FHA Home Loan Types
That loan is known as the FHA 203(b) mortgage, offered for a variety of different property types including one-to-four unit homes as well as condominium units, duplexes or townhomes, even mixed-use properties which are primarily residential.
Does that list above seem incomplete? That’s because some borrowers want to know if it’s possible to use an FHA 203(b) mortgage for a manufactured home or modular home. Your FHA home loan options do include a loan for manufactured homes, but these are not FHA 203(b) mortgages, which are often referred to as Title II mortgages.
The FHA home loan you need to purchase a manufactured home is called a Title I mortgage.
The rules for FHA Title I mortgages say these loans can be used to finance both the purchase of the home and the land the home would be placed upon. FHA Title I loans are generally offered as a two-decade loan term, which is different than the FHA 15-year and 30-year loan options offered with FHA 203(b) mortgages.
Manufactured home loans aren’t the only other FHA home loan types available? Another type of FHA mortgage is called the FHA 203(k) Rehabilitation Mortgage. This is available as a purchase loan and also as a refinance loan.
When researching your 203(k) loan options, you may read find certain mortgage blogs erroneously lump FHA Construction Loans under the 203(k) heading, using the two terms interchangeably. But these two loans are quite different.
An FHA Construction Loan is an option under the FHA 203(b) program. It can be used to build a home from the ground up rather than purchasing an existing property. An FHA 203(k) Rehabilitation Loan is meant for structures a year old or more, and the HUD official site describes 203(k) mortgages as follows:
“A portion of the loan proceeds is used to pay the seller, or, if a refinance, to pay off the existing mortgage, and the remaining funds are placed in an escrow account and released as rehabilitation is completed.” FHA loan rules say that for a standard 203(k) loan, the price tag for the rehabilitation must be at least $5,000.
You can apply for a standard 203(k) but there is also the option to apply for a “limited” version of the 203(k) loan with no minimum cost but with restrictions on the types of renovation work that can be done.
Most FHA home loans have some standard features. One of those features? Borrowers cannot be penalized for paying the FHA loan off ahead of schedule.
Another option? Adding an Energy Efficient Mortgage (EEM) package to any of these FHA loans. The EEM is an add-on to your home loan that makes extra loan funds available for approved energy-saving upgrades to the property, ask a participating FHA lender about how the EEM works and what you can do with those extra funds.
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