source:
  type: guide
  id: hud-4000-1-ii-d-underwriting-the-borrower-2
  authority: FHA Single Family Housing Policy Handbook 4000.1, Part II — d. Underwriting
    the Borrower (05/08/2025)
  description: FHA Single Family Housing Policy Handbook 4000.1, Part II — d. Underwriting
    the Borrower (05/08/2025).
  coverage_tier: operative
obligations:
- id: hud-4000-1-ii-d-underwriting-the-borrower-2-full
  canonical_id: hud-4000-1-ii-d-underwriting-the-borrower-2-full
  section: FHA Single Family Housing Policy Handbook 4000.1, Part II — d. Underwriting
    the Borrower (05/08/2025)
  type: do
  tags:
  - regulator-direct
  - fha
  - hud-handbook
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: FHA Single Family Housing Policy Handbook 4000.1, Part II — d. Underwriting
      the Borrower (05/08/2025)
    source_class: hud-handbook
    source_url: https://www.hud.gov/hud-partners/single-family-handbook-4000-1
    snapshot_id: 8c03836f77f317e1
    fetched_at: '2026-05-23T00:28:40Z'
    content_hash: sha256:411430f29b13f9b54a2ebb0e6f6e7087ecd2b90d0da22eb0c8c792eaa2d7d0df
    paragraph_quote: 'd. Underwriting the Borrower (05/08/2025) The Lender must evaluate
      the Borrower’s ability and willingness to repay a Loan for the purchase or refinance
      of a Title I Manufactured Home Loan product. The Lender must exercise prudent
      underwriting practices when evaluating the creditworthiness of the Borrower
      and the value of the Property being offered as collateral, in order to limit
      the risk of Default. Title I Loans are not eligible for automated underwriting
      through the Technology Open To Approved Lenders (TOTAL) Scorecard. Once it is
      determined that the Borrower and the Property are eligible, analysis of the
      Borrower’s credit must be performed for final loan approval, including review
      and documentation of the following: • downpayment and other required funds •
      credit history • employment history II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1
      1046 Last Revised: 11/26/2025 • income • assets • liabilities • debt ratios
      • compensating factors If the Loan involves a HUD employee, the Lender must
      underwrite the transaction in accordance with the guidance in this section.
      The Lender must submit the underwritten loan application package to the Director
      of the Financial Operations Center (FOC) for final underwriting approval. i.
      Credit Requirements (A) General Credit Requirements FHA’s general credit policy
      requires Lenders to analyze the Borrower’s credit history, liabilities, and
      debts to determine creditworthiness. The Lender must obtain a merged credit
      report from an independent consumer reporting agency. The Lender must obtain
      a credit report for each Borrower who will be obligated on the loan Note. The
      Lender may obtain a joint report for individuals with joint accounts. Before
      making a determination on the creditworthiness of an applicant, a Lender must
      conduct an interview to resolve any material discrepancies between the information
      on the loan application and information on the credit report to determine accurate
      and complete information. The Lender is not required to obtain a credit report
      for non-credit qualifying Streamline Refinance transactions. (B) Types of Credit
      History (1) Traditional Credit Lenders must pull a credit report that draws
      and merges information from three national credit bureaus. Lenders are prohibited
      from developing non-traditional credit history to use in place of a traditional
      credit report. If the credit report generates a credit score, the Lender must
      utilize traditional credit history. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1
      1047 Last Revised: 11/26/2025 (a) Requirements for the Credit Report Credit
      reports must obtain all information from three credit repositories pertaining
      to credit, residence history, and public records information; be in an easy
      to read and understandable format; and not require code translations. The credit
      report may not contain whiteouts, erasures, or alterations. The Lender must
      retain copies of all credit reports. The credit report must include: • the name
      of the Lender ordering the report; • the name, address, and telephone number
      of the consumer reporting agency; • the name and SSN of each Borrower; and •
      the primary repository from which any particular information was pulled, for
      each account listed. A truncated SSN is acceptable for FHA loan insurance purposes
      provided that the loan application captures the full nine-digit SSN. The credit
      report must also include: • all inquiries made within the last 90 Days; • all
      credit and legal information not considered obsolete under the FCRA, including
      information for the last seven years regarding: o bankruptcies; o Judgments;
      o lawsuits; o foreclosures; and o tax liens; and • for each Borrower debt listed:
      o the date the account was opened; o high credit amount; o required monthly
      payment amount; o unpaid balance; and o payment history. (b) Updated Credit
      Report or Supplement to the Credit Report The Lender must obtain an updated
      credit report or supplement if the underwriter identifies material inconsistencies
      between any information in the case binder and the original credit report. (2)
      Non-traditional Credit For Borrowers without a credit score, the Lender must
