The terms “mobile home” and “manufactured home” are often used interchangeably. However, while mobile homes are not eligible for reverse mortgages, some manufactured homes are. Understanding the differences between the two terms can help you learn if your home is eligible for a reverse mortgage.
The Difference Between a Mobile Home and a Manufactured Home
Mobile homes are manufactured in a factory and permanently affixed to a chassis or the vehicle’s base frame. A mobile home is:
- Considered personal property for tax purposes, similar to a vehicle.
- Registered with the Department of Motor Vehicles (DMV).
- Movable and not affixed to a permanent foundation.
Mobile homeowners usually rent the space where they park their mobile homes. Renting or buying the land happens in a separate transaction from purchasing or financing the mobile home.
In 1974, Congress passed the National Mobile Home Construction and Safety Act. This law created a national building code for these homes. Any manufactured homes built after June 15, 1976, follow this code and are called manufactured homes.
Like mobile homes, manufactured homes are made in a factory. However, manufactured homes are permanently affixed to a foundation, often sold with the land, and taxed as real estate.
Manufactured Homes and Reverse Mortgage Eligibility
Mobile homes are not eligible for reverse mortgages, but certain manufactured homes are.
To be eligible for a home equity conversion mortgage (HECM), or government-backed reverse mortgage, a manufactured home must meet the following requirements established by The Department of Housing and Urban Development (HUD).
- Minimum floor area. The manufactured home’s floor area must be no less than 400 square feet.
- Comply with building requirements. The manufactured home must be connected to the home’s foundation and must be built on a permanent chassis, meaning it cannot be removed from the framework.
- Built after a specific date. To qualify for a reverse mortgage, the manufactured home must have been constructed after June 15, 1976.
- Seal present. The manufactured home must have a seal that shows it was built in compliance with the Federal Manufactured Home Construction and Safety Standards. Generally, homes built after June 15, 1976, will have this seal.
- Must meet tax classification. The manufactured home must be classified and taxed as real estate.
- No previous occupation. For reverse mortgage eligibility, the manufactured home cannot be occupied or have been previously installed at any other site or location.
- Permanent Foundation. The home must sit on a permanent foundation.
- Land ownership. The borrowers must own the land that the manufactured home sits on.
- Grade elevation requirement. The elevation beneath the home must have finished grade elevation. The floor must be at or above the 100-year flood elevation if a basement is used.
- Certified by an engineer. An engineer must certify the foundation.
Additional Reverse Mortgage Property Requirements
In addition to the home meeting HUD’s requirement, there are also additional requirements a lender may impose. Those requirements are generally as follows but may vary from lender to lender:
- Unit size requirement. The borrower can only qualify for a double-wide unit. No single-wide units are eligible.
- Credit report verification. The lender will verify that there are no outstanding personal liens on a dwelling.
- HUD tag requirement. Each manufactured home section must have HUD tags accessible to the appraiser. In addition, the appraiser must certify that the home’s seal isn’t compromised.
- Appraisal of comparable sales. Comparable sales must be within one mile in urban areas or within 20 miles in rural areas.
- Cannot be a part of a condominium complex. No manufactured home can be located as a part of a manufactured condominium complex.
This article is intended for general informational and educational purposes only, and should not be construed as financial or tax advice. For more information about whether a reverse mortgage may be right for you, you should consult an independent financial advisor. For tax advice, please consult a tax professional.