Homeownership has always been a major part of the ?American Dream.? While conventional site-built housing has become out of reach for many Americans, manufactured housing has made homeownership attainable for many low- and moderate-income families priced out of the housing market.
A manufactured home is constructed entirely in a factory environment in accordance with the Manufactured Home Construction and Safety Standard Act of June 15, 1976, a federal building code administered by the Department of Housing and Urban Development (HUD) which regulates the design, construction, and installation of manufactured homes. Homes are then sited or installed in a manufactured home community on land owned by the homebuyer, or where the resident leases a lot from the community owner. Typically these leases include ground rent for the home site and fees for common services.
According to the U.S. Census Bureau, the more than 22 million Americans that live in manufactured homes have a median household income of $30,000.1 This is nearly half of the median annual household income, $64,000, for those living in site-built single-family homes. And, with the cost of a new manufactured home averaging nearly $72,000?versus nearly $385,000 for a new single-family home?the affordability of manufactured housing is hard to ignore.2
Manufactured housing is viewed as an affordable and cost-effective alternative to site-built housing. According to the Consumer Financial Protection Bureau, ?on a square-foot basis, manufactured homes cost less than half as much as the estimated $94 per square foot for new site-built housing construction in 2013.? And, "typical all-in housing costs for manufactured-home owners in non-metropolitan areas were over a third less than the costs for households that owned a site-built home in a non-metro area ($608 compared with $948), and the gap is even wider for those residing within metro areas."3
While less expensive to purchase than traditional housing, manufactured homes are substantially more difficult and expensive to finance. Most manufactured homes are considered personal property (chattel) as opposed to real estate and often do not qualify for conventional mortgages.4 The most common method of financing a manufactured home is through a chattel loan, which is not secured by real property. Chattel loans have interest rates that can range from 3-4 percent higher than a traditional mortgage loan, and may carry interest rates into the double digits, which can effectively negate the homes affordability advantage.
There are substantially fewer lenders offering manufactured home chattel loans than there are mortgage lenders, but a growing number of lending institutions are providing conventional and government-insured financing for prospective owners. Manufactured homes are eligible for government-insured loans offered by the Federal Housing Administration (FHA), the Veterans Administration (VA), and the U.S. Department of Agriculture (USDA).
Certified Community Development Financial Intuitions have also begun to be more active in providing affordable financing options for people looking to purchase manufactured housing, including:
Missoula Federal Credit Union: a locally-owned, not-for-profit, financial cooperative, Missoula Federal Credit Union is Montana?s largest certified Community Development Financial Institution (CDFI) and its second largest credit union. Their mission is to be a force for good in banking in the communities they serve and in the lives of their members. This institution provides affordable financing for manufactured housing loans. This is a new program with roughly 10 loans totaling $500,000 in their portfolio.
ROC USA was founded May in 2008 by national and regional nonprofits that joined together to serve one mission: to make quality resident ownership viable nationwide and to expand economic opportunities for homeowners in manufactured (mobile) home communities. This organization provides technical assistance and financing for residents of these communities to form cooperatives and purchase the neighborhoods in which they live. Cooperative-owned communities provide residents with greater authority over the management of, and costs associated with living in, a manufactured home community. This often leads to a higher level of affordability and stability for residents.
Funding Partners (FP) is a certified CDFI with a mission is to coordinate, enhance and leverage resources to increase the affordable housing stock available to very low- to moderate-income families and individuals. FP has developed two manufactured housing loan programs to assist consumers in purchasing homes. Their Manufactured Home Loan Program includes benefits for qualified participants, such as the ability to secure loans with fixed interest rates, no minimum credit score, the ability to borrow up to 90 percent of the home?s purchase price, and the ability to borrow as much as $100,000 with approved credit. Their Family Promise Hope for Homes Program provides financing to enable eligible participants to purchase homes located within participating communities in Colorado Springs, CO. Participants of both programs must complete financial education/counseling prior to loan closing. This combination of financial support and education works to ensure that program participants have the funding to purchase their homes, as well as the financial education necessary to stay in those homes.
Established in 1983, the New Hampshire Community Loan Fund (CLF) is a certified CDFI. CLF has developed the Welcome Home Loans Program that provides real mortgages for qualified participants to purchase manufactured homes or refinance their current homes. These are fixed-rate, long-term mortgages for homeowners and home buyers in resident-owned communities or on their own land in New Hampshire.
In FY 2018, CDFI Fund Program award recipients reported originating loans or investments totaling over $11 billion based on their portfolio of activities in FY 2017, including $2 billion for 19,000 home improvement and purchase loans which include manufactured housing. CDFIs are a valuable resource for those seeking to purchase affordable housing, which can be manufactured or site-built.
Gail Thomas is a Communications Specialist with the CDFI Fund.
U.S. Census Bureau, 2015 American Housing Survey & 2012-2016 ACS 5-year Estimate.
Consumer Financial Protection Bureau, ?Manufactured-housing consumer finance in the United States,? September 2014, 20-22
According to the Manufactured Housing Institute (MHI), 77 percent of new manufactured homes are titled as personal property (chattel); https://www.manufacturedhousing.org/wp-content/uploads/2018/06/2018-MHI-Quick-Facts-updated-6-2018.pdf.