      independently develop the Borrower’s credit history using the requirements outlined
      below. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs
      4. Manufactured Home Loan Program Handbook 4000.1 1048 Last Revised: 11/26/2025
      (a) Independent Verification of Non-traditional Credit Providers The Lender
      may independently verify the Borrower’s credit references by documenting the
      existence of the credit provider and that the provider extended credit to the
      Borrower. To verify the existence of each credit provider, the Lender must review
      public records from the state, county, or city or other documents providing
      a similar level of objective information. To verify credit information, the
      Lender must: • use a published address or telephone number for the credit provider
      and not rely solely on information provided by the applicant; and • obtain the
      most recent 12 months of canceled checks, or equivalent proof of payment, demonstrating
      the timing of payment to the credit provider. To verify the Borrower’s rental
      payment history, the Lender must obtain a rental reference from the appropriate
      rental management company or landlord, demonstrating the timing of payment for
      the most recent 12 months in lieu of 12 months of canceled checks or equivalent
      proof of payment. (b) Sufficiency of Non-traditional Credit References To be
      sufficient to establish the Borrower’s credit, the non-traditional credit history
      must include three credit references, including at least one of the following:
      • rental housing payments (subject to independent verification if the Borrower
      is a renter); • telephone service; or • utility company reference (if not included
      in the rental housing payment), including: o gas; o electricity; o water; o
      television service; or o Internet service. If the Lender cannot obtain all three
      credit references from the list above, the Lender may use the following sources
      of unreported recurring debt: • insurance premiums not payroll deducted (e.g.,
      medical, auto, life, renter’s insurance); • payment to child care providers
      made to businesses that provide such services; • school tuition; II. ORIGINATION
      THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured
      Home Loan Program Handbook 4000.1 1049 Last Revised: 11/26/2025 • retail store
      credit cards (e.g., from department, furniture, or appliance stores, or specialty
      stores); • rent-to-own (e.g., furniture, appliances); • payment of that part
      of medical bills not covered by insurance; • a documented 12-month history of
      savings evidenced by regular deposits resulting in an increased balance to the
      account that: o were made at least quarterly; o were not payroll deducted; and
      o caused no Insufficient Funds (NSF) checks; • an automobile lease; • a personal
      loan from an individual with repayment terms in writing and supported by canceled
      checks to document the payments; or • a documented 12-month history of payment
      by the Borrower on an account for which the Borrower is an authorized user.
      (3) Minimum Decision Credit Score (a) Definition The Minimum Decision Credit
      Score (MDCS) refers to the credit score reported on the Borrower’s credit report
      when all reported scores are the same. Where three differing scores are reported,
      the middle score is the MDCS. Where two differing scores are reported, the MDCS
      is the lowest score. Where only one score is reported, that score is the MDCS.
      An MDCS is determined for each Borrower. (b) Standard The Lender must determine
      the MDCS. An MDCS has not been established for Title I Manufactured Home Loans
      that would replace the credit underwriting requirements for this program. The
      credit score will only affect the amount of downpayment required. (c) Required
      Documentation/Data Entry When credit scores are available, the Lender must report
      all scores in FHAC for each Borrower. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1
      1050 Last Revised: 11/26/2025 (C) Evaluating Credit History (1) General Credit
      The underwriter must examine the Borrower’s overall pattern of credit behavior,
      not just isolated unsatisfactory or slow payments, to determine the Borrower’s
      creditworthiness. (2) Types of Payment Histories The underwriter must evaluate
      the Borrower’s payment histories in the following order: (1) previous housing
      expenses and related expenses, including utilities; (2) installment debts; and
      (3) revolving accounts. (a) Satisfactory Credit The underwriter may consider
      a Borrower to have an acceptable payment history if the Borrower has made all
      housing and installment debt payments on time for the previous 12 months and
      has no more than two 30-Day late Loan Payments or installment payments in the
      previous 24 months. The underwriter may approve the Borrower with an acceptable
      payment history if the Borrower has no major derogatory credit on revolving
      accounts in the previous 12 months. Major derogatory credit excludes medical
      collections. On revolving accounts, major derogatory credit must include any
      payments made more than 90 Days after the due date, or three or more payments
      more than 60 Days after the due date. (b) Payment History Requiring Additional
      Analysis If a Borrower’s credit history does not reflect satisfactory credit
      as stated above, the Borrower’s payment history requires additional analysis.
