Most MLOs are familiar with FHA Title II mortgage financing, which applies to manufactured homes classified as real property. Title I is a different program: it provides personal property (chattel) financing for manufactured homes that are not permanently affixed to land owned by the borrower, such as homes on leased lots in manufactured home communities. Understanding the distinction matters because Title I loans have very different terms and approval requirements.
When Title I Applies
FHA Title I applies when the manufactured home is on leased land (not owned by the borrower) or where the home cannot be classified as real property. Title II requires the home to be on land the borrower owns, permanently affixed to a foundation, and classified as real property under state law. When those conditions are not met, Title I is the primary FHA option.
Title I Loan Parameters
Title I manufactured home loan limits are set by HUD and are updated periodically. Loan terms are limited compared to traditional mortgages. Manufactured home only loans have shorter maximum terms than loans that include the lot. Interest rates on Title I loans are typically higher than on real property mortgages because the collateral (a personal property item) has lower recovery value than real property in default.
- ✦Eligible collateral: manufactured homes as personal property; home need not be on owned land
- ✦Title II contrast: requires real property classification, owned land, and permanent foundation
- ✦Lender availability: far fewer lenders participate in Title I than Title II; specialized lenders required
- ✦Rate comparison: Title I personal property rates are typically higher than Title II real property mortgage rates
The Push Toward Real Property Classification
Lenders and borrowers are generally better served by converting a manufactured home to real property status where possible. This involves permanently affixing the home, retiring the title certificate, and recording a deed with the land. Once classified as real property, Title II FHA, conventional, VA, and USDA financing become available with better rates and terms than Title I can offer.
Aria can walk through manufactured home classification requirements and identify which financing path is available for a specific property and borrower scenario. Ask at vicariointel.com.
7-day free trial. No credit card required.
Ask Aria About Manufactured Home Financing →