Manufactured homes account for a significant portion of the housing market in Texas. These affordable properties are a popular choice for their speedy construction, and installation, versatility, and energy efficiency. Manufactured home sales are on the rise in Texas, with June 2021 showing an increase of 6% over the previous month, and an increase of over 18% for multi-section manufactured homes.
If you're interested in purchasing a manufactured home in Texas, an FHA home loan can offer a convenient option, particularly for low-to-moderate-income borrowers.
What is an FHA Loan?
The Federal Housing Administration is not a lender itself. Rather, the FHA provides federal backing for home loans financed by an approved lender. This means that the FHA insures your mortgage and agrees to pay the lender if you should default on your loan. Since the lender takes a smaller risk on this type of loan, they're often more flexible about the borrowers they're willing to work with.
FHA loans make it easier for borrowers with a lower credit score and low-to-moderate income to qualify for a mortgage. FHA loans are especially popular with first-time homebuyers, as they require a smaller down payment.
What Qualifies as a Manufactured Home in Texas?
According to the FHA, a manufactured home is "a structure that is transportable in one or more sections. In traveling mode, the home is eight feet or more in width and forty feet or more in length." To qualify for an FHA loan, the assembled home must have at least 400 square feet total.
The home must adhere to all Federal Manufactured Construction and Safety Standards and have a Department of Housing and Urban Development certification label on each section of the home that's visible after siding and painting are completed. FHA manufactured home loans are only available for homes built after June 15, 1976.
The manufactured home can only serve as a single-family dwelling, taxed as real estate, and is required to have all-weather road access. For an FHA loan, It must sit on a permanent foundation and qualify as permanently attached to the land. There are other options available for homes that are not attached to a foundation.
An engineer will need to inspect the foundation and issue a Permanent Foundations Guide for Manufactured Housing Certification as part of the approval process. The home must also have an FHA-approved water supply and sewer system. New manufactured homes must come with a one-year warranty from the manufacturer to qualify for an FHA loan.
How Do I Qualify for an FHA Manufactured Home Loan?
To qualify for an FHA loan, you must meet several strict requirements. Applicants must have a minimum credit score of 620, although exceptions may be granted with other Unlike many other loans, FHA loans allow you to use gift money for your down payment. The debt-to-income limits are higher for FHA loans as well. The upper limit is around 57%, although this is not a definitive rule.
Is an FHA Manufactured Home Loan Right for Me?
An FHA manufactured home loan is probably a good fit for your needs if you:
Cannot afford a 20% down payment.
Have a credit score near 620.
Do not qualify for a VA loan.
Can purchase a satisfactory homethat meets FHA’s standards.
How Do I Apply for an FHA Manufactured Home Loan?
To apply for an FHA manufactured home loan, you must reach out to an approved lender such as Cascade. You will need a valid Social Security number, proof of U.S. citizenship, eligibility to work in the U.S. or legal permanent residency, and at least 30 days of bank statements. Your lender may ask for additional information as you go through the loan application process. Once approved for the loan, your manufactured home and lot must pass FHA inspections as well.
If you're interested in applying for an FHA manufactured home loan, Cascade Financial Services can help! We offer a convenient that makes it easy to get started on the path to the home of your dreams. If an FHA loan isn't the right fit for your family, we also offer a variety of other home loans that may better suit your needs. Contact us today to learn more!