Customized Freddie Mac-Insured Loans for Manufactured Housing Communities 

In many areas of the U.S., manufactured housing communities (MHCs) are often the only reliable source of affordable housing — which is why Freddie Mac is eager to help maintain the supply of high-qualify manufactured housing around the country.

If you're an investor or developer looking to purchase or refinance a MHC, Freddie Mac's Manufactured Housing Community Loan could be a great option. Manufactured Housing Community Loans offer flexible 5, 7, and 10-year terms and amortizations as long as 30 years. Plus, these loans are non-recourse and have LTV allowances as high as 80% for eligible properties.

To learn more, check out Freddie Mac’s official Manufactured Housing Community Loan Product Sheet or keep reading below for an in-depth explanation of the Freddie Mac Manufactured Housing Community Loan program.

Sample Freddie Mac Terms for Manufactured Housing Community Loans in 2023

Size:  $1 million minimum 

Terms:  Up to 7, 5, and 10-year terms (longer loans may be approved on an individual basis), both fixed and variable-rate loans available, partial and full term interest-only loans also available 

Amortization: Up to 30 years 

Maximum LTV/Minimum DSCR:  

• 5-7 Year Loans:

  • Amortizing: 75%/1.30x

  • Partial Term Interest-Only: 75%/1.30x

  • Full Term Interest-Only: 65%/1.40x

• 7 Year Loans:

  • Amortizing: 80%/1.25x

  • Partial Term Interest-Only: 80%/1.25x

  • Full Term Interest-Only: 70%/1.30x

• 7+ Year Loans:

  • Amortizing: 80%/1.25x

  • Partial Term Interest-Only: 80%/1.25x

  • Full Term Interest-Only: 70%1.35x

Recourse: Most loans are non-recourse with standard “bad boy” carve-out

Prepayment Options: Yield maintenance until securitization, 2-year lock-out period following securitization, defeasance allowed after securitization. Yield maintenance for securitized loans is permitted for an additional fee. No pre-payment premiums required in the last 90 days of the loan, or if the loan is refinanced with another Freddie Mac loan. 

Eligible Borrowers:  

• Should have 2+ years experience owning manufactured housing communities, and should currently own at least one other manufactured housing community.

• Can be a corporation, limited partnership, tenancy in common with no more than 10 members, or a limited liability company. REITs, general partnerships, some trusts, and limited liability partnerships are sometimes allowed, depending on the circumstances.

• For loans less than $5 million, borrowers can be a Single Asset Entity or a Single Purpose Entity. For loans more than $5 million, they must be a Single Purpose Entity, or SPE, (except for tenants in common, which each member must be an SPE, regardless off size).

Eligible Properties:  

• Stabilized manufactured housing communities with professional management. Age restrictions allowed, but Seniors Housing Loans are not.

• Must have at least five pad sites.

• No more than 25% of homes can be rented out.

• Manufactured homes must follow HUD safety standards, and must be compliant. with the Federal Manufactured Home Construction and Safety Standards Act of 1974.

• Leases must not have the option to purchase either the pad site or a borrower owned manufactured home.

• Private wells/septic systems are permitted under certain circumstances.

• No RV resorts or broken condominiums allowed.

Sellers/Servicers:  Freddie Mac Multifamily Approved Seller/Servicers can originate/service these loans, but in general, Freddie Mac prefers seller/servicers with specific experience financing manufactured housing communities. 

Supplemental Financing:  Available 

Assumability:  Loans are assumable with lender approval, but require a 1% assumption fee paid to Freddie Mac and a $5,000 underwriting fee paid to the lender 

Timing:  Borrower will typically receive a commitment 45 to 60 days after initial application; third-party report timing and borrower due diligence submission may speed up or slow down the process

Advantages:

• Very competitive interest rates

• Loans are non-recourse

• 60-120 day rate locks available, with early-rate lock, spread-lock, and index-lock options available

• Loans fully assumable (with approval and fees)

Disadvantages:

• Typically requires third-party reports, including appraisal, Phase I Environmental Assessment, and physical condition assessment

• Application fees required: $2,000 or 0.1% of loan amount (whichever is larger)

• Replacement reserves required ($50/pad site per year, or $250/rented manufactured home per year, if owned by the borrower and included in the loan's collateral)

• Typically requires a loan origination fee

• Typically requires between $8,000 and $12,000 in legal fees

• Lender application fees also required (avg. of $15,000, including third-party reports, but may vary based on specific lender)

• 2% rate lock fee usually required (refunded after Freddie Mac purchases loan, usually around 30 days post-closing)