Buying a manufactured home: land, labels and loans

Mortgage or chattel loan

There are two broad ways to finance a manufactured home:

A mortgage covers both the home and the land, with both treated as real estate. It works much like a loan on a site-built house, and the CFPB has found mortgages generally come with more consumer protections than chattel loans.

A chattel loan covers only the home, treated like personal property. The land is either owned separately, leased or rented in a manufactured home community.

The CFPB studied this market using Home Mortgage Disclosure Act data and reported that around 42 percent of manufactured home purchase loans were chattel loans. It found that chattel loans generally have higher interest rates and fewer consumer protections than mortgages, and that owners who do not own the land under their home are more likely to see it lose value and have fewer protections if they fall behind.

If you have a choice, a home on land you own and titled as real property usually opens up more loan options.

Fannie Mae's eligibility rules

Fannie Mae's Selling Guide, section B5-2-02, sets out which manufactured home loans it buys. The core requirement is that the loan is secured by both the home and your interest in the land, and that both are legally classified as real property under state law. Other conditions include:

Further limits on loan-to-value are in Fannie Mae's Eligibility Matrix, and section B2-3-02 covers property standards for factory-built housing. FHA, VA and USDA have their own manufactured home rules.

The HUD label and data plate

Manufactured homes built to HUD's code carry two pieces of identification. Your lender, appraiser and insurer may all ask about them.

The certification label, often called the HUD tag, is a metal plate about 2 by 4 inches attached to the outside of the home. It has a three-letter code and a six-digit number.

The data plate is a paper sheet inside the home, usually in a kitchen cabinet, on or near the main electrical panel or in a bedroom closet. HUD says it lists the manufacturing plant, the serial number and model, the date of manufacture and maps showing the wind zone, snow load and roof load the home was built for.

If the label is missing, HUD does not reissue it. HUD says you can request a Letter of Label Verification from the Institute for Building Technology and Safety when the historical information can be found. Ask the seller to locate both before closing, since a missing label can complicate financing.

What to check before you offer

• The land. Is it included, and how is it titled? If it is leased or rented, read the lease and community rules.
• Titling. Ask the seller or a title company whether the home is titled as real property or personal property. Converting from one to the other follows state rules.
• Installation and foundation. Lenders and programs care how the home is attached to its foundation. An inspector familiar with manufactured homes can check it.
• Age and condition. Look at the data plate date and ask about roof, plumbing and heating updates.
• Insurance. Ask insurers for quotes early, since coverage options and costs can differ from site-built homes.

The bottom line

A manufactured home on land you own, titled as real property, can often be financed with a regular mortgage. A home on leased or rented land usually means a chattel loan, which the CFPB has found generally costs more and offers fewer protections. Confirm the land and title status, find the HUD labels and data plate and get an inspection before you commit.