Modular Home Financing: FHA Loan and Its Requirements

An FHA loan is a mortgage loan that is insured by the Federal Housing Administration (FHA). Essentially, the federal government insures loans for FHA-approved lenders in order to reduce their risk of loss if a borrower defaults on their mortgage payments. They have set a number of requirements for each borrower to maintain consistency of the program.

The borrower of FHA loan for modular home construction must have the following requirements;

Must have a steady employment history or worked for the same employer for the past two years and have a valid Social Security number, lawful residency in the U.S. and be of legal age to sign a mortgage in your state

Must make a minimum down payment of 3.5 percent. The money can be gifted by a family member.

Must have a property appraisal from a FHA-approved appraiser. Also, an FHA loan requires that a property meet certain minimum standards at appraisal. If the home you are purchasing does not meet these standards and a seller will not agree to the required repairs, your only option is to pay for the required repairs at closing

Minimum credit score of 580 for maximum financing with a minimum down payment of 3.5 percent. Minimum credit score of 500-579 for maximum LTV of 90 percent with a minimum down payment of 10 percent. FHA-qualified lenders will use a case-by-case basis to determine an applicants’ credit worthiness.