Manufactured Home Appraisals: Key To Affordable Homeownership
To pass the manufactured home appraisal, the home must be built after June 15, 1976, on a permanent foundation, meet HUD standards, and have nearby comparable sales.
Why Manufactured Homes Require Special Appraisal Considerations
In many ways, a manufactured home appraisal is relatively similar to one for a stick-built residence.
“For example, the appraisal process will generally include a visit to the property to collect important information about property characteristics, an analysis of the market, and a consideration of typical valuation approaches, says Joshua Walitt, principal of Walitt Solutions in Grand Junction, Colorado.
However, appraising manufactured homes involves additional documentation and steps that aren’t required for traditional site-built residences. Experts say these extra layers are in place to safeguard lenders and ensure the structure meets long-term housing standards.
“Appraisers must verify that the home meets HUD standards, confirm the presence of certification labels and data plates, and ensure that the manufactured home is on a permanent foundation,” explains Rachel Mann with Triangle Appraisal Group in Cary, North Carolina.
Appraisers use comparable sales, or "comps," to estimate a manufactured home’s value by looking at recent sales of similar homes nearby.
“There’s a stricter threshold when it comes to gathering comparable sales; only other manufactured homes can be used as comps, which can limit options in some markets.”
Additionally, the appraiser uses a particular form – the 1004C Manufactured Home Appraisal Report – which is tailored to factory-built homes.
There’s a stricter threshold when it comes to gathering comparable sales; only other manufactured homes can be used as comps, which can limit options in some markets.
Specifically, manufactured homes need at least two comparable sales of other manufactured homes, which can be difficult in areas where they are less common.
“The appraiser also focuses more on the home’s construction. And they look at things like whether the home is classified as real property or personal property. Real property includes land along with anything permanently affixed to it, such as a home, fence, or driveway, while personal property means moveable things like a car,” says Steven Glick, director of mortgage sales for HomeAbroad. “Traditional homes don’t have these requirements.”
Additionally, the appraiser’s checklist is more detailed for some loan types, like government-backed loans such as FHA or VA mortgages, which have stricter safety and structural standards for manufactured homes.
What’s Required to Get a Loan?
To secure financing for a manufactured home, several boxes must be checked. Let’s break down what’s needed based on different loan types.
Conventional loans
Count on a credit score of around 620 to 680 and a debt-to-income (DTI) ratio below 43%, and make sure the home is on a permanent foundation and classifies as real property. The residence must be at least 400 square feet, 12 feet wide, and built after June 15, 1976, per HUD standards.
“A 5% down payment is typical for a conventional loan, but financing can be tougher because not all lenders offer these loans,” cautions Glick.
FHA loans
With this loan option, the home needs a permanent foundation, HUD certification, and a build date after June 15, 1976. The factory-built dwelling must also be your primary residence.
You can put down as little as 3.5% if you have a credit score of at least 580, and 10% down with a credit score of 500 to 579.
VA loans
No down payment is required with a VA loan, and the VA doesn’t set a minimum credit score – although at least 620 is recommended, as well as a DTI of 41%, with higher maximums with compensating factors. HUD compliance and permanent foundations are must-haves.
USDA loans
The residence must be located in a USDA-eligible rural area, be fixed on a permanent foundation, and meet HUD standards as well as serve as your primary residence. The manufactured home must be newly purchased from the dealer, set on a foundation, and never lived in. Aim for a credit score of 640 or higher and a DTI ceiling of 41%.
Key Factors in a Manufactured Home Appraisal
There are also particular factors involved in a manufactured home appraisal you should be aware of. Here’s a breakdown.
Foundation Type
The appraiser will identify the foundation type during the visit to your property and could make the appraisal subject to a foundation inspection if the foundation is in question.
“Foundation systems for manufactured homes commonly include tie-downs or straps, concrete perimeter with crawlspace, or concrete slabs,” says Walitt.
The foundation type plays a big role in the appraisal, per George Carrillo, CEO of the Hispanic Construction Council.
“Manufactured homes with solid permanent foundations tend to get higher appraisals and better loan options,” he notes.
If your manufactured residence is merely sitting on blocks or has wheels, it’s considered personal property, which can lead to loan denial.
Manufactured homes with solid permanent foundations tend to get higher appraisals and better loan options.
HUD Certification Labels and Data Plate
These serve like the home’s birth certificate. The HUD Certification Label is usually red or silver and attached to each section of the manufactured home; expect to find two different tags for a double-wide structure.
