FHA raises loan limits for manufactured housing for the first time in 15 years

The Federal Housing Administration (FHA) has raised the lending limits for its Title I Manufactured Home Loan Program, aiming to unlock the supply of affordable housing.

The FHA said the increase better reflects today's market prices for manufactured homes and should encourage more lenders to offer loans to homebuyers seeking to purchase manufactured homes, also known as mobile homes, and the lots on which they sit. This is the first update to the Title I program loan limits since 2008 and is part of President Joe Biden's push to increase the supply and use of manufactured homes as an affordable housing option.

The new approach utilizes "new methodologies for calculating and updating the program's limits," which were part of a final rule published on Feb. 29, FHA explained in a press statement. 

The new limits are:

"Updating the Title I loan limits was the next critical piece in our ongoing efforts to make the Title I Manufactured Home Loan Program work for lenders and homebuyers for whom manufactured housing offers an affordable way to meet their housing needs," Federal Housing Commissioner Julia Gordon said. "We hope these changes will prompt more lenders to consider using the Title I program to meet the financing needs of consumers purchasing or refinancing manufactured homes."

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The U.S. Treasury Department plans to update rules to allow state and local governments with remaining resources to use unspent COVID-19 funds on eligible housing projects, according to a recent statement. It has also expanded eligibility to support housing projects serving families earning up to 120% of the area's median income, a revision from 65% previously. 

State and local governments may also use unspent money to fund Fannie Mae and Freddie Mac-supported affordable housing projects for teachers, firefighters, nurses, and other essential workers, which are increasingly priced out of specific markets. 

According to a Reuters calculation, this move could unlock as much as $40 billion in unspent money from the $350 billion State and Local Fiscal Recovery Fund. The funds are part of the American Rescue Plan Act (ARPA) — a $1.9 trillion stimulus package to speed the country's recovery from the public health emergency. 

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President Biden has called on Congress to invest more than $175 billion in affordable housing initiatives, according to a White House statement.

The administration has proposed using some funds to build and maintain millions of affordable homes for rent and ownership, such as accessory dwelling units and manufactured housing, and to incentivize state and local governments to reduce barriers to affordable housing development. 

The Biden administration has also proposed a new Neighborhood Homes Tax Credit. The proposed federal initiative would enable better affordability for home buyers by injecting $16 billion for adding more housing stock to the market and $10.1 billion for down payment assistance. The tax credit would be provided on the condition that low- or middle-income homeowners occupy the home.

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