Fannie Mae Manufactured Home Loans

Fannie Mae manufactured home loans provide financing support for commercial investors planning to build or purchase a Manufactured Housing Community (MHC). This may also include associated amenities and other infrastructure associated with MHCs.

These loans are a part of Fannie Mae’s mission to provide more affordable rents to qualified individuals. These loans enable community owners or buyers to purchase these properties with low-interest rates, with the goal of ensuring those lowered costs are passed on to the renter later. They aim to provide specific support for underserved markets.

There are a number of restrictions and limitations on these properties. They must be either age-restricted properties (such as for seniors), or they must be all age, such as a family community. They also must conform to all manufactured housing HUD code standards whenever it is possible for them to do so (some limited exceptions may apply).

An additional factor relates to tenant occupancy. Tenant-occupied homes cannot make up more than 35 percent. More so, Fannie Mae also limits the number of properties within the community. That is, Fannie Mae states that density should be based on what is normal for the market itself. Typically, it should not exceed 12 manufactured homes per acre of space. That applies to an existing community. For new communities, the guidelines require properties to have no more than 7 manufactured homes per acre.

To utilize Fannie Mae manufactured home loans, properties must meet specific requirements:

• Available for existing, stabilized, and professionally managed MHCs, this may include an age restriction or not;
• Properties must have at least 50 pad sites
• Quality level is important with preference from Level 4 and Level 5, with Level 3 available in some situations (case by case basis)
• One key principal is the borrowers should have some experience managing or otherwise operating an MHC
• Lenders must also be experienced in financing these types of communities and must be approved by Fannie Mae prior to participating in these loans

• Tenant-occupied homes may not exceed 35 percent
• Density requirements are typically no more than 12 homes per acre for existing communities or no more than 7 homes per acre for new communities, with some variances
• Properties typically need to meet or exceed manufactured housing HUD code requirements and standards
• Leases that have terms of two years or longer must not contain a tenant option to purchase the site pad
• Pricing incentives may be available for non-traditional ownerships, which could include resident-owned, government-owned, and non-profits
• Within one year of loan origination, tenant site lease protections must be implemented on all sites

Fannie Mae does not set a maximum amount for borrowers. The minimum loan size is $1 million, though borrowers can secure more depending on property value as well as borrower qualifications.

Fannie Mae will provide reimbursement for third-party report costs. This is capped at $10,000. It applies to communities with tenant site lease protections that are already in place for 100 percent of the community’s sites. It may also be applicable if the community is non-profit owned. There is a range of minimum site lease protections that must be adhered to.

This includes the property needs to have a one year renewable lease term for the site unless there is some type of good cause for nonrenewal, which is made on a case-by-case basis. In addition, there must be 30 day written notice to tenants of any rent increases, and 5 day grace period must be in place for rent payments with the right to cure defaults on rents.

Additionally, the lease protections must also provide tenants with the right to sell their manufactured home without having to relocate it out of the community first. It also requires that subleases on the properties be allowed as long as the new buyer meets the minimum requirements of MHC rules and all regulations. This could include credit standards for borrowers. Tenants must also have the right to post a “for sale” sign as long as they meet all MHC rules and regulations. They have the right to sell their home in place within 45 days of an eviction and receive up to 60 days of notice of any type of planned sale or the closure of the MHC.

Other rules and restrictions may apply. Fannie Mae manufactured home guidelines may change over time. Investors may find these loans highly lucrative to meet their needs.