January 15, 2013
A reader asks, “My wife, 5 year old and I live in North Carolina with her parents b/c it simply costs too much to rent. Her parents purchased a manufactured home that is over 10 yrs old (1998) 3 years ago as well as the roughly 3/4 acre lot it sits on.”
“The house itself does have a permanent foundation (Strapped or bolted to a PIP or masonry perimeter foundation, with no tow gear left in the crawl). They currently still owe significantly on the mortgage. I’ve been looking at the FHA sites out there for information but I haven’t learned an answer to my question. My question is, can my wife and I buy her parents house and land through a manufactured home loan when the house itself is 10 years or older?”
The FHA loan rules for manufactured housing are spelled out clearly on the FHA official site in one of its Frequently Asked Questions pages. Those rules include the following guidelines which state, “all manufactured homes must comply with the following:”
1. Have a floor area of not less than 400 square feet
2. Be constructed after June 15, 1976, in conformance with the Federal manufactured home construction and safety standards, as evidenced by an affixed certification label in accordance with 24 CFR Section 3280.8; (manufactured homes produced prior to that date are ineligible for insured financing)
3. Be classified as real estate
4. The mortgage must cover both the manufactured unit and its site and shall have a term of not more than 30 years from the date amortization begins
5. Be built and remain on a permanent chassis
6. Be designed to be used as a dwelling with a permanent foundation built to FHA criteria;
7. The finished grade elevation beneath the manufactured home or, if a basement is used, the grade beneath the basement shall be at or above the 100-year return frequency flood elevation
8. The home must not have been installed or occupied previously at another site or location”
It’s very important to take note of rule #3, which means that houseboats, RVs and any other “moving home” not affixed to a permanent foundation cannot be purchased with an FHA guaranteed mortgage. To reinforce this concept, Rule #6 ends any ambiguity. The home MUST be built and remain upon a “permanent” chassis. An RV or houseboat cannot be given a permanent foundation and under the law they cannot be classified as “real property” for the purposes of a loan or mortgage insurance.
The reader’s specific question about the age of the mobile home is addressed by Rule #2–any manufactured home built before June 15, 1976 would not be eligible for an FHA loan.
These requirements are established by the FHA to provide consistency in the lending process and to protect the investment of both the borrower and the lender. For more information on this subject, contact the FHA directly by calling 1-800 CALL FHA.
Do you have questions about how FHA loans work? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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