Manufactured Homes & Condos: Approvals, HOAs & Appraisals
Manufactured Homes & Condos: Approvals, HOAs & Appraisals
Manufactured homes and condos can be great affordable housing options, but they come with unique mortgage approval requirements that trip up many buyers. Here's exactly what lenders look for in HOA approvals, project certifications, and appraisals—and how to avoid common pitfalls.
Quick Summary
- Manufactured homes: Must be on permanent foundation, meet HUD code, have proper title/ownership documents
- Condos: Project must be approved (FHA, VA, or conventional); HOA must meet financial/insurance requirements
- HOA reviews: Lenders check reserves, insurance, rental restrictions, pending litigation
- Appraisals: Both property types require specialized appraisals with specific inspection requirements
- Timeline: Condo/HOA reviews can add 2–4 weeks to your loan timeline; start early
Manufactured Home Approval Checklist
Foundation & Installation Requirements
- Permanent foundation: Home must be on a permanent, approved foundation (not just blocks or piers)
- HUD certification: Home must have HUD certification label (HUD tag) showing it meets federal standards
- Installation certificate: Proof of proper installation by licensed installer
- Title/ownership: Clear title showing home is real property (not personal property)
Common issue: If the home was originally titled as personal property (like a vehicle), it must be converted to real property before financing. This requires a title conversion process that can take weeks.
Property Type Classifications
Lenders distinguish between:
- Manufactured home (post-1976): Built to HUD code, can be financed with conventional/FHA/VA loans
- Mobile home (pre-1976): May not meet current standards; harder to finance
- Modular home: Built to local building codes (not HUD); typically easier to finance
Key difference: Manufactured = HUD code; Modular = local building codes. Lenders prefer modular homes because they're treated like site-built homes.
Loan Program Restrictions
- FHA: Allows manufactured homes on permanent foundations; requires HUD certification
- VA: Similar to FHA; must be on permanent foundation
- Conventional: Varies by lender; some have restrictions on age, condition, or location
- USDA: Allows manufactured homes in rural areas; must meet USDA property requirements
Condo Approval Checklist
Project Approval Status
Condos must be approved by the loan program you're using:
- FHA approval: Project must be on FHA approved condo list or go through spot approval
- VA approval: Project must be VA-approved or eligible for VA waiver
- Conventional approval: Project must meet Fannie Mae/Freddie Mac requirements
Critical: If the project isn't approved, you may need to:
- Wait for project approval (can take 30–60 days)
- Use a different loan program
- Find a different property
HOA Financial Requirements
Lenders review HOA financials to ensure the association is financially stable:
- Reserves: Typically need 10% of annual budget in reserves (varies by program)
- Delinquencies: No more than 15% of units can be 60+ days delinquent on HOA fees
- Budget: Current year budget must be approved and adequate
- Insurance: Master policy must meet lender requirements (typically $1M+ liability)
Red flags: Low reserves, high delinquency rates, pending special assessments, or inadequate insurance can kill a loan.
HOA Legal Requirements
- Rental restrictions: Some lenders restrict projects with >50% rental units
- Pending litigation: Major lawsuits against the HOA can delay or prevent approval
- Right of first refusal: Some programs don't allow projects with ROFR clauses
- Commercial space: Too much commercial space (>25%) can be an issue
Single-Unit Approval Options
If the project isn't approved, you may have options:
- FHA spot approval: One-time approval for your specific unit (if project meets basic requirements)
- VA waiver: VA may approve individual units in non-approved projects
- Conventional review: Some lenders offer project reviews for conventional loans
Timeline: Spot approvals/waivers can add 2–4 weeks to your loan process.
Appraisal Requirements
Manufactured Home Appraisals
- Foundation inspection: Appraiser must verify permanent foundation installation
- HUD tag verification: Must confirm HUD certification label is present
- Comparable sales: Appraiser uses other manufactured homes as comparables (not site-built)
- Condition assessment: Home must be in good condition; significant repairs can be required
Challenge: Manufactured homes in rural areas may have limited comparable sales, which can affect value.
Condo Appraisals
- Unit inspection: Standard interior/exterior inspection of your unit
- Common area review: Appraiser reviews building condition, amenities, maintenance
- Comparable sales: Uses other units in same project or similar nearby projects
- HOA review: Appraiser notes HOA fees, amenities, and project condition
Common issue: Low appraisals can occur if recent sales in the project were distressed or if the project has maintenance issues.
Common Approval Pitfalls
Manufactured Homes
- Personal property title: Home still titled as vehicle/mobile home instead of real property
- Foundation issues: Temporary foundation or improper installation
- Missing HUD tag: Can't verify HUD certification
- Age/condition: Homes >20 years old may need significant repairs or may not qualify
- Land ownership: Must own the land; some lenders don't finance manufactured homes on leased land
Condos
- Unapproved project: Project not on approved list and spot approval not available
- Low reserves: HOA reserves below required threshold
- High delinquency: Too many units behind on HOA fees
- Pending litigation: Major lawsuit against HOA
- Rental restrictions: Project has >50% rental units (some programs)
- Inadequate insurance: Master policy doesn't meet lender requirements
Timeline Considerations
- Condo project approval: 30–60 days if project needs approval
- HOA document review: 1–2 weeks for lender to review HOA financials/legal docs
- Manufactured home title conversion: 2–4 weeks if home needs to be converted from personal to real property
- Appraisal: 1–2 weeks (may be longer for manufactured homes in rural areas)
Pro tip: Start the approval process early. If you're buying a condo, check project approval status before making an offer. For manufactured homes, verify foundation and title status during due diligence.
What To Do Next
- Check project approval — If buying a condo, verify the project is approved for your loan program before making an offer
- Review HOA documents — Request HOA financials, budget, and meeting minutes during due diligence
- Verify foundation/title — For manufactured homes, confirm permanent foundation and real property title
- Talk with Harry — Get guidance on your specific property and loan program requirements
Quick FAQ
Can I finance a manufactured home on leased land?
It depends on the loan program and lender. FHA and VA typically require you to own the land. Some conventional lenders allow manufactured homes on leased land, but terms are stricter and rates may be higher.
What if my condo project isn't approved?
You have options: (1) Request spot approval (FHA) or waiver (VA) for your specific unit, (2) Use a different loan program that may have different approval requirements, (3) Wait for project approval (can take 30–60 days), or (4) Find a different property in an approved project.
How do I check if a condo project is FHA-approved?
Check the FHA condo approval list at the HUD website, or ask your lender to check. Your real estate agent may also know the project's approval status.
Can I get a VA loan on a manufactured home?
Yes, if the home is on a permanent foundation, has HUD certification, and meets VA property requirements. The process is similar to FHA but may have additional VA-specific requirements.
What happens if the HOA has low reserves?
Low reserves can delay or prevent loan approval. Some lenders may require the HOA to increase reserves or may require you to pay additional fees. In extreme cases, you may need to find a different property or use a different loan program.
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Educational only; not a commitment to lend. Qualification and terms subject to credit, income, collateral, and underwriting approval. Equal Housing Lender. Rockhouse Mortgage, LLC. NMLS #2469785.