FAQ

If homeownership feels like it’s beyond your reach, don’t throw in the towel just yet on the American Dream. In the face of an ever-widening housing affordability gap, there are options you may not have considered. Manufactured homes (factory-built homes) are commonly available at lower monthly payments than what it costs to rent, providing an affordable path to homeownership for millions of Americans. Manufactured homes can be found anywhere in the country, in rural, suburban and urban communities. There are 8.6 million manufactured homes nationwide, representing nearly 10 percent of the nation’s housing stock. These days, manufactured homes are being built with quality construction to meet rigorous federal standards for safety, installation and construction. They come with features that today’s homebuyers want like luxury bathrooms and state-of-the-art kitchens with energy-efficient appliances. What’s more, many are often situated in communities with swimming pools, playgrounds and clubhouses. While these amenities may sound like they come with a hefty price tag, manufactured homes provide quality housing at a lower cost. Indeed, the average price of a new, single-section manufactured home is less than $46,700 without land, and $89,500 for a multi-section, compared to $286,814 without land for a site-built home. It’s important to remember that the affordability of manufactured homes is not a product of lesser quality, but rather the efficient way the homes are produced, a savings that is passed on to the homebuyer. The terms of a manufactured home purchase differ from site-built homes. Be sure to ask the right questions at signing, including whether the home and its components come with warranties. Manufactured homes can be found anywhere in the country, in rural, suburban and urban communities. If you are ready to take the step of saying goodbye to writing rent checks, do your research to discover the varied paths to affordable homeownership available today.

One of the many advantages of buying a manufactured home is the cost compared to both site-built homes and apartment rentals. For starters, manufactured homes typically have more space and more amenities for the dollar compared to site-built homes and apartment rentals. On top of that, rental rates in most markets are rising at an alarming rate. Manufactured homes typically cost less than site-built homes, both on a square-foot basis and in total. Manufactured homes cost half as much per square foot than new site-built housing construction. The average consumer sales price for a new single-section manufactured home was about $46,700 in 2016, and the average price of a new multi-section manufactured home was about $89,500. Here’s a typical scenario. For a chattel loan of $40,000 with a $5,000 down payment and 10.5 percent interest rate over 25 years for a three bedroom, two bathroom manufactured home, the monthly payment would be $377.67. The closing costs for this loan would be between $1,000 and $1,500 depending on the state, the lender and your credit profile. The site rent would be $350.00, for a total housing payment of $727.67. Compare that to the average adjusted rent for a two-bedroom apartment of $1,228 per month in a market like Minneapolis/St. Paul, MN. For a $245,700 site-built home in the same market with a 10 percent down payment of $24,570, the loan amount would be $221,130. At a 4 percent interest rate over 25 years, the monthly payment amount would be $1,167.21. The closing costs for this loan would be between $2,000 and $3,000 depending on the state, the lender and your credit profile. In this example, the manufactured home is the most affordable option.

Manufactured homes provide quality housing and an opportunity for home-ownership. They often cost less than renting, and can offer more square footage and distance from neighbors than an apartment.  The cost per square foot for a new manufactured home can be up to 50 percent less than the cost of a comparable site-built home, excluding land costs.

Most manufactured homes are sold through retail sales centers, many of which are independently owned and operated. Others are owned and operated by a manufacturer. In some states, you may also buy from a manufactured home community owner or developer, or if you’re purchasing a previously owned home, a real estate agent. Most states do not allow you to purchase a home directly from the manufacturer. Retailers offer a variety of products and services, including helping you customize the home to fit your needs and budget. Typically, the retailer is also responsible for coordinating the delivery and installation of your home. And, once you’ve moved in, the retailer is often the contact for warranty service.

Most states have laws that govern the installation of a new manufactured home. Your retailer or the subcontractor installing the home is responsible for ensuring that the home is installed in accordance with state regulations and the manufacturer’s installation instructions or with an installation designed and approved by a licensed, registered engineer. The proper method of installing the home will depend on the home’s design and the location’s conditions, such as climate and soil type. Depending on the type of loan used to finance the home, the lender may have some specific requirements for the foundation and installation of the home as well.

Most manufacturers now offer warranties to guarantee the quality, workmanship, and major heating and cooling systems of the home for a specified time, usually ranging from one to five years. This warranty also tells the homebuyer what to do if a problem arises. Makers of the appliances provided in the homes also provide either “full” or “limited” warranties. There are major differences among warranties and these warranties should be provided to you in writing. The retailer also has distinct responsibilities in the installation and servicing of the home. Be sure to have the retailer clearly state in writing its responsibilities and warranty coverage for the home’s transportation and installation.

Generally, a home is a great investment. Appreciation on any home — either site-built or manufactured — is affected by the similar factors: the desirability and stability of the community, supply and demand for homes in the local market, location and maintenance and upkeep of the home. When properly installed and maintained, today’s manufactured homes can appreciate the same as surrounding site-built homes.

