FHA Proposes to Adjust Title 1 Manufactured Home Loan Program Loan Limits Annually
A majority of manufactured homes are financed utilizing a home-only (chattel loan), similar to financing automobiles, boats, recreational vehicles, etc., with higher interest rates and shorter terms than conventional site-built homes.
Most manufactured home industry personnel and manufactured home buyers are unaware of FHA financing available for manufactured homes as personal property sited on land not owned by the home purchaser.
Yes, there is such a program that has been available since 2008. However, the FHA Title 1 program is seldom (rarely) used as the established loan limits are far below any reasonable opportunity to utilize.
That may be changing in the near future.
The Federal Housing Administration (FHA) announced on October 18, 2022, the publication of a proposed rule in the Federal Register to increase and index the loan limits for its Title 1 Manufactured Home Loan Program, which insures loans used to finance manufactured homes titled as personal property.
“Adjusting loan limits to current market conditions will make Title 1 a much more useful source of affordable loan financing for manufactured homes,” said Federal Housing Commissioner Julia Gordon. “This proposal is the next step in FHA’s ongoing work to support manufactured housing as an affordable and attractive option in a challenging housing market.”
Loan limits for the Title 1 Manufactured Home Loan Program were last updated by the Housing and Economic Recovery Act (HERA) of 2008. The proposed methodology will be used to establish indexes that annually calculate and adjust loan limits using sales prices, the number of sections of the manufactured home, and property data collected by the U.S. Census Bureau. FHA’s proposal includes separate indexes for single-section manufactured homes and multi-section manufactured homes for the three loan categories covered under the Title 1 Manufactured Home Loan Program:
- Manufactured Home Loans are used for the purchase of manufactured homes only;
- Manufactured Home Lot Loans are used for the purchase or refinance of the land where the home will be installed;
- Manufactured Home and Lot Combination Loans are used for the purchase of both the home and the land on which the home will be installed.
In November 2021, FHA published a revised and enhanced Title 1 Manufactured Home Loan Program policies in its Single Family Policy Handbook 4000.1. These changes made it easier for lenders to understand and use the programs while providing expanded eligibility requirements for loan financing that are consistent with criteria for income and property valuations used in real-estate mortgage financing.
The following are projected “example” loan limits–Manufactured home Loan Program. Based on 2021 data from the U.S. Census Bureau. Current limits per the 2008 Housing and Economic Recovery Act (HERA)
Single section (unit only) Current Limits (per HERA) – $69,678
Example 2022 loan limit – $72,600
Multi-section (home only) Current Limits (per HERA) – $69,678
Example 2022 loan limit – $132,000
Manufactured home (lot only) Current Limits – $23,226
Example 2022 loan limit – $37,205
Single section home- land combination Current limit – $92,904
Example 2022 loan loan limit – $109,805
Multi-section home-land combination Current loan limit – $92,904
Example 2022 loan limit – $169,205
Notes:
- Indexing to occur at the beginning of each year, based on the weighted average price data for the most recent 12 months available from the Manufactured Housing Survey.
- Indexing to occur at the beginning of each year, based on the median sales price of the most recent 12 months available from the New Residential Sales data.
As discussed in the proposed rule, HUD would annually adjust future loan limits using the above methodology and post new limits, including an explanation of the calculation by notices such as a Title 1 letter and on HUD.gov.
