If you're considering moving to Florida or already live in the Sunshine State, a manufactured home could be a fantastic option for you. Year-round temperate weather makes this state a nature lover's dream, as they'll have more months out of the year (than in the temperate parts of the U.S.) to enjoy their favorite pastimes. That said, to fully enjoy all Florida has to offer, you probably need your own permanent residence here. And whether you're a first-time homebuyer or a retiree, a manufactured home can make your homeownership dreams a reality.
What Is a Manufactured Home?
A manufactured home refers to a prefabricated home built after June 15, 1976. At that time, the Department of Housing and Urban Development enacted the Manufactured Home Construction and Safety Standards Act, ensuring all prefab homes built after this period met specific codes. These standards improved the safety of mobile homes and, by extension, their construction. A manufactured home also indicates that the prefabricated home has parts that have been assembled off-site. The house is placed on a foundation, and other construction elements are completed, including sewer and electricity.
What Is an FHA Manufactured Home Loan?
FHA is the acronym for the Federal Housing Administration. An FHA loan for a manufactured home is a mortgage insured by the FHA and issued by an FHA-approved lender. This loan is designed to assist homebuyers who have low to moderate incomes. The advantage of an FHA manufactured home loan is that securing one requires a lower down payment than are demanded for most other forms of mortgage loans. It's also possible to qualify for an FHA manufactured home loan with a lower credit score than is usually accepted for a conventional home loan.
FHA loans can be used to cover the cost of the manufactured home, land, and other improvements, such as the addition of a garage or deck. If you already own the land you plan to place your manufactured home on, you may want to alternatively consider a chattel loan instead of an FHA loan.
FHA Loan Down Payment Guidelines
Within the guidelines of an FHA loan, your credit score can vary what you'll need to come up with for your down payment. If you have a credit score of at least 620, you can borrow up to 96.5% of the value of a home. This allowance means your down payment will only have to be 3.5% of the total manufactured home price. That's a much smaller down payment than you'd typically need for a conventional mortgage loan.
FHA Loan Structure and Best-Suited Applicants
The benefit of an FHA loan is that the FHA guarantees the loan with your lender to make it easier for you to receive funding to purchase your manufactured home. The loan guarantee encourages lenders to take a chance on lower-income homebuyers.
As part of the conditions for benefiting from this FHA guarantee, you'll be required to buy mortgage insurance once you qualify for an FHA loan. You'll make your premium payments for this mortgage insurance directly to the FHA. What this mortgage insurance does is lower the risk for lenders. If, for any reason, you have to default on your mortgage, the FHA will pay a claim to your lender.
Due to this guarantee, lenders are more willing to work with you despite that you may be in the low- to a moderate-income range or have a lower credit score. This undertaking by the FHA creates a win-win situation, where the lender is protected and the borrower has the opportunity for homeownership that might otherwise be out of reach under conventional loan guidelines.
Disqualifying Factors for an FHA Loan
Are you in a higher income bracket, have more money saved for a down payment, or have a higher credit score? Then, you may want to pursue a conventional home loan instead of an FHA loan. Although an FHA loan has its benefits, it has some stringent regulations and strictures attached. If you don't need the upsides it provides, you're better off skipping it and seeking a loan that comes with fewer stipulations and greater flexibility.
If you are a buyer on the lower end of the credit score spectrum, an FHA-insured loan generally can't help if your credit score is under 620 – although Cascade may still be able to help on a case-by-case basis. If you find yourself in that category, you may be better off applying for a personal loan or chattel loan to help fund the purchase of a manufactured home. Alternatively, you may be better served by finding a manufactured home that you can purchase under a rent-to-own program, where you pay monthly rent with part of it going toward the purchase of the manufactured home so that you'll eventually own it outright.
How Do You Secure Financing?
After you've decided to seek an FHA loan for a manufactured home, these few steps will help you save time in the application process:
- Review your income, expenses, credit history, and any other financial factors.
- Learn about the restrictions and terms of an FHA loan, including limits, fees, interest rates, closing costs, and credit score requirements.
- Find a lender that issues FHA loans for manufactured homes, and research their application process, fees, and timelines.
- Hire a real estate agent or sales representative to help you find the manufactured home of your dreams.
Florida residents who wish to secure an FHA loan for manufactured housing may benefit from the lower down payment requirements, making homeownership possible. Cascade Financial Services specializes in manufactured home financing, including FHA loans. We proudly serve the areas of Miami and Tallahassee as well. Explore your financing options and get prequalified through Cascade today. Contact us by phone at 855-516-2830 today! You'll be on the road toward homeownership.