Florida Mobile and Manufactured Home FinancingWe finance manufactured homes which are often still called mobile homes.
Florida mobile home financing or manufactured home financing.
First thing is first, technically a mobile home is a factory built home that was constructed prior to June 15, 1976 and does not have H.U. D. plates. Even so people still today call newer manufactured homes mobile homes. The terms people use can change depending where you live but in Florida people often use the term mobile home for manufactured homes constructed after June 15th of 1976.
Technically a manufactured home is a factory built home constructed to the HUD (Housing Urban Development) Title 6 construction standards that took effect after June 15 of 1976. If it is a manufactured home built to HUD code there will be two forms of verification, a certification label and a data plate. The data plate will be located somewhere inside the home, often near an electrical box, the main thing is it has to be easily visible. You can find the certification label on the tail end of each transportable section of the manufactured home. You may be missing a certification label, or you can’t find the data plates, but one of those items are needed to verify the home is built to HUD code.
Whether you want to purchase or refinance a manufactured home there are some nuances to financing a manufactured home that you need to understand but we are here to guide you through the process.
How important is the certification label or HUD Plate?
Its actually against the law to remove HUD plates, the appraiser will need to find them when purchasing a manufactured home. HUD states that if the certification label or HUD tag is missing from the manufactured home, they do not reissue labels. They can however issue a Letter of Label Verification if the data plates can not be found. The home should have serial numbers on a certification label that can be found inside the home in one of three spots: in a kitchen cabinet, in a bedroom closet, on or near the main electrical panel. The data plate will have a map of the U.S. to let the consumer know the wind zone, snow load, and roof load for which their manufactured home was constructed for. When an appraisal is done when purchasing or selling, they will look for all the necessary information, so don’t feel overwhelmed. If there is an issue the lender will the take necessary action to resolve any issue.
Its possible to request a Letter of Label Verification from the Institute for Building Technology and Safety (IBTS). You can call them via phone at (703) 481-2010 or fax them at: (703) 437-6894.
Tie downs and other HUD Guidelines
Tie downs being up to current code are one of the biggest issued we run into when borrowers choose to buy a manufactured home. On July 13, 1994, HUD increased the size of the requirement for the knuckle on the tie downs that anchors the manufactured home to the ground. In addition they changed the requirement for the amount of longitudinal and lateral tie downs needed to meet code. This means that if the manufactured home was anchored before July of 1994 there is a good chance that the tie downs will not be up to current code. When you purchase a manufactured home an engineer is required to come out and inspect the home and make sure that it is up to code. The only time an engineer report is not required is when conventional financing is being utilized on a home with no additions or changes to the roofline or added decking. Additionally VA financing for Veterans does not require and engineer report, with or without changes to the roofline or added decking.
More on the Engineering Report
If the property has changed hands since 1994 and the purchaser used a government backed loan then it should have been retrofitted to current standards, but that is not always the case. Sometimes even newly set up homes are anchored incorrectly. Additionally the engineer will inspect the siding around the bottom of the home making sure that there are no holes larger than an inch. Preparing for this inspection beforehand is always smart because a hole in the siding is easily remedied with spray foam. Its always best when the listing agent for a manufactured home prepares the seller for the possibility that they may need to pay for their manufactured home to be retrofitted if it was anchored before July 13, of 1994.
As a lender we always make sure everyone involved in the transaction realizes that the tie downs may need to be addressed to successfully close the transaction. If a borrower is using FHA financing an engineer report is always required. The cost of retrofitting can range anywhere from $1,200 to $3,000 depending on the size of the manufactured home. Its important to remember that an escrow hold back is not allowed for the cost of retrofitting the property, meaning that the home must be corrected before the loan can close.
A Few Important in house Manufactured Home Tips:
- We can finance manufactured homes as second homes with 10% down.
- We can not finance on leased land, it is considered a Chattel Loan which is similar to a motor vehicle loan.
- We do not finance homes in co-ops, condo associations are allowed only if the community does not have singlewides. HOA’s are allowed.
- We can finance single wide manufactured homes as a primary residence only.
- We finance manufactured homes from the Florida Keys to the panhandle. Coastal properties are allowed.
- We do not require an engineer report for conventional financing unless the home has decking or a change to the roof line.
- We can finance a manufactured home as an investment property with 30% down using a Non QM Lender.
- If you think your home’s tie downs are not up to code we have contractors who can quote you the work. Sometimes they allow payment at closing so you don’t have to come out of pocket!
You can use conventional financing to purchase a manufactured home with as little as 5% down with p.m.i. (private mortgage insurance). You can also use conventional financing to purchase a second home with as little as 10% down. You can get cash out using conventional financing up to 65% of the value of the manufactured home and a max term of 20 years. If you are concerned about the condition of the property then conventional financing will be the most lenient in regards to meeting condition requirements.
