In addition to manufactured home loans, lot loans are available, as well as manufactured home and lot combination loans. The amount of the loan will depend on the type of property or structure that is being financed. Applicants must be able to provide the down payment required, demonstrate a stable income, and have a suitable location for the home’s installation where utilities can be connected. The lot can be owned or leased, and in some cases is financed in conjunction with the home. The home must also meet certain industry standards, and must carry a minimum of a 1-year warranty.

The Approval Process

The first step for a borrower, is to determine whether their lender is FHA approved, and if not, to locate an FHA approved lender to obtain a manufactured home loan. During the application process, the borrower’s credit history will be reviewed, to determine eligibility. Once approved, buyers can coordinate the purchase of a home. Manufactured homes purchased with Title 1 funds must adhere to HUD standards, as well as state and local codes governing the installation process, and the construction of the home itself. Borrowers will be required to sign a HUD placement statement, by which they assert that the home was installed properly.

Terms and Conditions

A down payment of 3.5 percent of the total loan amount is supposed to be made by borrowers. This down payment may be paid by the buyer, or may be a gift from family members or other persons. The interest rate on a Title 1 loan is fixed for the life of the loan. The length of the loan is determined by the type of property that is being financed. The terms of an FHA Title 1 manufactured home loan can vary from 12 to 25 years. Lenders are restricted to a 15 year maximum on lot-only loans, and 20 year terms for a single-wide home, or lot and single-wide home combination loans. 20-year terms are allowed for doublewide manufactured homes only. There are no prepayment penalties, which are fees imposed as a penalty for paying the loan off ahead of schedule, for FHA Title 1 loans. Title 1 manufactured home loans are also available for the remodeling of existing manufactured homes.