Lots of potential minefields need to be navigated during a manufactured home transaction. Below are
some of the potential issues to be aware of.
Appraisal & property condition issues
Missing labels and/or data plate can be problematic--more details in my manufactured home loan tips article.
Foundation certification by a licensed engineer may be required--see my manufactured home loan tips article for more details.
Foundation skirting required-- Non-load bearing skirting must be permanently attached to concrete, masonry or wood backing. Skirting must allow ventilation to the space.
FHA require perimeter enclosures to be constructed of concrete, masonry or treated wood. Vinyl skirting alone is not acceptable.
Any structural modifications to an existing manufactured home must be approved by a licensed professional engineer or the local, state or Federal authority.
Land typically must be owned by the buyer/borrower. Leasehold interest or manufactured condo projects are problematic and many lenders will not touch. Any condo project must be approved by Fannie or FHA
Second moves of the manufactured home is usually a deal killer. Homes installed at one location and then relocated and installed at a second location are ineligible for all loan programs except for VA. VA will require additional plumbing, electrical and roof inspections if a second move. FYI --- Only a handful of VA lenders will allow a second move.
Flood insurance required on the property. On FHA if the home requires flood insurance it is likely a deal killer.
Repair escrows - lender required property repairs to be completed after closing is not allowed on conventional loans. Repair escrows may be allowed on FHA, VA and USDA.
USDA does not allow existing manufactured homes to be financed unless the property is in a pilot program state. California is not currently in this USDA pilot program so only newly constructed manufactured homes are eligible for USDA financing.
Appraiser must have a minimum of 2 manufactured sold comps in the appraisal report on a multi wide home. For single wide homes--when a lender allows this property type--at least one sold comp must be a single wide home. If an appraiser can't include manufactured sold comps then nearly every lender will not lend on the property.
Tow hitch and running gear must be removed from the property.
Investment property is not allowed.
Second or vacation homes are allowed on conventional with a minimum of 10% down payment.
PUDs require a lender to confirm
Second dwelling on the property
Additional vacant manufactured housing located on a property being used strictly for storage with a kitchen inoperable may remain if it does not pose a health or safety risk. Financing problems may occur when hooked up to utilities or septic/sewer.
ADUs (accessory dwelling unit) are problematic. Fannie does not allow ADUs when the main home is a manufactured. Freddie will allow an ADU when the main home is a manufactured however the ADU cannot be a manufactured. Strict rules apply in this case and are lender by lender.
FHA allows ADUs sometimes even a second manufactured however this is a problematic transaction and both manufactured homes must comply with FHA rules.
Cash out refinances are restricted to owner occupied transactions
On conventional cash out is restricted to 65% loan to value and a 20 year term max.
Cash out refinance is allowed on FHA up to 80% loan to value
VA allows cash out up to a 100% loan to value.
FYI-some lenders will further restrict cash out loan to value.