FHA seeks to increase loan limits for manufactured housing

The Federal Housing Administration issued a proposed rule on Tuesday that would update loan limits annually for Title I manufactured homes secured by personal property, as well as create separate indexes to pave the way for subsequent adjustments.

The proposal on the FHA calculation of loan limits for Title I-insured manufactured-home loans is open for a 60-day public comment period expiring Dec. 19. 

“Adjusting loan limits to current market conditions will make Title I a much more useful source of affordable loan financing for manufactured homes,” said Commissioner Julia Gordon. 

“This proposal is the next step in FHA’s ongoing work to support manufactured housing as an affordable and attractive option in a challenging housing market,” she said.

Manufactured and prefabricated homes were a prominent feature in the Biden administration’s housing plan unveiled earlier this year. Proposed indexes for future loan-limit adjustments would rely on pricing data collected in the U.S. Census Bureau’s Manufactured Housing Survey and include separate guidelines for single-section and multi-section manufactured homes. The Department of Housing and Urban Development, which oversees the FHA, would not decrease the limits even if an annual index reflects a decline.

Current limits for the Title I Manufactured Home Loan Program are based on rules established in the Housing and Economic Recovery Act of 2008, which set an upper threshold of $69,678 for individual units, $23,226 for lots and $92,904 when both were included. 

Under the new proposal, the limit would increase to $72,600, $37,205 and $109,805 for single-section units when applying 2022 data. Loan limits for double- or multi-section manufactured homes would also be added and set at $132,000 for units, $37,205 for lots and $169,205 when combined.

No changes were announced to the manufactured-home property improvement plan, also included in the 2008 act. 

Housing advocates have pushed for increased consideration of chattel manufactured homes as a solution to affordability concerns. Earlier this year, the Urban Institute called on government-sponsored enterprises Fannie Mae and Freddie Mac to explore backing the loans used for such purchases. In his housing plan, President Biden also said his administration would develop new financing mechanisms to help support the creation of manufactured housing.