FHA Lending Programs – Best for Manufactured Homes and Low Down Payment

FHA Financed HomeStandard FHA 203(b) Mortgages, available for both stick built and manufactured homes.

FHA has the lowest down payment of any of the preferred loan types.  3.5% down, plus closing costs.  The seller can pay closing costs and relatives can gift funds for the down payment.

This government entity also supports a  Purchase and Repair Program 203(k)

If you buy a “fixer” home, you can finance funds to do the repairs.

FHA interest rates are slightly lower than conventional mortgages. However with an this loan you will pay upfront mortgage insurance premium, which is financed, and in addition you pay an annual  premium, which is divided into the 12 monthly payments.

So between the two, if you can finance a property with 20% down or more, the conventional loan issue better choice, because with FHA, the mortgage insurance premium never drops off the loan. Even if your loan-to-value is less than 80%, you will still pay the monthly mortgage insurance premium until the loan is paid. Today though, the interest rate for the conventional loan is about 1% higher, and the closing costs are also higher.

If you have a manufactured home, and you finance it with an FHA loan, which in itself is a wonderful thing, as the rules for manufactured housing have changed in the last 20 years, for the better. In addition to the regular appraisal, you will probably have to pay for an engineering certification, at a cost similar to the appraisal, where the engineer certifies that the house foundation is safe and complies with all the underwriting requirements.

If your home is in a flood zone, and can obtain flood insurance, FHA will ensure your home with one of their mortgages.

Another advantage is that they offer a streamlined loan program. Unlike any other conventional lender, you can refinance your existing loan, with little or no costs to you. The new loan has to benefit you in a savings, and there is a test to meet for that.

However if you do have a manufactured home with an FHA loan, and you want to do a Streamline, with some lenders, you will still have to get an appraisal.

Author’s Notes:

Over the 30 plus years I have in the business, so many times prospective borrowers will come to me, asking for a VA or Conventional Loan. Even if they are putting 20% down, or more, in the case of the conventional loan, most of the time the FHA loan will win out.

There will be advantages to the FHA loan, especially in the case of a Manufactured Home, that the others loans can’t compete with.

Please call or write me for answers to your specific loan related questions.

Judy Sellens

951-265-2102

judy@sellenslending.com

 

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