FHA loans for manufactured homes: Title I vs Title II explained

The FHA insures two separate loan programs for manufactured homes. Title I covers the home itself, with or without the land, and works even when you lease a lot in a community. Title II is a true real-property mortgage that treats the home like any other house, but it requires the home to be permanently affixed to land you own or are buying. The right one comes down to a single question: are you financing real property, or just the home?

Title I: the home, with or without the land

Title I is designed for buyers who do not own land or who plan to keep the home in a manufactured home community. You can finance the home alone, a lot alone, or both together; if you lease the lot, FHA typically requires a lease with at least three years remaining. Loan amounts are capped well below a typical mortgage and terms are shorter, often up to 20 years. The home does not have to be classified as real property, which is what makes it usable on leased land.

Title II: a real mortgage on real property

Title II is the program most buyers picture when they think of an FHA loan. It treats the manufactured home like a site-built house, which means higher loan limits that follow standard FHA county limits and longer terms. In exchange, the home must be permanently attached to a foundation and titled as real property along with the land.

What both programs require

• A HUD-code home built on or after June 15, 1976, with its red HUD certification label and data plate intact.
• A credit score that typically allows 3.5% down at 580 or higher; FHA rules allow scores as low as 500 with 10% down, though lenders often set higher floors.
• The home used as your primary residence, not a vacation or investment property.
• FHA mortgage insurance, which adds an upfront premium plus an annual premium to your payment.