What happens during the appraisal?
The primary purpose of the appraisal is to determine the value of a property using similar properties called "comparables."
Manufactured homes are generally financable with a few stipulations:
- Home must be manufactured after June, 1976*.
- Home must be on a permanent foundation with wheels and axles removed.
- Manufactured homes can be singlewide, doublewide, or larger. Singlewide manufactured homes must be at least 12 feet wide and have a minimum of 400 square feet of gross living area. Freddie Mac requires 600 square feet of gross living area, unless the home is classified as an ADU.
- The home can only have been moved once - from the factory to the current site. The exception to this rule is VA transactions. The VA does allow a home that has been moved more than once.
- A manufactured home cannot be financed as an investment property (primary residence or second home only).
Manufactured homes on leased land are allowed with the following additional requirements:
- May be doublewide (conventional) or singlewide (FHA only).
- Purchase or rate term refinances only. No cash out refinances.
- The manufactured home cannot include an ADU on the property.
- The appraiser must provide two comparable properties that are also on a leasehold estate.
- The lease must meet all the requirements of a leasehold estate. Namely, the manufactured home must be classified as real property that can be covered by a title insurance policy. The term of the lease must run for at least five years (conventional) or ten years (FHA) beyond the maturity date of the mortgage.
FHA transactions require manufactured homes to have a foundation inspection or structural engineer's report. For VA transactions, the appraiser will decide whether a foundation inspection is necessary.
And the appraiser may check to see that L&I inspections have been obtained. Check here to see the kinds of modifications that require an L&I permit. I recommend that real estate agents look for things that couldn't possibly be original to the home. For instance, if your 1984 manufactured home has a fancy new tankless hot water heater, it probably needs an L&I inspection.
Don't worry if permits weren't obtained from L&I at the time the modification was made. They're fairly easy to get after the fact and not terribly expensive.
Manufactured Homes as ADUs
Two manufactured homes on one parcel is generally unacceptable (one of those strange lending guidelines I've never understood). However, a stick-built home with a manufactured ADU is generally acceptable for Fannie, Freddie, and FHA. The typical guidelines still apply (built after 1976, installed on a permanent foundation, etc.). And the manufactured home must be the ADU; it can't be the primary dwelling unit. To summarize:
- Manufactured home with manufactured ADU = no
- Manufactured home with stick-built ADU = no
- Stick-built home with manufactured ADU = yes
If you are listing a manufactured home (or are interested in purchasing a manufactured home), please give us a ring! We're happy to take a look at your parcel and offer our expert opinion.
* The exception is USDA transactions. USDA requires homes to have been manufactured after January 1, 2006. This is a pilot program and is only available in certain states (Washington is included). Otherwise, the home must be brand new and never occupied.
