Next Step Network

Support Affordable Homeownership Opportunity for Manufactured Home Buyers

Needs Summary

Next Step (and our partners at Freddie Mac) seek lending institutions to join Next Step Network and participate in the SmartMH program, offering affordable mortgage products very low- and low-income manufactured home buyers and expanding affordable homeownership in communities.

Product or Service Development

Affordable Mortgage Products for Manufactured Home Buyers

December 31, 2020

Details of Need

Next Step seeks banking and lending partners that offer existing mortgage products or specialized mortgage products for manufactured home buyers seeking financing through our SmartMH program. The majority of these buyers will be low- or moderate-income with many located in designated underserved or distressed communities.

Next Step is partnered with Freddie Mac to develop and employ affordable loan products eligible to manufactured homes. We also seek to discuss existing mortgage financial and home buyer programs a bank currently uses (including in-house, KHC, FHA, VA and GSE programs) to determine if one or more of those programs can be deployed as a financing option for our home buyers.

Community Impact

Manufactured housing is the largest source of unsubsidized affordable housing in the United States and is home to 22 million Americans. Historically, manufactured housing has not been recognized for its potential to support financial security and stimulate wealth creation through homeownership. Factory-built housing is a practical solution to the growing affordability gap. A recent study from the Urban Institute estimates that the U.S. needs an additional 430,000 homes for those earning 120 percent of median income, particularly immigrants and low-income homebuyers. Manufactured homes account for 80 percent of all homes priced under $150,000.

The median income for a manufactured home resident is $26,400 as compared to $50,600 for a resident of a site-built home. Twenty-two percent of households living in a manufactured home have an income at or below the federal poverty level, and 75 percent of households earn less than $50,000. The median net worth of individuals is one-fourth that of their counterparts in site-built construction ($26,000 versus $112,500 in 2010 dollars).

The SmartMH program is supported by the SmartMH Task Force, a partnership of the manufactured housing industry, lenders, retailers, utilities, nonprofits and public stakeholders committed to increasing access to high-performing, energy-efficient, affordable homes.

The program has established a referral system (facilitated by referrals from participating manufactured housing retailers and lenders) whereby prospective home buyers can receive housing counseling services and specialized homebuyer education subsidized by Freddie Mac. The goal is to return mortgage-ready buyers to the market, prepared and equipped to make the best home purchasing and financing choices for themselves and their families. Education is available in both English- and Spanish-language.

Since the program began in April 2017, nearly 300 individuals have enrolled in the program, receiving services including credit counseling, financial literacy education and homebuyer education.