USDA Mortgages provide low-income families with an exceptional way to purchase a home. With 100% financing, low-interest rates, and simple qualification guidelines, this program makes becoming a homeowner much easier than any other program available. Even better news is the fact that manufactured homes can be included in this financing program, as long as they meet the specific requirements created by the USDA.
Manufactured homes must meet the Federal Manufactured Home Construction and Safety Standards in order to be eligible. These standards, which were set by HUD, pertain to the construction, design, and performance of the home. In order to ensure that the homes meet these guidelines, they will be issued a red plate, which gets affixed to the front of the unit to show that it meets the necessary requirements.
Size of the Manufactured Homes
The USDA has specific size guidelines in terms of manufactured homes. The sizes differ depending on if you purchase a single-wide or double-wide home. The single-wide home must be at least 12 feet wide and have a minimum of 400 square feet of living space. The double-wide home must be at least 20 feet wide and have a minimum of 400 square feet of living space.
The site where the manufactured home is placed must be permanent. It must be built on a permanent foundation. The site itself must not be so large that it can be subdivided and the value of the site must be modest. Generally, it needs to be worth no more than 30 percent of the market value of the home that is placed on it.
The site must be considered rural, as well. This is determined by the USDA and can be confirmed by visiting the USDA Eligibility Map. The site the home is constructed on must have street access and all of the streets must be paved. The lowest point of the home, whether the finished grade or living space floor, must be higher than the 100-year flood plain. The site must also have proper access to water and wastewater disposal.
How to Use the USDA Loan for the Site and Home
The USDA loan should be used to purchase the home and the site if the site is not already owned. The home must also be brand new – existing manufactured homes are not an allowed purchase. The proceeds of the loan can be used to develop the site, within reason. The funds cannot be used to purchase furniture or any other items for the interior of the home. All work that is to be done on the home with the funds from the USDA loan must be under one contract as well.
Securing the Financing
Securing USDA financing is not as complicated as some of the other government-backed programs available. The USDA allows applicants several concessions, including the ability to use household income from people that live in the home but are not on the loan. The income cannot be included in the qualifying factors, but can be used as a compensating factor. If you are borderline on being able to qualify for the loan, the additional household income could help to push you to the approval.
Perhaps the largest hurdle to overcome with USDA financing for manufactured homes is the need to find an approved dealer. You cannot just purchase your manufactured home from any dealer and expect the USDA to provide financing. You must find a USDA approved dealer to ensure that the process goes smoothly. The funds will not be disbursed until the home is securely attached to the permanent site and all liens are removed from the property. The lender will need to determine that all contractors and such are paid and are not placing mechanic’s liens on the property for the work they did. The final requirement is that the dealer provides the lender with proof of the warranty for the home as well as a signed document stating that there was no damage that occurred to the home during the transport to its permanent location.
If you are in the market for a manufactured home, USDA financing could be a very lucrative way to purchase your home. Make sure you deal with a USDA approved lender that has experience in this type of home in order to ensure the smoothest process in your home buying journey.