How to Improve and Expand Ownership of Manufactured Homes

A persistent national housing shortage of 4 million to 7 million homes has driven housing costs to record highs, putting homeownership out of reach for millions of Americans. On Feb. 25, The Pew Charitable Trusts convened experts, lenders, and advocates to explore how federal and state policymakers could modernize financing for manufactured homes to increase the housing supply and expand homeownership opportunities.

Manufactured homes often feature modern and energy-efficient designs with high-end finishes, and research shows that models built since the 1990s are similar in durability to other single-family homes and less like the mobile homes of the past. The U.S. Department of Housing and Urban Development recently updated its building code for manufactured housing to streamline the construction process, allow for more modern and accessible designs, and increase the supply of these homes.

Housing that increases the supply of affordable homes

Manufactured housing has the potential to address two major challenges in the U.S. housing market: limited supply and affordability. Millions of Americans currently live in manufactured homes, which can cost two-thirds less than other single-family homes.

Financing challenges imperil current borrowers and limit new homeownership

Yet, as the event highlighted, borrowers face challenges when seeking access to traditional financing for manufactured homes. Because these homes have long been treated differently—both financially and legally—than site-built houses (homes built on their permanent location), access to mortgages for manufactured homes is stymied, which limits the availability of these homes.

For manufactured home buyers, in particular, accessing credit to buy their homes can be difficult. While there are a few ways that families can finance their manufactured home purchases, mortgages are the safest and most affordable loan type. But new research from Pew shows that only 44% of manufactured home borrowers have a mortgage, compared with 95% of site-built home borrowers. Another 35% of manufactured home borrowers have what are often called “home-only loans” (also known as personal property or chattel loans)—which finance just the home and not the land beneath it, unlike mortgages, which finance both the home and the land together.

Home-only loans are typically less affordable than a mortgage because of shorter repayment terms and high interest rates. But they’re often the next best option for homebuyers who can’t obtain a mortgage, because they have some federal- and state-level protections (such as loan disclosures, requirements for lenders to determine a borrower’s ability to repay, and standards for repossession), and the buyer becomes the home’s legal owner at the beginning of the loan.

In the absence of better loans, manufactured home borrowers are four times more likely than other home borrowers to use risky contract financing, such as lease-purchase or contract for deed (also known as a land contract). These arrangements are typically made directly between a seller and a buyer. In a lease-purchase arrangement, the buyer usually first rents the property from the seller, who is also the landlord. Lease-purchase buyers often pay an upfront fee or down payment under a separate option contract to reserve their right to purchase the home within a set period, and then typically have to secure a mortgage to purchase the home after the rental period. With land contracts, the buyer usually makes regular payments to the seller until receiving full legal ownership of the home. Some practices can make these arrangements especially risky to the borrower, including a lack of public recording of the contract or of clear written terms for the arrangement (such as sale price, number of payments, or tax or maintenance responsibilities).

These contract financing arrangements have far fewer protections at the state and federal levels than mortgages or home-only loans, and most borrowers who use them don’t legally own their home until their final payment is made, putting them at far higher risk of swift eviction or foreclosure, loss of their home, or loss of their equity.

Three key policy opportunities

There are opportunities to improve access to traditional loans, and the panelists pointed to three key policy opportunities to modernize the lending process, improve its efficiency, and expand access to—and the quality of—loans:

• Reduce hurdles for mortgages by updating titling practices: Mortgage financing—which tends to have the lowest monthly payments (because of lower interest rates and longer repayment terms) and strongest consumer protections compared with other types of financing—requires that a home is titled as real estate. But in most jurisdictions, there are significant barriers to manufactured homes being titled as real estate. State lawmakers could consider ways to modernize laws to reduce hurdles for real estate titling and thus expand eligibility for traditional mortgages to more homebuyers and refinancing for current borrowers.
• Expand access to home-only loans: The Federal Housing Administration (FHA) could improve options for homebuyers, and the availability of loans, by finalizing updates on its existing manufactured home loan program (Title I)—specifically by aligning this program with standard mortgage policies. In addition, Fannie Mae and Freddie Mac, the government-sponsored enterprises that buy mortgages from lenders, could also begin purchasing home-only loans. These actions could improve efficiency and lender adoption so that credit-ready borrowers who own their homes as personal property could access better FHA loans for manufactured homes than what is currently possible.
• Ensure reasonable protections: Federal and state policymakers could evaluate current laws regarding contract financing to ensure that consumer protections are sufficient and include manufactured home owners.

Expanding access to mortgages by modernizing state titling policy

Today’s manufactured homes are not the stereotypical flimsy, low-quality trailer homes of the past, yet they’re largely still treated that way by law in most states. Policy changes at the state and federal levels could make it easier for buyers of modern manufactured homes to obtain better financing and allow them to refinance. This could increase the number of borrowers who can afford to buy and remain in a manufactured home. Many of the financing challenges are rooted in the outdated practice of titling manufactured homes as personal property—more like a car than a house—which not only limits access to mortgages but also drives borrowers to risky contract financing. A Pew survey shows that borrowers with homes titled as personal property are more than twice as likely to use contract financing (28%) than manufactured home borrowers who own their homes as real estate (12%).

In fact, manufactured homes are automatically titled as personal property—much like cars—in 49 states, regardless of home quality or landownership. Buyers can obtain a mortgage only if they own the home as real estate; this process, which is not even possible in some states, often requires landownership and proof of specific installation standards. Some states disallow change in titling if there is an existing lien—making refinancing to a better loan type impossible. In contrast, site-built homes are automatically titled as real estate in all 50 states, meaning that credit-ready buyers could get a mortgage.

Seventy-six percent of current manufactured home borrowers say they own both their land and their home, like any other single-family home borrowers. However, one-third of this group still has their home titled as personal property rather than real estate, making them ineligible for mortgages.

To expand access to mortgages and improve affordability, state policymakers could consider updating manufactured home titling laws to make it easier for home owners and buyers to title their homes as real estate, unlocking access to mortgages for families pursuing homeownership.

For manufactured home borrowers who cannot title their home as real estate under current state laws—which is often the case for homebuyers on family, tribal, rented, or resident-owned community (cooperatively owned) land—the next best option is a home-only loan. Research shows that home-only loans can be especially challenging to get—and, because there are no federal programs that help lower costs and increase loan availability similar to those for mortgages, most lenders can’t make home-only loans at scale.

Ways to resurrect existing home-only loan program

FinRegLab, an independent nonprofit research organization, recently interviewed manufactured home experts and published a report noting the importance of updating policies for FHA’s Title I manufactured home loan program, which is designed to insure home-only loans similarly to how FHA mortgage programs insure mortgages. In 2024, a couple of key changes were made—including increasing the loan limits for the first time since 2009 and reducing lender net worth requirements to more closely mirror mortgage policies. Industry experts note the need to make additional updates, aligning Title I policies with standard mortgage practices such as loan documentation policies; allowable fees; and permitting lenders to analyze a loan application using automated, rather than manual, underwriting.

Rachel Siegel is a senior officer and Linlin Liang is a principal associate with The Pew Charitable Trusts’ housing policy initiative.