Department of Agriculture (USDA), Rural Housing Service Final Rule Expanding Opportunities to Manufactured Housing in the USDA Program

On January 3, 2025, USDA published a final rule with the, “intent…to allow the Agency to give borrowers increased purchase options within a competitive market and increase adequate housing along with an enhanced customer experience with the SFH programs.”

The USDA housing programs are:

Section 502 Direct Loan Program assists low- and very low-income applicants who currently do not own adequate housing and cannot obtain other credit, the opportunity to acquire, build, rehabilitate, improve, or relocate dwellings in rural areas.

Section 502 Guaranteed Loan Program assists low- and moderate-income applicants the opportunity to acquire, build, rehabilitate, improve, or relocate dwellings in rural areas.

Specifically, regarding the eligibility of manufactured homes, the final rule:

• Permits the purchase of existing manufactured homes by clarifying that borrowers are allowed, under the Direct and Guaranteed loan programs, to purchase existing manufactured homes constructed in conformance with FMHCSS, on or after a date, as determined by the Agency;
• Allows for a lease with an unexpired term that is at least two years longer than the loan term for new energy efficient manufactured and modular home financing in land-lease communities operating on a nonprofit basis and Tribal lands;
• Amends the definition of a “New dwelling” for a manufactured home by removing the reference to “purchase contract” and replacing the text with “date of loan closing” for 502 Guaranteed loans;
• For direct loans only, removes the administrative requirements from the regulations for review and approval of applications from manufactured housing dealers; and
• Revises the definition of “Manufactured home” to remove reference to RHS thermal performance standards because SFH is exempt from RHS Thermal Performance Standards compliance.

The final rule is effective March 4, 2025.