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USDA loans make homeownership possible for thousands of low-income Americans in rural areas. These low-interest, zero-down mortgages aren't as well-known as their FHA or VA loan counterparts, but they include many perks that can make them a great option for eligible borrowers.
In many cases, homebuyers can use a USDA home loan to purchase a manufactured home — one that's constructed off-site before being transported and attached to an on-site, permanent foundation. Even some modular homes, which are built in sections and then assembled on location, may qualify for USDA loans.
Read on to learn more about USDA manufactured home loans and how to make sure your property qualifies.
It’s important to understand that Neighbors Bank does not offer USDA loans for manufactured or mobile housing.
Can You Get a USDA Loan on a Manufactured Home?
Yes, borrowers can finance a manufactured home through the U.S. Department of Agriculture's Single Family Housing Guaranteed Loan Program (SFHGLP). They must still meet general USDA requirements for property location and income limits. These guidelines vary by state, so be sure to check the current limits and restrictions in your area before you apply.
Beyond that, specific USDA manufactured home loan guidelines are also in place. The borrower must meet these guidelines in addition to general USDA requirements to qualify.
USDA Manufactured Home Guidelines 2023
Although USDA loans generally have looser requirements than FHA or VA loans, there are still a few guidelines to follow when it comes to using this type of financing to buy a manufactured home.
USDA Loan Property Requirements
Here are key USDA manufactured home guidelines:
Age and construction: Your manufactured home must be new stock, built within the last 12 months and never installed on another site. It cannot be modified except for adding porches, decks or similar structures, as approved and inspected by local code officials. You must also have a copy of all manufacturer warranties and dealer and contractor certifications. The home must also display a red certification label on the exterior of each transportable section. This MUST remain visible after all necessary work is finished to complete the installation.
Size: Manufactured single-wide homes must be at least 12 feet wide. Double-wides must be at least 20 feet wide. All manufactured homes must have an area of at least 400 square feet.
Safety: Manufactured homes must meet Federal Manufactured Home Construction and Safety Standards (FMHCSS). These regulations ensure that the housing is safe for occupancy. They also vary, depending on where the home will be placed.
Location: The home must be installed on land in an approved, USDA-eligible area and affixed to a permanent foundation. The site must meet current floodplain requirements and include proper waste disposal systems and water access.
Tax status: For tax purposes, the manufactured home must be classified as real estate, and its site must be zoned the same.
As with any mortgage, the lender will require a property appraisal to evaluate the above issues and to determine the total value of the manufactured home and its land. This is necessary to determine your maximum loan amount. The closing process for manufactured homes will also include title transfer and any necessary documentation.
Are Mobile Homes USDA Eligible?
The terms manufactured and mobile home are often used interchangeably, but there’s an important difference when it comes to whether they’re eligible for USDA financing.
Mobile homes are different from manufactured homes in that they have wheels, are not affixed to a permanent foundation and are not classified as real estate. Because these types of homes are considered personal property, they are not eligible for a USDA loan.
Are Modular Homes USDA Eligible?
Like manufactured homes, modular homes are primarily constructed in a factory. They’re built-in prefabricated "modules," which are then moved to a specific location, where they are assembled and attached to a permanent foundation.
Manufactured homes are held to federal standards set by the Department of Housing and Urban Development (HUD). Modular homes must conform to the same local, state and regional building codes required for on-site homes, which means they will vary depending on the area.
There is also one important caveat for using a USDA loan to finance a modular home. You can't use the loan to buy land and then install a modular home on it. In other words, your modular home is only eligible for USDA financing after it's been built and installed in its permanent location.
See How Much Home You Can Afford With a USDA Loan
USDA loans are a powerful financing tool for those interested in buying homes in rural areas. With no down payment requirement and low-interest rates, these loans can be an attractive option for many buyers.
Whether you're interested in financing a manufactured home, modular home or purchasing an existing house in a rural area, a USDA home loan is worth considering. Neighbors Bank is ready and can help with your home loan needs. Reach out today to learn more about USDA loans and other types of financing.