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There are some borrowers who want to know why it’s not possible to purchase a houseboat or a recreational vehicle (RV) with an FHA mortgage loan. Do you know the difference between a mobile home and an RV? Or why houseboats will never qualify for FHA home loan approval?

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Why You Can't Buy a Houseboat or RV With an FHA Mortgage

Why You Can't Buy a Houseboat or RV With an FHA Mortgage
April 18, 2018 - There are some borrowers who want to know why it’s not possible to purchase a houseboat or a recreational vehicle (RV) with an FHA mortgage loan. Do you know the difference between a mobile home and an RV? Or why houseboats will never qualify for FHA home loan approval?

FHA Loan Rules For New Purchase Mortgages

FHA loan rules for home loans are found in HUD 4000.1, the FHA loan handbook. The handbook includes a list of eligible properties for an FHA home loan. This list includes the following:
  • detached or semi-detached dwellings
  • manufactured housing
  • townhouses or row houses
  • individual units within FHA-approved condominium projects
This list of specific property types does not include vehicles or any property type that is not affixed to a permanent foundation at closing time (see below).

FHA Home Loan Rules for “Real Property”

Note that the only property types that may be purchased with an FHA mortgage loan in the list above are all properties that feature a permanent foundation. The foundation is key to the answer to the question, “Why can’t I buy a houseboat or RV with my FHA mortgage?”.

Any home to be acquired with an FHA-insured mortgage loan must be classifiable as real property, and in order to do that, the permanent foundation is mandatory. You cannot tax an RV or houseboat as real estate, and as such it’s not permitted to use FHA home loan funds to purchase non-real estate items (or pay for upgrades, improvements, renovations, etc.).

FHA Loan Rules for Mobile Homes (Versus RVs)

It would be a mistake to assume after having read the above that FHA home loans cannot be used to buy a home that is classified as a “mobile home”, manufactured home, or modular housing. The mobile home purchased with an FHA mortgage must meet certain age requirements AND be affixed to a permanent foundation as a condition of FHA home loan approval.

The foundation must meet federal standards as well as state/local building code. The home must be affixed to the foundation in a way that is acceptable for the FHA appraisal process, and any shortcomings or issues with the foundation must be addressed where required by the FHA appraisal process.

FHA Appraisals for Mobile Homes

If you are interested in buying a mobile home with an FHA mortgage loan, it is never safe to assume the home is defect free even if it passes the FHA appraisal. The optional (but far more complete) home inspection is an expense well worth the cost. It is the only way to make a more fully informed decision about buying the property.

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