The Overlooked Case for Manufactured Housing Finance

Shawn King is executive vice president of national sales and co-founder of Arrive Home, Sandy, Utah.

America’s housing affordability crisis has created a simple but increasingly urgent question for mortgage lenders: Where will the next generation of homeowners come from? As the median price of an existing home has climbed nearly 50% since 2019, a growing share of buyers are finding that traditional site-built homes are simply out of reach. Manufactured housing, which often costs roughly one-third as much, could fill this gap.

But manufactured housing has long been overlooked by the lending community. Part of the problem is that for years, outdated federal policies, stagnant loan limits, and structural barriers constrained lender participation and borrower access.

But now, that reality is changing. The recently passed 21st Century ROAD to Housing Act has the potential to fundamentally reshape the economics of manufactured housing finance, creating a sizable growth opportunity for mortgage lenders.

The Affordability Math

The numbers make a compelling case. The average new manufactured home sold for approximately $123,300 in 2024, compared with a national median home price of roughly $367,000 for a site-built residence. Manufactured homes also cost 35% to 45% less per square foot than comparable traditional construction, creating a viable path to ownership for first-time buyers, working families, retirees, and households that have been sidelined by rising home prices and elevated interest rates.

Yet, despite serving nearly 22 million Americans, manufactured housing finance remains one of the least developed segments of the housing market. That isn’t simply a function of buyer demand. It reflects decades of limited lender investment and a financing structure that hasn’t kept pace with the rest of the mortgage industry.

A Policy Shift

The most promising policy change arrived in March 2024, when the FHA updated loan limits for its Title I Manufactured Home Loan Program for the first time in 16 years. The maximum loan amount for a multi-section manufactured home rose to $193,719 from $92,904, with single section homes now eligible up to $105,532 and lot loans up to $43,377. HUD has also committed to recalculating these limits annually, which should help the program track home prices more closely going forward.

Separately, the bipartisan 21st Century ROAD to Housing Act has eliminated the federal requirement that manufactured homes be built on a permanent steel chassis. This change is expected to have a meaningful impact on affordability and design flexibility. A permanent steel chassis can add an estimated $5,000 to $10,000 to the cost of a home, even though fewer than 5% to 7% of manufactured homes are ever moved after installation. Removing the mandate gives manufacturers greater flexibility in how homes are built, helping reduce construction costs while expanding design options. The change also represents an important step toward treating manufactured homes more like site-built housing, supporting broader adoption as an affordable homeownership solution.

The Financing Challenges Are Real

Any honest look at this market has to start with its financing problems. The FHA Title I program, originally intended to broaden access to affordable financing, is largely dormant today. Origination volume has fallen to marginal levels, and the Ginnie Mae securitization channel for Title I loans, a pathway used by nearly all other FHA single family programs, has seen almost no volume in recent years.

That leaves most borrowers reliant on a concentrated private chattel loan market, where just three lenders control roughly 76% of personal property manufactured housing loans. Limited competition shows up directly in pricing and access. 

In 2024, the average interest rate on a manufactured housing chattel loan was 9.7%, compared with 7.0% for manufactured home mortgages and 6.5% for traditional site-built loans, and that gap traces directly to collateral. Chattel loans finance the home as personal property, the way an auto loan would, while Title II loans finance it as real property once it’s affixed to land the borrower owns, giving lenders the same security profile as a standard mortgage. Weaker collateral makes lenders more cautious across the board, not just on price. According to Pew Charitable Trusts, nearly two thirds of manufactured housing loan applications were denied between 2018 and 2022, a period marked by thin lender participation and few alternative financing paths.

These frictions are real, but they’re also addressable. The same affordability that draws borrowers to manufactured housing creates a strong incentive to fix the financing side of the equation. Lenders who take the time to understand these structural issues, rather than assuming the affordability math resolves them automatically, are well positioned to help close that gap.

Who These Borrowers Are

Behind the policy and pricing details is a borrower population many lenders already aim to serve. Manufactured housing buyers tend to be first-time homebuyers, rural households, retirees looking to downsize, and families earning between 50% and 80% of area median income. They’re often underserved by conventional mortgage products, even as demand continues to grow. Manufactured home shipments rose to approximately 103,300 units in 2024, up from 89,169 the year before, with shipments continuing to climb through 2025. And, industry forecasts suggest the broader manufactured housing market could grow from roughly $24.4 billion in 2024 to nearly $43 billion by 2034.

This demand is especially concentrated across the South and Sun Belt. Florida alone is home to more than 824,000 manufactured housing units. For lenders weighing whether to build out this capability, that scale is worth noting.

Why This Market Deserves a Closer Look

The good news for lenders is that policymakers have already done much of the heavy lifting. FHA loan limits now better reflect the realities of today’s manufactured housing market, HUD has committed to keeping those limits current through annual updates, and momentum continues to build behind reforms designed to expand housing supply and design flexibility. For lenders ready to act, the practical first steps are refreshingly familiar: pursuing FHA Title I approval, educating underwriting and operations teams on manufactured housing products, and building partnerships with platforms or correspondent channels that already operate in this market. Lenders building this capability should also look to pair that Title I approval with Title II underwriting for borrowers who own their land outright, since land ownership is what gives a manufactured home real property status and the resale value that comes with it. None of these require a wholesale strategic pivot, which makes this an accessible entry point. Lenders can start small and grow their involvement as they build expertise in a market that remains thinly served and increasingly open to new participants.

Manufactured housing may not become a mainstream mortgage product overnight, but the trajectory is encouraging. For lenders willing to invest in understanding its underwriting nuances, this market offers a genuine opportunity to expand an affordable housing strategy, especially as policy continues to move in the program’s favor.

(Views expressed in this article do not necessarily reflect policies of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes submissions from member firms. Inquiries can be sent to Editor Michael Tucker or Editorial Manager Anneliese Mahoney.)