When you call a lender to inquire about a reverse mortgage on a manufactured home, you might hear that they don’t accept manufactured homes. Some lenders don’t do reverse mortgage loans on manufactured homes at all. The good news is that there are plenty of lenders that do allow manufactured homes, and the property type is definitely acceptable to HUD—with some exceptions.
Mobile vs. Manufactured Homes
Many customers use the term “mobile home” interchangeably with “manufactured home.” Wikipedia explains the difference well:
Technically, a mobile home and manufactured home are different entities. A mobile home is always constructed prior to June 1976. Homes constructed post June 1976, are almost categorically known as manufactured homes, meeting FHA certification requirements, and come with attached metal certification tags. Mobile homes permanently installed on owned land are rarely mortgageable, whereas FHA code manufactured homes are mortgageable through VA, FHA, and FNMA.
Once the tongue and axle are removed, the home is placed on a permanent foundation, and utilities are installed, it is no longer a “mobile home.”
Manufactured Home Requirements
Let’s review some of the other reverse mortgage financing requirements for manufactured homes. To be eligible, all manufactured homes must:
- Have a floor area of at least 400 square feet.
- Be built and remain on a permanent chassis.
- Display all the HUD tags on the outside of the home.
- Meet county and HUD requirements for any additions.
- Stay on the original site. The home cannot be installed or occupied at a new location.
Additionally, manufactured homes cannot be:
- Taxed by the county as a motor vehicle instead of real property.
- In a condo association.
- In a leasehold (manufactured home park where you lease instead of own the land).
- Manufactured homes located in a flood zone, partially or otherwise.
- On a property containing multiple manufactured homes (can be resolved, but case by case).
If your property meets all of the requirements above, you can continue pursuing a reverse mortgage.
A Note About Upfront Costs
We would be remiss not to point out that the upfront cost of obtaining a reverse mortgage loan can be more expensive for manufactured homes than other property types, because of the foundation inspection.
All manufactured homes are required to have a foundation inspection conducted by a licensed professional engineer. The inspection, conducted prior to the appraisal, is usually in the $300 to $400 range. Due to the rural nature of many manufactured homes, the appraiser often charges a higher fee, so the total cost for the appraisal can be $500 to $550. That’s a total out-of-pocket cost of $800 to $1,000 to obtain a reverse mortgage.
Manufactured Homes Are Not Off-Limits
If you hear that you can’t get a reverse mortgage loan on a manufactured home, don’t despair: it’s a common misconception. Some lenders don’t do them because of the very specific nature of eligibility on manufactured homes, but if you know that the home meets HUD requirements and you’re prepared to pay a little more for an inspection, there is no reason you can’t apply for a reverse mortgage loan for a manufactured home.