“Inside the home, usually glued to the interior of a cabinet or closet, is the HUD data plate, which has the serial number for the house as a whole, references the associated HUD tags, establishes its manufacture date, and also describes the house’s compliance with the HUD code and other details,” Walitt continues.
“Missing labels and data plates are big red flags for appraisers and lenders,” cautions Glick.
However, if the plate or tags are not located by the appraiser, the lender can pursue other means to research the associated serial and tag numbers, although that will be an extra step for the loan officer.
Property Classification: Real vs. Personal Property
For most loans, including conventional, FHA, VA, and USDA mortgages, manufactured homes must be classified as real property – which typically means it’s on a permanent foundation and deeded with the land. If the home is not permanently affixed or on leased land, it’s typically regarded as personal property, which limits financing to chattel loans that come with higher interest rates.
Comparable Sales (Comps)
As mentioned earlier, finding comparable sales can sometimes be difficult due to the limited number of manufactured homes in many areas.
“Appraisers need at least two recent sales of similar manufactured homes nearby,” reminds Glick. The age, location, and condition of these comps are important in determining value.
However, in some circumstances, particularly in locations with limited sales, the appraiser might include non-manufactured houses as supplemental comps, with additional analysis and explanation included in the appraisal report, per Walitt.
Value is Location-Dependent
Rural locations commonly experience a higher demand for manufactured homes, possibly increasing their value. Some urban markets, on the other hand, could see manufactured homes as less desirable. Then again, it’s often more common to find large manufactured home parks in urban and suburban areas, where the land is owned by each owner. In rural areas, manufactured homes are typically found on larger acreage.
“Urban areas often appraise higher if market demand is high for manufactured homes there, while rural properties could see value shifts faced on local needs,” says Carrillo.
What the Appraiser Looks For
The appraiser will inspect several aspects of the manufactured home to assess its value. Let’s zoom in closer at the different criteria the appraiser will scrutinize.
Age and Size
Newer homes tend to appraise higher, particularly if built after the 1976 HUD standard.
“Size also matters significantly, as larger homes typically command more value,” Mann adds.
FHA and conventional loans require at least 400 square feet. Smaller or older homes can be harder to finance.
Overall Condition and Quality of the Construction
The appraiser will inspect the foundation, roof, plumbing, HVAC, electrical systems, and other areas to ensure they are safe and functional.
“Quality of materials and construction is key. Higher-end finishes can bump up value, while wear-and-tear drags it down,” Glick notes.
Updates or Renovations
Upgrades made to the manufactured home can impact the appraisal, as well.
“Permitted improvements can increase value, especially if they bring the home in line with modern standards,” says Mann.
Modernizations like a contemporary kitchen or energy-efficient additions can definitely make a positive impact, according to Carrillo.
“But these have to be high-quality renovations that fit local market tastes,” cautions Glick. “Shoddy DIY jobs could hurt more than help.”
Keep in mind that renovations may require HUD approval; if anything is altered from its original manufactured specs, it could jeopardize future financing.
Attached Features
Permanent additions such as porches, decks, carports, or garages must be securely affixed and meet local building codes and usually require permitting to be included in the valuation.
“If they’re not up to snuff or detachable,” Glick adds, “they won’t add value and could raise red flags for FHA or VA loans in particular.”
Tips for Buyers and Sellers
To improve your odds of a higher appraisal and loan approval, follow these best practices recommended by the experts:
Ensure that HUD tags and the data plate are intact before the appraisal.
Consider converting your manufactured home to real property if it’s classified as personal property. “Ask if the home can be converted through title elimination, which can be a game changer for financing approval,” Glick advises.
Pay for a professional home inspection before the appraisal to catch issues early.
Make minor repairs and upgrades ahead of the appraisal to boost value, so long as these don’t interfere with HUD certification.
Work with a trusted real estate agent who has experience in manufactured homes.
Be aware of appraiser limitations. “Remember that when an appraiser visits a property, they are not acting as a property inspector, structural engineer, foundation expert, or other professional when it comes to technical aspects of the property,” Walitt.
Final Thoughts
Appraising a manufactured home involves a special process with extra steps and rules not usually required for homes built on-site. The appraiser has to confirm HUD compliance, gather comparable sales of similar manufactured homes, check the foundation, and classify the property type. By understanding this process ahead of time, you can prepare for the appraisal and increase your chances of better outcomes, including loan approval.
