When looking at housing options, manufactured homes are a popular choice among homeowners in Arizona. If you're looking at purchasing a home soon, you'll want to start researching your financing options, especially if considering a manufactured home. Manufactured homes have different requirements from traditional site-built homes, so it's essential to know your options before deciding on a home. One of your options could be an FHA manufactured home loan.
What Is an FHA Loan?
The Federal Housing Administration, or FHA, is a part of the Department of Housing and Urban Development. The FHA insures mortgages funded by an approved FHA lender through an FHA loan. FHA loans are designed to help borrowers in the low-to-moderate income bracket. These loans typically require a lower down payment than conventional loans and offer more flexibility in qualifying based on credit scores.
FHA loans may require as little as a 3.5% down payment versus the 20% traditionally required by a conventional mortgage lender. You may be able to qualify for an FHA loan, even if your credit score is too low to be eligible for a traditional mortgage.
How Do I Qualify for an FHA Loan?
Depending on the type of FHA loan you're applying for, qualification requirements may vary. Typically the criteria for an FHA loan approval include:
- Income. You must provide proof of current income.
- Credit. The FHA lender will check your credit history and credit score.
- Debts. They will consider any other loans, credit card debt, or other debts.
- Equity. They will appraise any equity you have in the property or other properties.
- Loan amount. The lender will look at the total amount you want to borrow for the home.
The home must be used as your primary residence to qualify for an FHA loan. It's important to note that FHA lenders have restrictions on the amount you can borrow, and these often vary by county or can be based on real estate costs in the area you plan to locate the home.
What Types of Manufactured Homes Are Eligible For an FHA Loan in Arizona?
Several types of manufactured or mobile homes exist, and it's essential to know which types of these homes qualify for an FHA loan in Arizona. Single-wide, double-wide, and multi-wide manufactured and modular homes may be eligible for FHA loans. Mobile homes manufactured before June 15, 1976, will not qualify for an FHA loan. The manufactured housing guidelines changed then, and homes manufactured before that date do not adhere to the new guidelines.
What Is a Manufactured Home?
The Federal Housing Administration defines a manufactured home as any prefabricated house that can be transported to a location in one or more sections. It needs to be 40 feet or longer and at least 8 feet wide in traveling mode. Manufactured homes differ from new construction homes because of the assembly methods used, according to the FHA. New construction homes are built 100% on-site from the ground up, whereas prefabricated homes are built in part or entirely in a factory-type setting, off-site.
Manufactured homes are partially assembled off-site and then later transported to a precisely placed location. There may be additional construction to the house completed once these pre-assembled parts arrive. The final construction can be completed by construction companies, building contractors, or individual laborers. You will also need to have a plumber and electrician connect the home to the sewer system and local power source.
A single-wide manufactured home is 18 feet or less in width and 90 feet or less in length, with a double-wide coming in at 20 feet in width as a minimum and no more than 90 feet in length. A single-wide manufactured home can be the perfect starter home or retirement home as it's affordable and manageable in size. Manufactured homes that qualify for FHA loans were constructed after June 14, 1976, and meet the higher level of safety and construction codes required by HUD for prefabricated housing.
You can finance manufactured homes using a chattel loan. Chattel loans cover personal property that can be moved, such as machinery, vehicles, and manufactured homes. The property acts as collateral on the loan, much like a traditional mortgage. However, if you own the manufactured home's land and default to the chattel loan on the manufactured home, the bank can only repossess the house. Arizona offers FHA chattel loans for manufactured homes.
What Is a Modular Home?
Another option for a prefabricated home that may qualify for an FHA loan in Arizona is a modular home. This type of home is also built off-site but differs from manufactured ones because it's placed on a permanent foundation and won't move. Because this type of prefabricated loan is permanently rooted to the land it's located on, you can finance a modular home via a traditional mortgage, including an FHA option.
You only need to take a loan out for the modular home if you already own the land. If you haven't purchased the plot of land yet, then you can include the land in the loan, and at the end of the loan's life, you'll own both the home and the land outright. The advantage to this is that you're not paying land rent even after you own the home.
Many prefabricated homes offer an attractive exterior, solid construction, and a stylish interior with modern appliances and fixtures. Manufactured and modular homes are getting harder to discern from new construction, and often once inside the house, it's impossible to tell the home is a prefabricated dwelling.
If you're looking to purchase a prefabricated home in Arizona, reach out to the knowledgeable team at Cascade Financial Services. We proudly serve the Phoenix area. We would be happy to answer any questions you may have, discuss loan options with you, and get you pre-qualified so you can start the search for your dream home. You can reach us at 877-869-7082 or via our convenient and secure online messaging system. Cascade Financial Services can help you make Arizona your home.