“I recently discussed the differences between manufactured and modular homes along with the available mortgage options, but today we are going to be very specific and talk about how it can be possible to qualify for a manufactured home with a no down payment USDA loan,” said Sean Stephens, of Metroplex Mortgage Services.
The U.S. Department of Agriculture (USDA) handbook defines a manufactured home as follows:
“Manufactured housing units are single-or multi-width units constructed partially off-site and then transported to a site to be completed and attached to a permanent foundation. Manufactured homes are built to different construction standards and codes and have different inspection requirements than those manufactured structures generally referred to as “modular” or “panelized” homes.”
Stephens noted that USDA loans for existing manufactured homes are “extremely limited” because the guidelines state that a “purchase of an existing manufactured home is not permitted, unless it is a purchase of an existing Rural Development Section 502 direct loan or guarantee…” That means purchasing an existing manufactured home that is not part of any pilot program, and it must already be secured by either a USDA Guaranteed or Direct loan, which makes it a “rare scenario.”
For some years, there have been manufactured home retailers in certain markets that have gained experience at making sales with these loans, which when added to their other sales, have resulted in a total rise in new HUD Code home sales. There is not much heard about this from the powers that be in MHVille, perhaps because it doesn’t put financing dollars into the coffers of Berkshire Hathaway owned lenders such as 21st Mortgage Corp or Vanderbilt Mortgage and Finance (VMF).
USDA loan and guidelines state the following about manufactured home loans.
“Purchase of an eligible new unit, transportation and set-up costs, and purchase of an eligible site if not already owned by the applicant” provided the manufactured home has not been “installed, or occupied at any other site or location.”
Further, “the manufactured home must be classified and taxed as real estate” which translates to the home being on land that is owned because the USDA mortgage must cover both the manufactured home and land where it is located.
“Manufactured units may be moved only from the manufacturers or dealer’s lot to the site on which the unit will be guaranteed. This type of unit is eligible as long as the purchase agreement is dated within 12 months of the date the unit was manufactured.”
- “The date of manufacture is available on the factory installed plate on the unit.”
- “Manufactured home units with a manufacture date exceeding 12 months of the purchase agreement contract will be ineligible for a guaranteed loan.”
Metroplex produced the video shown to promote the increased use of USDA loans for manufactured housing sales.
“While today’s video was meant to give you a summary of this unique part of the program, it is important to remember that minimum credit and qualifying conditions will apply and that additional property conditions are required when you purchase a manufactured home with a no down payment USDA construction loan,” per the company. That’s MH “Industry News, Tips, and Views Pros Can Use” © where “We Provide, You Decide.” ## © (News, analysis, and commentary.)
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