Freddie Mac Guidelines: Manufactured Home Mortgage Eligibility

What Mortgage Products Work for Manufactured Homes

Fannie Mae severely limits the types of loans available for manufactured homes. You can only get a fully amortizing fixed-rate mortgage or one of two specific adjustable-rate mortgages: a 7/6-Month ARM or 10/6-Month ARM.

The 7/6-Month ARM has a fixed rate for the first seven years, then adjusts every six months after that. The 10/6-Month ARM works the same way but stays fixed for ten years before adjusting every six months.

Say you're buying a $200,000 manufactured home as your primary residence. You could get a 30-year fixed-rate mortgage at today's rates, or you might choose a 7/6 ARM if you plan to sell or refinance within seven years and want the lower initial rate.

Mortgage Types That Don't Work

Most specialty mortgage products are off the table for manufactured homes. You cannot get a HomeOne mortgage, which is Fannie Mae's program for first-time buyers with flexible down payment requirements. Community Land Trust mortgages are also prohibited.

Investment property financing is completely unavailable. If you want to buy a manufactured home as a rental property, you'll need to look at other loan programs or portfolio lenders who keep loans on their books.

Cooperative housing units secured by manufactured homes cannot be financed through Fannie Mae. This affects some manufactured home communities where residents own shares in a cooperative rather than owning their individual lots.

The CHOICEHome Exception

CHOICEHome is Fannie Mae's designation for manufactured homes that meet enhanced construction and energy efficiency standards. These homes get access to mortgage products that regular manufactured homes cannot use.

If your manufactured home has CHOICEHome certification, you can get a HomeOne mortgage or a Community Land Trust mortgage. The home must meet specific construction requirements and energy efficiency standards to qualify for this designation.

Your builder or dealer can tell you if a particular model qualifies as a CHOICEHome. The certification must be in place before closing.

Why Previously Moved Homes Are Ineligible

Fannie Mae will not finance any manufactured home that was moved from its original installation site and was previously occupied. This rule eliminates most used manufactured homes from the resale market.

The home must be new and installed on its first permanent site to qualify for Fannie Mae financing. Even if the home was only moved once and is in excellent condition, it becomes ineligible for conventional financing.

This creates a significant challenge in the manufactured housing market. Say you find a five-year-old manufactured home that the current owner wants to sell. Even if it's in perfect condition and properly installed on a permanent foundation, you cannot get a Fannie Mae loan to buy it.

Renovation and Modification Restrictions

Renovation mortgages that combine purchase and improvement financing are not available for manufactured homes. You cannot use Fannie Mae's renovation loan programs to buy a manufactured home and finance improvements in a single transaction.

Seller-owned converted mortgages and seller-owned modified mortgages are also prohibited. These are specialized products where the seller holds part of the financing, and they simply don't work with manufactured home loans.

Documents You'll Need

Your lender will require standard mortgage documentation plus manufactured home-specific paperwork. You need the manufacturer's certificate of origin, which proves the home was built to HUD standards. This document is like a title for the home itself.

You'll also need proof that the home is properly installed on a permanent foundation. This typically requires an engineer's certification or inspection report confirming the foundation meets local building codes and HUD installation standards.

If you're claiming CHOICEHome status for access to additional mortgage products, you need the official CHOICEHome certification from the manufacturer.

Affordable Second Mortgage Options

Home Possible mortgages secured by manufactured homes can include affordable second mortgages, but only for primary residences. The second mortgage must meet all requirements in Fannie Mae's affordable seconds program [[Chapter 4501]].

This option helps buyers reduce their down payment or eliminate private mortgage insurance. The second mortgage typically comes from a government agency, nonprofit organization, or employer assistance program.

Both the first and second mortgages must close simultaneously. You cannot add an affordable second mortgage after your primary loan closes.

Common Problems and Gotchas

The biggest surprise for manufactured home buyers is discovering that most used homes cannot be financed with conventional loans. This forces buyers into the new home market or alternative financing with higher rates and shorter terms.

ARM restrictions also catch some buyers off guard. While other property types can use various ARM products, manufactured homes are limited to just two specific ARM types. If you want a 5/1 ARM or other ARM structure, you'll need a different loan program.

Foundation requirements create another common stumbling block. The home must be on a permanent foundation that meets both HUD standards and local building codes. Homes on temporary foundations, piers, or blocks typically don't qualify.

Zoning issues can also derail manufactured home loans. Some areas restrict manufactured homes to specific zones or require special permits. Your lender will verify that the home's location complies with local zoning before approving the loan.

References

For the official guidelines, see 5703.5: Eligible and ineligible Mortgages for Mortgages secured by Manufactured Homes in the Fannie Mae Selling Guide.