We offer FHA financing for a manufactured home. The minimum down payment is 3.5% and you must occupy the home as your primary residence. The tie downs must be up to current manufactured home HUD guidelines. Its important to note there are rules for the distance of the septic, well, and drain field from the property line. The well must be 10 feet from the property line, 50 feet from the septic tank, and a 100 feet from the septic tank drain field. However this can be reduced to 75 feet if allowed by local authority. If the subject property line is adjacent to residential property then local well distance requirements prevail over the guidelines. If the property is adjacent to a non residential property the minimum is 10 feet still. Cash out is allowed up to 80% of the value of the home, and a 30 year term is allowed.
Veterans can use their VA entitlement to purchase a manufactured home with no money down! Keep in mind that when purchasing any home that has a well the VA requires both a bacteria water test and a lead water test. The veteran is now allowed to pay for those inspections instead of the seller. We do not require an engineer to inspect the property like FHA or conventional financing to make sure that the manufactured home meets the current HUD guidelines. Additionally the veterans administration will allow a veteran to purchase a manufactured home if it has been moved, but only moved one time. This makes VA financing the most flexible when it comes to financing manufactured homes. Its a great benefit for veterans.
What are the Insurance Requirements for a Manufactured Home?
The cost of homeowners insurance has certainly risen over time for manufactured homes. Getting insurance can sometimes be difficult. We have partnered with some excellent insurance agents that specialize in getting acceptable coverage for manufactured homes. There are a few different routes one can go with in regards to getting coverage that meets the minimum standard for financing. These would be requirements for either conventional, FHA, or VA financing. One option is to make sure the policy has what’s called the “replacement cost endorsement.” This can be phrased different ways but the meaning should be clear and it will be listed on the endorsements for the policy.
As an alternative the insurance agent can provide what’s called a replacement cost estimator for the property. The coverage just needs to meet or exceed the replacement cost estimator. The least popular option is to get coverage at 80% of the loan amount. Most of the time that option is impossible unless the buyer is doing a very large down payment.
Another issue on older manufactured homes in regards to acquiring home owners insurance are polybutylene pipes. These were used for a period of time in the construction of manufactured homes between the late 1970’s until the mid 1990’s. The are prone to bursting and breakdown easily. Most insurers will not bind a policy as long as the home has polybutylene pipes. Depending on the county maybe one carrier will allow a policy to be bound as long as the pipes are replaced within 30 days. The safe assumption is that the home will need to be re-piped before closing on the home, either for purchase or refinance if the pipes are polybutylene
Double Wide or Single Wide?
We finance both doublewides, singlewides, and triple wide homes! Some lenders do not finance singlewides, but we gladly finance them either with Conventional, FHA, or VA financing. We also allow for cash out on singlewide homes using FHA financing. Except for VA financing the home can not have been moved from its original installation though! That means the home had to go from the dealer or factory straight to the property it now sits on. Fannie Mae, VA and FHA require a singlewide to be at least 400 square feet. Freddie mac requires a singlewide to be 600 feet. Fannie once required a single wide to be 10 years old or newer but they have since removed that requirement and go back to June 15, of 1976 for singlewide homes as well.
What if My Manufactured Home is Titled Separate From the Land?
If you bought your land first or were given land, and then you bought your manufactured home its possible that the title of the manufactured home has not been retired. When you retire the title on a manufactured home it essentially combines the home and the land together. This makes your home considered real property. If you are buying a home and the title has not been retired it will need to be done so before closing. Additionally if you are refinancing your home and the title is not retired it will need to be retired before closing. We require the paperwork to be completed at closing to retire the title of the manufactured home but we do not require it to be processed. This can take time, some lenders will require the retirement to be processed before closing but we do not.
Can I Buy a Manufactured Home as an Investment Property?
Neither Fannie Mae or Freddie Mac (the two entities backing all conventional mortgages) allow for borrower to utilize conventional financing to purchase a manufactured home. So unfortunately you are left needing to use alternative financing. There are very few alternative or Non QM (non qualified mortgage) lenders who will finance manufactured homes as investment properties, but we do have a couple at our disposal! The minimum down is 30%, interest rates are higher, and the closing costs are higher. The potential rent income must be close to covering the cost of the liability as well. The home must also be a double-wide or larger.
Additional Manufactured Home Guidelines
- Both the manufactured home and land must be titled together and classified as real property.
- Primary and second homes only for conventional financing (no investment properties unless its a non QM loan)
- Manufactured homes that have been ‘moved’ once installed are ineligible unless the borrower is utilizing VA financing.
- Towing hitch, wheels and axles must be removed in all cases.
- Minimum of 400 square foot living area required
- Must be affixed to a permanent foundation, (tied downs are ok).
- Appraisal form 1004C must be used and must clearly reflect a photo of the HUD Certification Tag unless an IBTS report is obtained.
- Min 620 FICO for conventional, 580 minimum score for FHA and VA
- Maximum 90% LTV allowed Second Home.
- Structural engineer certification only required if changes to the original structure were made (such as added porch or roof line) or if the appraiser notes issues.