Residential Magazine

A Manufactured-Housing Boom Could Be Coming

Originators should become familiar with financing options for these homes

By Bill Packer

With an insufficient inventory of traditional stick-built homes available and as the resale market for these single-family houses continues to be robust, the nation could be poised to experience a dramatic increase in manufactured housing. Some may recall the 1970s stigma of low-quality mobile homes and worry an onslaught of such homes could create more problems than it solves.

Today’s manufactured housing, however, is a far cry from the tin-can trailer parks of yesteryear. Creative and innovative companies are building manufactured housing that rivals and, in some cases, exceeds the quality of more traditional homes.

Manufactured homes increasingly are making use of high-end finish-outs and spacious floorplans. Often, manufacturers are able to achieve factory-level economies of scale that also are kinder to the environment than the stick-built counterparts.

Fortunately, homebuyers and originators are seeing an increase in financing options for this type of housing, as well. There are unique loan programs especially suited for the purchase of a manufactured home.

Acute housing shortage

After a decade-long recovery from the subprime lending debacle, the housing market is seeing more home sales and a very low foreclosure rate. But now, there are not enough homes for sale. The inventory of homes for sale last year was so low that it was one of the tightest markets ever and, so far in 2018, it is even tighter.

Strictly focusing on single-family home listings, this is the lowest inventory since data tracking began in the early 1980s. Real estate market reports claim there are almost 10 percent fewer homes on the market to choose from than a year ago, and up to 40 percent fewer in housing markets where home values are appreciating fastest.

But why? Builders are struggling with high and rising land, lumber and labor costs. That’s a formula for a supply shortage — both because of labor-availability issues and the lack of companies who are able to build affordable entry-level homes. 

This acute housing-inventory shortage has fired up home prices. The median home price has risen by 40 percent in the past five years and is still rising. With the shortage of affordable single-family homes in the U.S., manufactured housing is becoming an increasingly popular alternative.

Manufactured homes are built offsite and transported to the lot in one or more sections. So, you get more than a century of experience in assembly-line manufacturing producing quality, innovative products —

think Mercedes-Benz — and, with the advancements in robotics, fewer skilled workers are required in the building process. The final delivery and assembly of the homes, however, supports the local economy by requiring skilled labor from local artisans and tradesman like plumbers, electricians and landscapers. It’s the best of both worlds, arguably.

There are few scenarios where a manufactured home shouldn’t be considered as a primary option. Land is a finite resource, and some potential buyers spend years searching for a buildable lot in the right area with the features they desire. That might mean proximity to a specific school or workplace, a walkable neighborhood or stunning view.

What if the ideal lot comes on the market but building a dream home is out of reach financially? Some homeowners will stretch their budget to purchase the lot, making mortgage payments on both their primary residence and the new lot. By purchasing a less costly manufactured home to live in on the new lot, costs are kept in check and the homeowners get to live in the dream location much sooner than anticipated.

A manufactured home also could provide a viable way to have a home away from home at a favorite vacation destination. An affordable place of your own at the beach, the lake, the mountains, or just closer to family you wish you could spend more time with. Many vacation hotspots have popular communities, and the properties often require less maintenance than stick-built homes, so homeowners can simply enjoy their time while there.

Wide open spaces have their benefits, too. Many folks might love the idea of owning a home, but a condo is a better fit for their budget. It may be possible to find a manufactured home on a small piece of land for a comparable cost, especially when you factor in the monthly condo fees that come with most units. Plus, the benefits that come with having your own land include privacy, space to entertain outdoors, and room enough to plant a garden or provide children or pets a place to play.

New financing options

Educating borrowers is key, including introducing manufactured housing as an option and where to search for homes and lots, and sharing information about the specific financing options available. Financing manufactured housing has inherent complexity because the home starts off as personal property but can convert to real estate property.

Although Ginnie Mae, the Federal Housing Administration and the U.S. departments of Veterans Affairs and Agriculture all support financing options for manufactured housing, it has been somewhat neglected by the government-sponsored enterprises Freddie Mac and Fannie Mae — until recently.

As an example of this newly found interest, Fannie Mae recently introduced the MH Advantage initiative, a mortgage program for specially designated manufactured homes with features comparable to traditional stick-built single-family homes. These manufactured homes can include interior features like drywall, energy- efficient appliances and upgraded cabinets in kitchens and bathrooms, as well as exterior amenities such as porches, garages, and architectural features like eaves and higher pitch rooflines.

“ The truth is that manufactured homes have been architecturally similar to stick-built homes for years. ”

Once a manufactured house meets eligibility criteria, including construction, architectural design and energy-efficiency standards that are more consistent with site-built homes, an MH Advantage sticker will be affixed by the manufacturer for easy identification by lenders and appraisers.

The truth is that manufactured homes have been architecturally similar to stick-built homes for years. This Fannie Mae program simply validates that quality for the mortgage industry and prospective homeowners alike.

Through MH Advantage, qualifying borrowers can secure financing with a down payment as low as 3 percent. Loans also feature cancellable mortgage insurance and also can be combined with other Fannie Mae programs like HomeReady or HFA Preferred mortgages.

The goal of this initiative is to help bridge the gap in affordable housing by encouraging more consumers to consider manufactured homes as an alternative to traditional single-family site-built homes. It is exciting to offer any loan program that helps mortgage originators get borrowers into a home with features they want, at a price they can afford.


  • Bill Packer

    Bill Packer is executive vice president and chief operations officer at American Financial Resources (AFR) Inc. With 30 years of experience in financial services, Packer joined AFR in 2015 and currently oversees operations, technology, new-product development and marketing. AFR is the nation’s leading FHA 203(k) lender for sponsored originations, and is an innovator in the construction and renovation lending space.

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