Modernizing State Titling Policies to Expand Access to Manufactured Home Mortgages

Today’s manufactured homes are far from the outdated, low-quality trailer homes of the past, yet they continue to be treated as such by law in most states. With the right policy changes at both the state and federal levels, buyers of modern manufactured homes could access better financing options and refinance opportunities, leading to greater affordability and stability. However, many financing challenges are rooted in outdated practices—specifically, state titling policies which treat manufactured homes as personal property rather than real estate, which limits access to traditional mortgages and forces many buyers into risky contract financing.

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A recent survey found that borrowers whose homes are personal property are more than twice as likely to rely on contract financing (28%) compared to those who own their homes as real estate (12%). This stark contrast in financing options highlights the barriers created by antiquated titling laws and the lack of access to affordable, secure loans.

The Problem: Outdated State Titling Policies

In 49 states, manufactured homes are automatically titled personal property, similar to vehicles, regardless of their quality or whether they are placed on owned land. A buyer can only obtain a mortgage if they own the manufactured home as real estate, a process that is not even available in some states. This often requires land ownership and the ability to meet specific installation standards. Some states even disallow changes in titling if there’s an existing lien, preventing homeowners from refinancing to more favorable loan options.

In contrast, site-built homes are automatically titled as real estate across all 50 states, allowing eligible borrowers to obtain traditional mortgages. Although 76% of current manufactured home borrowers own both their home and land, about one-third of these homeowners still have their homes titled as personal property, thus excluding them from mortgage opportunities.

The Solution: Modernizing Titling to Unlock Mortgage Access

To improve access to mortgages and reduce housing costs, state policymakers could update manufactured home titling laws to make it easier for homeowners to title their homes as real estate. This change would grant borrowers greater access to traditional mortgages, enhancing affordability and allowing them to build home equity.

Improved financing for manufactured homes is essential for increasing their use as a source of affordable housing. If the financing were improved, it would open the floodgates. It would make manufactured home buying easier, cheaper, and safer.

For those who cannot title their manufactured homes as real estate under existing state laws—often due to the home being located on rented, family, or tribal land—home-only loans are the next best option. However, research shows that these loans are difficult to obtain. Without federal programs to support and lower costs, home-only loans are often left to private lenders and equity groups, making them a less accessible and more expensive option.

Reviving the Home-Only Loan Program

A recent report from FinRegLab, an independent nonprofit research organization, highlights the need for policy updates to the FHA’s Title I manufactured home loan program. Title I ensures home-only loans, much like how FHA mortgages insure traditional home loans. In 2024, key changes were made to this program, such as increasing loan limits for the first time since 2009 and reducing lender net worth requirements to better align with standard mortgage policies.

Despite these updates, experts agree that further revisions are needed. These include aligning Title I policies with standard mortgage practices such as loan documentation standards, allowable fees, and the adoption of automated underwriting to improve efficiency and accessibility. A robust secondary market for home-only loans could increase homeownership opportunities for more Americans. If we had a robust secondary market, I do believe we could offer homeownership to more Americans.

Looking Ahead: Collaborative Solutions and Pilot Programs

Moving forward, industry experts suggest that more data is needed to help lenders confidently price and structure these loans. One possible solution is for the FHA to collaborate with lenders on pilot programs or research initiatives to gather data from existing sources. By working together, lenders and policymakers could make the FHA programs more attractive and effective, ultimately helping more people access affordable homeownership opportunities.

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Bottom Line

The path to expanding access to mortgages for manufactured home buyers is clear: modernize state titling policies, revamp the home-only loan program, and create a more robust secondary market for these loans. By making these changes, policymakers can unlock homeownership opportunities for a wider range of families, helping to address the affordable housing crisis and promoting long-term housing stability for manufactured home buyers. The time is now for updating outdated policies and creating a better future for affordable homeownership.