Manufactured homes, the growing segment of the housing industry once called mobile homes, are now eligible for more favorable long-term mortgage financing under a new rule announced by the Department of Housing and Urban Development.
"This move can open homeownership to thousands of families who are now effectively cut out of the homebuying market," said HUD Secretary Samuel R. Pierce Jr. "Manufactured housing, when well designed and placed on carefully planned, landscaped sites, is virtually indistinguishable from conventional housing."
Manufactured homes are those built in factories and then transported to the home site. As the cost of on-site housing construction has risen, manufactured houses, whose prices can be 20 percent to 50 percent lower than a comparable site-built house, have become an increasingly significant sector of the housing market.
Last year, manufactured houses accounted for one-third of all new single-family homes sold in the United States, according to the Manufactured Housing Institute. Manufacturers shipped a total of 238,808 homes in 1982, while about 413,000 site-built homes were sold.
The new rule makes buyers of new single-family, factory-built houses eligible for FHA-backed loans under Title II of the National Housing Act. The program provides home buyers with higher loan amounts, lower interest rates--usually two percentage points lower--and longer payback periods than the Title I program the manufactured homes generally were limited to before.
The new rule allows buyers of manufactured homes to secure FHA-insured loans for up to 30 years. The cap on the amount of the mortgage is generally $67,500 but it can go up to $90,000 in higher-cost areas. FHA will insure a loan for up to 97 percent of the first $25,000 of the appraised value of the house and 95 percent of the excess.
One program buyers of manufactured houses are eligible for now allows graduated payments over the life of the loan. The plan, designed for young first-time homebuyers, calls for lower monthly payments in the early years of the mortgage, with increasing monthly payments in the later years.
New manufactured homes which meet HUD's Manufactured Homes Construction and Safety Standards, placed on approved permanent foundations and sold as real property are eligible under the new rules for the more favorable mortgage insurance.
Although manufactured homes used to be sold as personal property, many jurisdictions are reclassifying them as real property.