If you’re the owner of a manufactured home and you’re wondering about your eligibility for a reverse mortgage, here’s the short answer: you may be eligible.
Now for the longer answer. As with any prospective borrower, you must be aged 62 or older, you must legally own the home, it must be your primary residence, and you must be eligible for participation in Federal Housing Administration programs.
And if you have a manufactured home, yes, you can get a reverse mortgage—as long as it was built after June 15th, 1976.
Why is this particular date so important? It’s when the Department of Housing and Urban Development (HUD) started regulating the construction of manufactured homes under established guidelines. (Homes from before this date will not qualify for FHA-insured loans)
In 2009, manufactured units in condominium projects became eligible for FHA-insured reverse mortgages, as long as they (as with all other manufactured homes) meet HUD guidelines.
Reverse Mortgage Guidelines for Borrowers with Manufactured Homes
- The home’s floor area must be no less than 400 square feet (in 2010, the average size was 1,515 square feet).
- The structure must be built and remain on a permanent chassis, and it must be connected to the foundation through welds, bolts, and various light gage metal plates.
- The home must have a seal that shows it has been constructed in conformance with Federal Manufactured Home Construction and Safety Standards. If your home was constructed after June 15th, 1976 it will have this seal.
- The finished grade elevation beneath the manufactured home or, if a basement is used, the lowest finished exterior grade adjacent to the perimeter enclosure, shall be at or above the 100-year return frequency flood elevation.
- The home must be classified and taxed as “real estate” and cannot have been installed or occupied previously at any other site or location.
*Manufactured homes are often referred to as “mobile homes” however a true mobile home where you do not own the land and is not taxed as real-estate are not eligible for any FHA reverse mortgage loan.
What This Could Mean for You
Even if your manufactured home was built after June 15th, 1976, it might be difficult to find a reverse mortgage lender. Some require a minimum appraised property value, and in other instances, origination fees may run a little higher than for other types of dwellings because of an extra foundation inspection required by an engineering company to make sure it complies with HUD’s acceptable foundation requirements.
Another issue could be the value of the land your home is located on. Manufactured homes on large acreage can be difficult to get approved, since the value of the land could account for more of the appraised property value than the house itself. These sorts of cases can be tricky for loan underwriters.
Characteristics of Manufactured Homes
In 2010, there were 50,000 new manufactured homes placed in the United States, according to U.S. Census data, with the majority located outside of manufactured home communities. The South by far leads all other regions in the number of manufactured homes, with 34,000.
The average sales price of a manufactured home (both single- and double-wide) in 2010 was $62,800, according to Census data, the lowest since 2007, when prices peaked at $65,400. The Western region led sales prices with an average of $79,100.
2019 Update to Reverse Mortgage manufactured Home Requirements
HUD has very specific guidelines for Manufactured homes and there are very few lenders who will still do them, but they can be done.
HUD/FHA requirements / guidelines:
- Minimum Square Footage of 400 Square Feet* (current lender requirements are greater)
- The Property must be constructed after 1976 and meet HUD guidelines as certified by HUD Label 24 CFR 3280.11.
- Must be classified and taxed as real estate (must have turned in DMV registrations in favor of real property).
- Was built on and remains on a permanent chassis.
- Was designed to be used with a dwelling with a permanent foundation built to FHA criteria.
- Finished grade elevation beneath the home or if a basement is used, the basement floor, must be at or above the 100-year frequency flood elevation (however, lenders will no longer accept a manufactured home in a flood hazard area).
- Must be situated on a permanent foundation
- Requires an engineer’s certification on the foundation
- borrowers must own the land
Additional Lender requirements / guidelines:
- The comparable sales for the appraisal must be available within 1 mile in urban and suburban areas and 20 miles in rural areas.
- The sales cannot require excessive adjustments or the property will not be acceptable.
- All Sections of the Home must have HUD tags accessible to the appraiser.
- The appraiser must indicate that the seal of the home has not been compromised and any structural modifications or additions pose no issues.
- All credit reports must be verified as having no personal liens pertaining to the dwelling.
- No single wide units.
- No units located in a manufactured condominium complex.
- Units must be on their original site. Homes moved from other previously installed sites are ineligible.