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FHA Programs
FHA Overview
The Federal Housing Administration (FHA) insures mortgages on single family and multifamily homes, including manufactured homes and hospitals. FHA mortgage insurance provides lenders with protection against losses as the result of homeowners defaulting on their mortgage loans. The lenders bear less risk because FHA will pay a claim to the lender in the event of a homeowner’s default. Loans must meet certain requirements established by FHA to qualify for insurance.
Unlike conventional loans that adhere to strict underwriting guidelines, FHA-insured loans require very little cash investment to close a loan. There is more flexibility in calculating household income and payment ratios. The cost of the mortgage insurance is passed along to the homeowner and typically is included in the monthly payment. In most cases, the insurance cost to the homeowner will drop off after five years, or when the remaining balance on the loan is 78% of the value of the property - whichever is longer.
FHA is the only government agency that operates entirely from its self-generated income and costs the taxpayers nothing. The proceeds from the mortgage insurance paid by the homeowners are captured in an account that is used to operate the program entirely.
Over the past two years, in the aftermath of the housing crisis, FHA has made significant changes to improve the health of the FHA program. In January of 2010, FHA announced that the mortgage insurance premium (MIP) will be increased by 50 bps to 2.25% to build up capital reserves and bring back private lending. New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%. FHA has also proposed reducing allowable seller concessions from 6% to 3%, however this issue remains under great scrutiny since it would severely hamper the mortgage industry’s ability to reach many borrowers.
FHA Programs
FHA is an essential source of consumer financing for manufactured housing. Because a manufactured home may be titled as either real property or personal property, FHA has created two distinct programs. For personal property, there is the FHA Title I Program, and for real property, there is the FHA Title II Program.
You should approach an FHA-approved lender to get the details of the program and also to know whether you can qualify for it.
FHA Title I
HUD has been providing loan insurance on manufactured homes under FHA Title I since 1969. By protecting mortgage lenders against the risk of default, HUD's participation has encouraged them to finance manufactured homes, which had traditionally been financed as personal property through comparatively high-interest, short-term consumer installment loans. The program thereby increases the availability of affordable financing and mortgages for buyers of manufactured homes and allows buyers to finance their home purchase at a longer term and lower interest rate than with conventional loans.
The FHA does not issue the loans, but rather insures the lender against loss if the borrower defaults. Credit is granted based upon the applicant's credit history and ability to repay the loan in regular monthly installments. A Title I loan may be used for the purchase or refinancing of a manufactured home, a developed lot on which to place a manufactured home, or a manufactured home and lot in combination. The home must be used as the principal residence of the borrower. Title I can also be used in conjunction with a 203k Rehabilitation Mortgage.
For more information on FHA Title I loan program, you can call HUD at (800) 767-7468 or visit the HUD website, Click Here!
FHA Title II
FHA also insures manufactured homes treated as real estate through the FHA Title II Program. FHA offers 30 year mortgages to manufactured homes that meet certain requirements, including being taxed as real estate, the mortgage must cover both the home and the land together, and must be installed in accordance with the HUD Guide to Permanent Foundations. For FHA Title II loans, FHA assumes 100% of the loss associated with a loan.
For more information on FHA Title II loan program, call HUD at (800) 767-7468 or visit the HUD website, Click Here!
The Federal Housing Administration (FHA) insures mortgages on single family and multifamily homes, including manufactured homes and hospitals. FHA mortgage insurance provides lenders with protection against losses as the result of homeowners defaulting on their mortgage loans. The lenders bear less risk because FHA will pay a claim to the lender in the event of a homeowner’s default. Loans must meet certain requirements established by FHA to qualify for insurance.
Unlike conventional loans that adhere to strict underwriting guidelines, FHA-insured loans require very little cash investment to close a loan. There is more flexibility in calculating household income and payment ratios. The cost of the mortgage insurance is passed along to the homeowner and typically is included in the monthly payment. In most cases, the insurance cost to the homeowner will drop off after five years, or when the remaining balance on the loan is 78% of the value of the property - whichever is longer.
FHA is the only government agency that operates entirely from its self-generated income and costs the taxpayers nothing. The proceeds from the mortgage insurance paid by the homeowners are captured in an account that is used to operate the program entirely.
Over the past two years, in the aftermath of the housing crisis, FHA has made significant changes to improve the health of the FHA program. In January of 2010, FHA announced that the mortgage insurance premium (MIP) will be increased by 50 bps to 2.25% to build up capital reserves and bring back private lending. New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%. FHA has also proposed reducing allowable seller concessions from 6% to 3%, however this issue remains under great scrutiny since it would severely hamper the mortgage industry’s ability to reach many borrowers.
FHA Programs
FHA is an essential source of consumer financing for manufactured housing. Because a manufactured home may be titled as either real property or personal property, FHA has created two distinct programs. For personal property, there is the FHA Title I Program, and for real property, there is the FHA Title II Program.
You should approach an FHA-approved lender to get the details of the program and also to know whether you can qualify for it.
FHA Title I
HUD has been providing loan insurance on manufactured homes under FHA Title I since 1969. By protecting mortgage lenders against the risk of default, HUD's participation has encouraged them to finance manufactured homes, which had traditionally been financed as personal property through comparatively high-interest, short-term consumer installment loans. The program thereby increases the availability of affordable financing and mortgages for buyers of manufactured homes and allows buyers to finance their home purchase at a longer term and lower interest rate than with conventional loans.
The FHA does not issue the loans, but rather insures the lender against loss if the borrower defaults. Credit is granted based upon the applicant's credit history and ability to repay the loan in regular monthly installments. A Title I loan may be used for the purchase or refinancing of a manufactured home, a developed lot on which to place a manufactured home, or a manufactured home and lot in combination. The home must be used as the principal residence of the borrower. Title I can also be used in conjunction with a 203k Rehabilitation Mortgage.
For more information on FHA Title I loan program, you can call HUD at (800) 767-7468 or visit the HUD website, Click Here!
FHA Title II
FHA also insures manufactured homes treated as real estate through the FHA Title II Program. FHA offers 30 year mortgages to manufactured homes that meet certain requirements, including being taxed as real estate, the mortgage must cover both the home and the land together, and must be installed in accordance with the HUD Guide to Permanent Foundations. For FHA Title II loans, FHA assumes 100% of the loss associated with a loan.
For more information on FHA Title II loan program, call HUD at (800) 767-7468 or visit the HUD website, Click Here!