FHA Condo Approvals – Manufactured Housing Condo Projects

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FHA Condo Approvals – Manufactured Housing Condo Projects

manufactured housing fha condo approval

[Note: article has been updated to reflect current FHA guidelines.  See below.]

In certain parts of the country, Manufactured Housing Condominium Projects (MHCPs) are prevalent.   Typical ownership of this fashion is where the unit owner owns the manufactured home and may own the ground on which it sits.

Manufactured Housing is a different category of housing than modular homesThis article by John DL Arendsen will give you more information than you would ever need to know about manufactured and modular housing and does an outstanding job of explaining the differences.

MHCPs may be eligible for an FHA condo project approval.  FHA requires that these approvals be processed via HRAP (directly through HUD) and cannot be reviewed and approved DELRAP (by a lender).  FHA also states that MHCPs cannot be handled as “site condos”.  [As an aside, FHA does not differentiate between modular and stick-built homes.]

One common feature of a site condo (and is a requirement of FHA to be deemed a site condo) is that the unit owners are to be responsible for the insurance, maintenance and upkeep of the interior and exterior of the unit.  This is common trait of MHCPs as well.

A call that I received yesterday from a mortgage lender in California was about this very topic.  She said that her mother-in-law lives in an MHCP and was trying to obtain a reverse mortgage.  However, she could not do so due to FHA rejecting the condo project because the unit owners pay for the insurance of the units.

For MHCPs, FHA requires that the Homeowners Association be responsible for the exterior of the units and fund the insurance for the units.  This requirement is for all condominium projects consisting of 5 or more units.  Therefore, in order for this project to be eligible for an FHA condo approval (and for her mother-in-law to obtain a reverse mortgage), the HOA would have to pay for the insurance for the units.

She mentioned that this is a major issue because the HOA will not pay for the insurance of the units.  The result is that her mother-in-law may end up in foreclosure if the reverse mortgage cannot be obtained.  Unfortunately, to my knowledge, there is no work around for this insurance issue.

[Update: FHA is now allowing a waiver for MHCPs that do not have master insurance policies as mentioned above.  If the MHCP unit owners provide for the insurance of both the interior and exterior of the unit, this is now acceptable to FHA.]

It would come as no surprise that part of FHA’s job is to mitigate risk.  Because of the design and construction of the manufactured housing, it creates a higher risk.  FHA tries to mitigate this risk by handling manufactured housing differently than site condos.  Requiring that the HOA pays for the insurance for the units is one method of doing so.


Image courtesy of Stuart Miles/freedigitalphotos.net

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The Condominium Project Approval Team at ReadySetLoan is dedicated to helping condominium projects across the nation to obtain their approvals with FHA and the VA or become recertified with FHA.  We have assisted nearly 200 condominiums and we can help your association.


ReadySetLoan is an active member of the Connecticut and New England chapters of the Community Associations Institute (CAI) and is a frequent contributor to Common Interest Magazine as an expert in FHA/VA condominium project approvals.


Please contact us with any questions regarding FHA or VA condominium project approvals.  You can email me at askeric@readysetloan.com or call me at 404-433-4565. I will be happy to answer any of your questions.


FHA/VA Condo Approval Specialist

404-433-4565 Cell Phone

860-644-3772 Fax Phone

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Debbie Reynolds
Platinum Properties - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

We don't have them here but I know who to turn to for the info if they should start building them in Clarksville. Well done.

Feb 06, 2014 05:45 AM #1
Suzanne Otto
Six Twenty Designs - Lansdale, PA
Your Montgomery County PA home stager

Eric you are a wealth of FHA condo approval knowledge! People looking to obtain these approvals would be wise to contact you.

Feb 06, 2014 05:47 AM #2
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Good morning Eric. I always learn something new from you all the time. I always trust your posts and know I can count on what you share with all of us. Well done!

Feb 06, 2014 06:57 PM #3
Conrad Allen
Re/Max Professional Associates - Webster, MA
Webster, Ma, Realtor

Hi Eric.  Great information.  We don't have those kind of housing developments in my area.

Feb 06, 2014 08:21 PM #4
John DL Arendsen
Crest Backyard Homes designer & builder of ADU's

Great post Eric and very accurate and informative. I will repost this now. Thanks for posting to our group: http://activerain.com/groups/manufacturedhomes

Feb 07, 2014 01:15 AM #5
ReadySetLoan Condo Approval Team
ReadySetLoan Condo Team LLC - South Windsor, CT
The FHA/VA Condo Project Approval Specialists

Debbie - we don't have a lot of these in our area either.  They are more common in California.

Thank you Suzanne!

The feeling is mutual, Joe.

We don't see these in CT either Conrad, but since I work nationally, I have to be up to speed on them as well.

Thank you John.  I have read some of your articles about manufactured homes.  I can safely say that I don't know anyone who knows more than you about these homes.

Feb 07, 2014 10:09 PM #6
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Thank you for the information. I will bookmark this and share it with others.

Feb 09, 2014 08:22 PM #8
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