A lender financing a manufactured home as real estate looks for four things before the borrower's file: proof the home was built to the federal HUD Code, a permanent foundation, title that has been converted to real property, and land the owner holds. When one is missing, the loan usually becomes a personal-property loan with different terms. Gathering the home's paperwork first tells you which conversation you are in.
With a site-built house, a lender starts with the borrower. With a manufactured home, the lender starts with the home. The questions below are the ones that decide which kind of loan is even available.
Was the Home Built to the HUD Code?
The dividing date is June 15, 1976. Homes built on or after it to the federal construction and safety standards are manufactured homes; Idaho law uses the same date. Proof comes in two places. The certification label, often called the HUD tag, is a metal plate on the outside of the home. The data plate is a paper sheet inside, typically in a kitchen cabinet, the electrical panel or a bedroom closet. If a tag is missing, HUD directs owners to the Institute for Building Technology and Safety for a label verification letter. Find both before you make an offer on an existing home.
Is It on a Permanent Foundation?
Mortgage programs require it. FHA's rule calls for a permanent foundation with the towing hitch and running gear removed, and a home with at least 400 square feet of floor space. Fannie Mae requires a permanent foundation and a home at least 12 feet wide with 400 square feet of finished area. In Idaho, installers must be licensed, and an installation requires a permit and an inspection, so ask for the installation paperwork.
Is the Home Titled as Real Property?
This is the step most buyers have not heard of. A manufactured home starts life with a vehicle-style title. Under Idaho Code §63-304 it may become real property when the running gear is removed, it is permanently affixed to a foundation on land the owner owns or is buying (or leases under qualifying terms), and the owner records a statement of intent to declare the manufactured home as real property with the county recorder. The title goes to the county assessor, who sends it to the Idaho Transportation Department to be cancelled. Mortgage programs expect this to be done: Fannie Mae requires that both the home and the land be legally classified as real property, and FHA requires a mortgage on property classified and taxed as real estate.
Who Owns the Land?
If you own the land, a real-estate mortgage is possible. If the home sits on leased land in a community, the Consumer Financial Protection Bureau's research found that owners who do not own their land are typically only able to finance with a personal-property (chattel) loan, and that financing costs are higher and consumer protections weaker for homes titled as personal property than for homes titled as real property. That is not a reason to rule a community out. It is a reason to know which loan you are shopping for.
Has the Home Been Moved?
For an existing home, FHA requires that it has been occupied only at the location being financed. A home that was relocated after its first installation may be limited to other financing. Ask the seller, and check the installation and title records.
What Else Will the Lender Check?
FHA requires the finished grade under the home to be at or above the 100-year flood elevation. Expect the usual appraisal, and expect the lender to ask for everything above in writing.
What About a Modular Home?
A modular home is built to state and local building codes, not the HUD Code. Once it is on its foundation, lenders generally treat it like a site-built house, and most of this checklist does not apply. Confirm which kind of home you are looking at before you assume either way.
The Paperwork to Gather First
- Photos of the HUD certification label and the data plate
- The home's title, or the recorded statement of intent if it has been converted
- Installation permit and inspection record
- The deed to the land, or the community lease
- Any record of the home having been moved
How Charlie Helps Before You Apply
Charlie helps you identify which loan category a specific home falls into before you apply, so you approach the right kind of lender with the right paperwork in hand. He does not make lending decisions; the lender does. His part is making sure the home's label, foundation, title and land records are gathered and read before the application starts.