Buying a Manufactured Home Just Got Easier With a USDA Mortgage

Effective May 5th the USDA opened up the opportunity to finance existing manufactured homes in all 50 states. This of course includes the great state of Florida where our rural communities have plenty of beautiful manufactured homes that are already set up. This includes singlewides, doublewides, and larger manufactured homes.

The USDA previously had a pilot program in select states for existing manufactured homes built on or after January 1st of 2006. This program was available in Colorado, Iowa, Louisiana, Michigan, Mississippi, Montana, Nevada, New Hampshire, New York, North Dakota, Ohio, Oregon, Pennsylvania, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming. The new rule extends this program to all 50 states.

How Old Can the Manufactured Home Be With USDA Financing?

The home must be 20 years old or newer. Unfortunately they are not aligning their guidelines to that of FHA, conventional, and VA financing, allowing homes constructed June 15th of 1976 or later. Instead to use USDA financing for the purchase of an existing manufactured home, it can’t be more than 20 years old. This is a rolling 20 year max threshold, so every year the oldest year it can be manufactured updates. To finance older homes you must use FHA, VA, or conventional financing.

Will I Need an Engineer Report With USDA Financing for a Manufactured Home?

The home still has to be up to current HUD standards. You can learn more about current manufactured home standards and guidelines here. That means the tie downs have to be up to current HUD code so an engineer report will be required to confirm this. An engineer report usually costs between $300 and $400. If it’s out of compliance the tie downs will need to be retrofitted. Depending on the amount of tie downs out of compliance (loose or missing), to retrofit a home this can cost anywhere from $1,200 to $3,000 depending on the size of the home.

The most recent manufactured home installation standards were updated October 20th of 2008. So any home installed after that date has a much higher likelihood of being compliant. This program won’t be for everyone but it will certainly help a lot of folks out. Let’s continue learning about USDA specifics in regards to financing manufactured homes.

Why Is the USDA Now Financing Manufactured Homes?

The USDA is addressing the growing home affordability problem we currently have in the United States. They specifically state “The intent of this final rule is to allow the Agency to give borrowers increased purchase options within a competitive market and increase adequate housing along with an enhanced customer experience with the SFH programs.” The USDA requires $0 down payment. This is going to open up the opportunity for many families to be able to buy who couldn’t before. Manufactured homes are more affordably priced than block or frame homes.

What Are the Requirements to Qualify for a USDA Mortgage?

This is going to be just like any other USDA mortgage, so what does that mean? There are going to be household income limits and geographic limitations. For most counties in Florida with a household of 1-4 the household income limit is going to be $112,450. For a household of 5 or more it goes up to $148,450. This is going to be the case for most of Florida except counties with higher median income. The counties with higher median income usually have less eligible areas that qualify for USDA financing. For more specific income limit details use the USDA’s Income eligibility tool. It will factor in child care expenses.

To check for the eligible areas for USDA use their property eligibility tool. You can type in an address to see if a home qualifies. From there you can use the map to get a better idea of what areas qualify and what doesn’t. Areas shaded in brown do not qualify. This is a rural development program, so properties that are in more densely populated areas won’t qualify.

What Does My Credit Score Need to Be to Get a USDA Mortgage for a Manufactured Home?

Your credit score must be a 580 for most USDA financing. In some cases we can qualify you with a lower score. A score of 660 or higher can allow for what’s called a GUS approval which is an automated underwriting approval for USDA loans. With a GUS approval your debt ratios can go up to a 31% front end ratio and a 46% back end ratio. For manual underwrites the max back end debt ratio is 41%. Your front end ratio is the max percentage of your monthly income your total housing payment can be, your back end is the max your total monthly debt obligation including your housing payment.

USDA Eligibility Maps for Manufactured Homes

We are licensed in 40 states. So feel free to inquire even if you don’t live in Florida. The areas in brown on the USDA map are not eligible for the USDA rural development program. Remember to use the property eligibility tool on the USDA website to confirm a specific address. We have an in house USDA eligibility tool so you can see what areas qualify and if your income qualifies.

USDA Mortgage Insurance on a Manufactured Home

First thing is first, USDA has the cheapest mortgage insurance of any government program. The upfront guarantee fee is 1% of the loan amount and gets financed into the loan, similar to FHA’s upfront fee. The annual fee is 0.35%, which works out to about $58 a month on a $200,000 loan. Compare that to FHA at 0.55% (about $92 a month on the same loan), and the USDA mortgage insurance savings add up to several hundred dollars a year.

Keep in mind that USDA mortgage insurance does run for the life of the loan, similar to FHA. The way borrowers eliminate it is by refinancing into conventional financing once the home appreciates above the 80% loan-to-value threshold, which often happens within the first 3 to 5 years on a new manufactured home that’s been properly maintained.

Frequently Asked Questions for USDA Financing on Manufactured Homes

Want to Buy a Manufactured Home With USDA Financing?

If you want to figure out what’s possible, the best thing to do is fill out an application for a mortgage pre-approval. From there we can crunch the numbers and see how much you can finance, and what loan program is best for you. On weekdays we can review your application in 24 hours or less.