can you buy a modular home with an fha loan

Yes, you can buy a modular home with an FHA loan. The Federal Housing Administration (FHA) offers financing options for various types of properties, including modular homes. Modular homes are prefabricated structures that are built off-site and then transported to the final location for assembly. They are built to specific standards and codes, ensuring quality and durability. With an FHA loan, you can take advantage of flexible eligibility requirements and low down payment options to make owning a modular home more affordable and accessible.

What is an FHA Loan?

An FHA loan is a mortgage loan insured by the Federal Housing Administration. It is designed to help homebuyers, particularly those with lower credit scores or limited funds for a down payment, to purchase a home. The FHA provides insurance to lenders, which reduces their risk in case the borrower defaults on the loan. This insurance allows lenders to offer more favorable terms and conditions to borrowers, making homeownership more attainable.

Here are some key features of an FHA loan:

  • Low down payment requirement: FHA loans typically require a down payment as low as 3.5% of the purchase price.
  • Flexible credit requirements: Borrowers with less-than-perfect credit scores may still qualify for an FHA loan.
  • Competitive interest rates: FHA loans offer competitive interest rates, making them an attractive option for homebuyers.
  • Streamlined refinancing options: FHA loans also offer refinancing options, allowing borrowers to take advantage of lower interest rates in the future.

How Do FHA Loans Work for Modular Homes?

When it comes to modular homes, FHA loans work similarly to conventional homes. However, there are a few important factors to consider:

  1. Modular home certification: The modular home must meet specific certification requirements set by the FHA. This ensures that the home is built to quality standards and complies with local building codes.
  2. Permanent foundation: The modular home must be affixed to a permanent foundation, just like any other home financed with an FHA loan. This ensures stability and longevity of the structure.
  3. Site preparation: Before the modular home can be placed on the permanent foundation, the site must be prepared, including necessary utility connections and landscaping.

It’s important to note that the FHA does not lend directly to borrowers. Instead, FHA loans are offered by approved lenders, such as banks and mortgage companies. These lenders follow FHA guidelines to determine eligibility and provide the loan.

Advantages of Buying a Modular Home with an FHA Loan

Buying a modular home with an FHA loan offers several advantages:

  • Lower down payment: FHA loans have a low down payment requirement of 3.5%, which can make homeownership more accessible to individuals with limited funds.
  • Favorable interest rates: FHA loans often offer competitive interest rates, helping borrowers save money over the life of the loan.
  • Flexible credit requirements: FHA loans have more lenient credit requirements compared to conventional loans, making them a viable option for borrowers with less-than-perfect credit scores.
  • Refinancing opportunities: FHA loans also provide refinancing options, allowing borrowers to take advantage of better interest rates or change the terms of their loan in the future.

Comparing FHA Loans to Conventional Loans for Modular Homes

Here’s a comparison between FHA loans and conventional loans for modular homes:

AspectFHA LoanConventional Loan
Down PaymentAs low as 3.5%Varies (typically 5-20%)
Credit RequirementsMore flexibleStricter
Interest RatesCompetitiveVaries (can be higher)
Loan LimitsSet by FHAVaries by lender


Buying a modular home with an FHA loan is definitely possible. FHA loans offer a range of benefits, including low down payments, competitive interest rates, and flexible credit requirements. However, it’s crucial to ensure that the modular home meets the FHA’s certification standards and is affixed to a permanent foundation. If you’re considering buying a modular home, an FHA loan can be an excellent financing option to make your dream of homeownership a reality.