Congress Made It Cheaper To Build Manufactured Homes. They’re Still Expensive To Buy.

Washington is hoping to fix the nation’s lack of affordable housing with manufactured homes — but the loans to buy them are still expensive.

Congress’s new, bipartisan housing law is expected to lower the price of units that are largely constructed off-site and sometimes sit on land that is rented rather than owned. But the law doesn’t fully address interest rates for the loans on those homes, which often reach near double digits. And that price could still lock out many prospective buyers.

The so-called personal property loans that are often used to purchase manufactured houses generally can’t be bundled and sold off to investors, which increases the risk for the lender that will likely be stuck holding them. The result: rates that are multiple percentage points higher than typical mortgages.

Now, some in Washington are hoping to ride the affordability wave to make factory-built home loans cheaper and more widely available by providing more federal government support for them.

“Congress must capitalize on the momentum of the landmark 21st Century ROAD to Housing Act — which took important steps to support affordable manufactured housing by eliminating outdated requirements — and continue to invest in affordable housing for all Americans,” Sen. Jeff Merkley (D-Ore.) told POLITICO in a statement.

The recently enacted housing package directs the Department of Housing and Urban Development to strike the national requirement that manufactured homes have a permanent, steel frame. That provision is widely hailed as one of the most consequential pieces of the legislation, which is aimed at addressing the nation’s multimillion-unit housing supply shortage.

The previous requirement stemmed from a time when manufactured housing was mostly synonymous with mobile homes that needed a steel base for transport, and authors of the bill deemed it no longer necessary. The center-right Niskanen Center estimates that Congress’ move to repeal that requirement could reduce construction prices by as much as $10,000.

Now, both the Trump administration and some congressional Democrats are trying to revamp previous efforts to increase the affordability of personal property loans — which are used by 44 percent of borrowers looking to purchase manufactured homes, according to analysis from Pew Charitable Trusts.

Some of those homebuyers were ineligible for regular mortgages because they rent their plot of land instead of owning it. Others own their land but state laws make it difficult to qualify for a typical mortgage with a manufactured home.

But opting for a personal property loan means missing out on the support that the federal government provides for most mortgages.

The government keeps typical mortgages widely available and relatively low-cost by supporting a financial system that offers liquidity to the lenders and insulates them from risk. The government-controlled companies Fannie Mae and Freddie Mac purchase mortgages from lenders, package the debt and sell it as bonds to investors.

For years, the government has pushed Fannie and Freddie to open a pilot program to include personal property loans for manufactured homes in the secondary market they uphold — but no program has materialized. Under pressure from voters to address their cost-of-living concerns, some in Washington are hoping to change that.

Democratic Sens. Merkley, John Hickenlooper and Peter Welch introduced legislation in June that would establish a 30-month deadline for Fannie and Freddie to take on some of the financial risk from personal property loans.

“While there has been some interest at the federal level to address these loans, my bill is a necessary step forward to bring these ideas into action,” Merkley told POLITICO.

President Donald Trump in a March executive order also charged the Federal Housing Finance Agency, which oversees Fannie and Freddie, with finding a solution for personal property loans.

Fannie and Freddie declined to provide comment for this story. In a 2024 progress report to FHFA, Freddie indicated it needed more time to gather and analyze industry data before launching a pilot program.

FHFA proposed changes in June to its regulations requiring Fannie and Freddie to target some of their purchasing power towards supporting low-income markets. The agency said at the time that it wants to make its requirements more flexible in an effort to encourage innovative approaches to boosting manufactured homes and other affordable housing.

“Thanks to President Trump’s leadership, Federal Housing [Finance Agency] is pioneering manufactured housing solutions for America’s families,” an FHFA spokesperson said in a statement. The agency is undertaking “ongoing work to implement the President’s order to develop appropriate policies for personal-property manufactured housing.”

Although the pilot program would only involve a small number of loans, proponents hope it will set an example for how to incorporate manufactured housing into the secondary market long term.

“You've got to do these things because the market is not doing them,” said Scott Olson, executive director of the industry group Community Home Lenders of America. Fannie and Freddie are “supposed to be the leaders.”

Even so, federal support won’t necessarily eliminate the gap between interest rates on manufactured and traditional, site-built homes.

Manufactured homebuyers with typical mortgages — which receive federal government support — tend to face interest rates around 1 percentage point higher on average compared to buyers purchasing site-built houses. This is partially because Fannie and Freddie charge extra fees on some of those mortgages, which are considered higher risk.

FHFA also isn’t the only agency on the hook for manufactured housing loans. HUD already has a program designed to support personal property financing by offering insurance policies for those loans — but outdated policies left the initiative underutilized for decades.

Under Trump and former President Joe Biden, HUD has sought to reduce regulatory burdens around manufactured homes, including easing some construction requirements and modernizing the personal property loan program.

Congress’s new housing law also updated HUD’s program to ensure the limits on the size of eligible loans keep pace with manufactured home prices over time.

Still, some issues remain. HUD’s administrative requirements for lenders who want to participate are hard for some smaller institutions to meet. The program's system to evaluate homebuyers’ credit is also different from the one many lenders are accustomed to.

The department “remains committed to facilitating the financing of manufactured homes,” alongside its work to make those houses easier to build, a HUD spokesperson said in a statement.

Consumer protections are also a concern. Not all personal property loans fall under the same rules meant to ensure transparency and fairness in lending as mortgages. And if a manufactured home owner lives on a rented plot of land, they can face destabilizing rent hikes.

Daniel Pang, a research associate at Urban Institute, said “there’s been a lot of discussion” among housing advocates about how the consumer protections found in other HUD, Fannie and Freddie programs could be adapted to guard manufactured homebuyers against unfair lending practices or unexpected rent increases.

“I think a lot of what [Fannie and Freddie] provide, as well as [HUD], in terms of some of these protections for their products is honestly a good framework for what we’d be looking to add to some of these personal property loans.”

Updating decades-old programs and launching a new pilot initiative will be a heavy lift for agencies that are already tasked with carrying out Congress’ new housing law. But proponents argue making these loans more affordable is essential to advance the legislation’s key goal of promoting manufactured housing supply.

“It’s not just about a slightly better rate. It’s about creating an environment where there's a stronger financing market,” said Olson of the Community Home Lenders of America. “If you have more financing available, then there's going to be more manufactured home construction, and building, and sales. It’s really going to have a profound impact.”