November 25, 2022

Can You Use USDA Loans To Buy Manufactured Homes?

Modern Manufactured Home Interior

4 questions to consider before buying a home

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Simple steps to buy a home successfully

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Consider your finance options, and then choose the best one available

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Make an offer with some wiggle room for negotiation

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Which other tips do you recommend when buying a home?

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Manufactured, otherwise known as Mobile Homes, refer to single-width or multi-width units that are built off-site, moved to the location, and then put together. If you are looking to purchase a manufactured home, you may be glad to learn that USDA Loans can be applied.

The USDA Manufactured Home Loans can provide significant advantages in your buying process. They create an opportunity for many to become homeowners by having no down payment requirements, cheap interest rates, and more lenient income restrictions than conventional loan products.

Requirement for USDA Manufactured Home Loans

Your property must meet certain requirements in order to be eligible for the USDA Manufactured Home Loans.

  • Your Property Unit

The housing unit must have been constructed within the last calendar year and be obtained from a dealer or contractor with approval. The minimum living area for manufactured single-wide homes is 400 square feet, and they must be at least 12 feet wide. Homes that are double-wide must be at least 20 feet wide.

  • Safety of the Manufactured Home

All Federal Manufactured Home Construction and Safety Standards (FMHCSS), which specify how the property should be manufactured, built, and installed, must be met by the house.

  • The Land

The location where your manufactured home will be built must be regarded as real estate and subject to real estate taxes. It must also be fastened to a sturdy foundation and situated in a rural location that the USDA has certified as eligible.

The home's lowest point needs to have access to water and sewage disposal systems as well as be higher than the 100-year floodplain.

  • Evaluation and Appraisal

Similar to when buying a conventional home, USDA lenders will request an evaluation of your manufactured home to make sure it satisfies all criteria for financing and to evaluate its present market standing.

USDA Manufactured Home Loans Restrictions

First and foremost, a site without a real house on it cannot be financed using USDA loans. Additionally, they are ineligible to pay for:

  • Any property unit that fails to meet FMHCSS requirements
  • A site that is currently owned by a different party
  • An existing, second-hand, or pre-owned manufactured home or renovated to one
  • Furniture of interior property

USDA Manufactured Home Loans Process

The procedure doesn't differ significantly from those of other loan products. But to make things work, you usually need a construction loan. Before the loan may be authorized, the property must also fulfill a few more conditions, be covered by a warranty, and meet other requirements.

  • Warranty

The home's dealer is required to show the lender evidence of the home's warranty. This warranty must adhere to all HUD specifications.

  • Lender

A copy of each manufacturer's warranty should be kept on file by the lender. If the loan is 80% or beyond that of the sales price, they will also demand a guaranteed charge and an annual cost (equivalent to PMI).

  • Certification

A document stating that the house was unharmed during assembly or transportation must be signed by both the dealer and the buyer.

  • Lien

To make sure there are no liens on the property for work done, you need to ensure payments are made to all contractors.

  • Taxes

Your manufactured home needs to be taxable as real estate.

  • Lien and Title

The property as well as the site itself must be included in the lien and title when it is recorded in the local land records. The mortgage requires title insurance, and you as the buyer must agree that even if the house is mobile, it must be secured to the location in order to qualify for USDA financing.