Just as there are choices when you buy a site-built home, there are a variety of financing options when you buy a manufactured home.  If you are buying the home and land together, or plan to place the home on land you already own, some financial institutions offer traditional real estate mortgages with similar interest rates. Should you be purchasing the manufactured home separately from the land on which it will be located, the home will probably be financed as a personal property manufactured home loan, usually with a somewhat higher interest rate and the down payment amount will reflect the amount of the entire loan, including the home and land costs being financed. FHA-insured and Department of Veterans Affairs-guaranteed (called FHA and VA) loans are available to manufactured home buyers. These types of loans may offer lower interest rates or lower down payment requirements if available in your area. They require more paperwork during the credit application and approval process and, therefore, may take longer for approval than a conventional loan.

When you are ready to buy a manufactured home, the more you have your financial situation in order, the better off you will be. Depending on the type of loan you are eligible for, it is important that you have money saved for the down payment and closing costs. Be sure you understand your credit score, which is a key factor that lending institutions use to determine the terms of your loan. Before you apply for credit, gather your bank statements, pay stubs, tax returns and other financial records. The more prepared you are, the faster you can get the process under way, know the budget you are working with, and get pre-approved.  The best way to determine your budget is to get pre-approved by a lender. This will help you know how much you can afford based on your income and your current financial situation. This also gives you the opportunity to shop around and learn more about the various lending products you may be eligible for — from conventional loans to VA and FHA loans. Additionally, most banks have a mortgage financing checklist that will likely be applicable to most types of manufactured housing loans to help you through the process.

There’s an old stereotype that needs to be cleared up. Manufactured homes (those built after 1976) are not more vulnerable to natural disasters than site-built homes. The fact is that tornadoes or hurricanes do not discriminate as to what types of homes or buildings they destroy. The only safe place to be during a tornado is in appropriate shelter.

The building materials in today’s manufactured homes are the same as those used in site-built homes. The homes are engineered for wind safety and energy efficiency based on the geographic region in which they are sold. For example, in areas prone to hurricane-force winds (Wind Zones II and III of the HUD Basic Wind Zone Map), the standards for manufactured homes are comparable to the current regional and national building codes for site-built homes.  Manufactured homes are designed and constructed to withstand wind speeds of 150 miles per hour in Wind Zone 2 and 163 miles per hour in Wind Zone 3. In fact, during the hurricanes that struck Florida in 2004, not one manufactured home built and installed after 1994 was destroyed by hurricane force winds. What that means is, the construction standards for manufactured housing across the country are subject to robust compliance and quality assurance regulations, sometimes more stringent than those for traditional site-built homes.

Anchoring is what holds manufactured homes firmly in place. Anchors are steel rods several feet long that screw into the ground, and steel straps fasten around the frame of the mobile home and are attached to the anchors with adjustable bolts. In 2007, the federal government established standards requiring all new manufactured homes to meet minimum requirements for installation and anchoring in accordance with its structural design and windstorm standards. In addition, states have the authority to establish additional installation standards above the minimum federal standards. State governments may establish installation and anchoring requirements for homes depending on soil conditions and other factors in their state. The industry supports state efforts to ensure that older homes are retrofitted with proper installation technologies to ensure their safety.

Manufactured housing is one of the most affordable options for Americans to achieve the American dream of home ownership. New homes cost an average of $70,600, compared with $287,000 for a single-family site-built home. There’s also more home for the buck: Manufactured homes can often cost 50% less per square foot to build than site-built homes, despite comparable interior finish-out. And, today’s new homes average over 1400 square feet of interior space. The median annual income for those who choose the option of a manufactured home is $34,700, but almost a quarter of all manufactured home owners have a median income of more than $50,000. With lower costs, manufactured home owners are able to save more than they would with a site-built home or by renting an apartment.

Living in a land-lease community, a homeowner can park by his or her own home.  There is a yard and outdoor space.  There are no shared walls.  Best of all, residents in a manufactured home community truly are part of a community.  In many communities, there are social or activity clubs, fitness amenities, and friendly and caring neighbors.  “Sense of belonging” is among the most frequent responses about why residents enjoy living in a land-lease community.

The Department of Housing & Urban Development has regulated and ensured standards for manufactured housing since 1976. All manufactured homes must meet this code.The performance code involves every aspect of the home including heating and air conditioning, fire safety, plumbing, electrical systems, structural design, construction, energy efficiency and even the transportation from factory to site. Today’s manufactured homes are built to a standard of safety comparable to, and in some cases exceeding, standards for site-built housing.

The construction of a manufactured home, from factory to finish can actually yield up to 90% less waste and environmental impact than site-built housing, owing to the efficiency of factory construction and the high standards of the HUD code. Manufactured homes and manufactured housing communities are far more green and eco friendly than site-built communities. Manufactured home construction uses fewer materials without compromising the home’s safety or structure. Key heating, cooling and utility components of manufactured homes are energy-efficient. Further, because manufactured homes are built in a factory and assembled on site, the environmental impact of transportation of the home is magnitudes less than the impact of the moving raw materials to the site to construct a home.

“Consumers: MHI: Manufactured Housing Institute.” MHI | Manufactured Housing Institute, https://www.manufacturedhousing.org/consumers-2/.