      The Lender must analyze the Borrower’s delinquent accounts to determine whether
      late payments were based on a disregard for financial obligations, an inability
      to manage debt, or extenuating circumstances. The Lender must document this
      analysis in the case binder. Any explanation or documentation of delinquent
      accounts must be consistent with other information in the file. The underwriter
      may only approve a Borrower with a credit history not meeting the satisfactory
      credit history above if the underwriter has documented the delinquency was related
      to extenuating circumstances. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1
      1051 Last Revised: 11/26/2025 (3) Payment History on Housing Obligations The
      Lender must determine the Borrower’s housing obligation payment history through:
      • the credit report; • verification of rent received directly from the landlord
      (for landlords with no Identity of Interest with the Borrower); • verification
      of Loan Payments received directly from the loan Servicer; or • a review of
      canceled checks that cover the most recent 12-month period. The Lender must
      verify and document the previous 12 months of housing history. For Borrowers
      who indicate they are living rent-free, the Lender must obtain verification
      from the property owner where they are residing that the Borrower has been living
      rent-free and the amount of time the Borrower has been living rent-free. A Loan
      that has been modified must utilize the payment history in accordance with the
      modification agreement for the time period of modification in determining late
      housing payments. (4) Collection Accounts (a) Definition A Collection Account
      is a Borrower’s loan or debt that has been submitted to a collection agency
      through a creditor. (b) Standard The Lender must determine if collection accounts
      were a result of: • the Borrower’s disregard for financial obligations; • the
      Borrower’s inability to manage debt; or • extenuating circumstances. The Lender
      may disregard collections occurring more than two years prior to the date of
      loan application. (c) Required Documentation The Lender must document reasons
      for approving a Loan when the Borrower has any collection accounts. The Borrower
      must provide a letter of explanation, which is supported by documentation, for
      each outstanding collection account. The explanation and supporting documentation
      must be consistent with other credit information in the file. Collections occurring
      more than two years ago do not require explanation. II. ORIGINATION THROUGH
      POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured Home Loan
      Program Handbook 4000.1 1052 Last Revised: 11/26/2025 (5) Charge Off Accounts
      (a) Definition Charge Off Account refers to a Borrower’s loan or debt that has
      been written off by the creditor. (b) Standard The Lender must determine if
      Charge Off Accounts in the past 24 months were a result of: • the Borrower’s
      disregard for financial obligations; • the Borrower’s inability to manage debt;
      or • extenuating circumstances. (c) Required Documentation The Lender must document
      reasons for approving a Loan when the Borrower has any Charge Off Accounts in
      the past 24 months. The Borrower must provide a letter of explanation, which
      is supported by documentation, for each outstanding Charge Off Account. The
      explanation and supporting documentation must be consistent with other credit
      information in the file. (6) Disputed Derogatory Credit Accounts (a) Definition
      Disputed Derogatory Credit Account refers to disputed Charge Off Accounts, disputed
      collection accounts, and disputed accounts with late payments in the last 24
      months. (b) Standard The Lender must analyze the documentation provided for
      consistency with other credit information to determine if the derogatory credit
      account should be considered in the underwriting analysis. The following items
      may be excluded from consideration in the underwriting analysis: • disputed
      medical accounts; and • disputed derogatory credit resulting from identity theft,
      credit card theft or unauthorized use provided the Lender includes a copy of
      the police report or other documentation from the creditor to support the status
      of the account in the case binder. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1
      1053 Last Revised: 11/26/2025 (c) Required Documentation If the credit report
      indicates that the Borrower is disputing derogatory credit accounts, the Borrower
      must provide a letter of explanation and documentation supporting the basis
      of the dispute. If the disputed derogatory credit resulted from identity theft,
      credit card theft or unauthorized use balances, the Lender must obtain a copy
      of the police report or other documentation from the creditor to support the
      status of the accounts. (7) Judgments (a) Definition Judgment refers to any
      debt or monetary liability of the Borrower, and the Borrower’s spouse in a community
      property state unless excluded by state law, created by a court, or other adjudicating
      body. (b) Standard The Lender must verify that court-ordered Judgments are resolved
      or paid off prior to or at closing. Regardless of the amount of outstanding
      Judgments, the Lender must determine if the Judgment was a result of: • the
      Borrower’s disregard for financial obligations; • the Borrower’s inability to
      manage debt; or • extenuating circumstances. Exception A Judgment is considered
      resolved if the Borrower has entered into a valid agreement with the creditor
      to make regular payments on the debt, the Borrower has made timely payments
      for at least three months of scheduled payments and the Judgment will not supersede
      the FHA-insured Loan lien. The Borrower cannot prepay scheduled payments in
      order to meet the required minimum of three months of payments. The Lender must
      include the payment amount in the agreement in the calculation of the Borrower’s
      DTI ratio. The Lender must obtain a copy of the agreement and evidence that
      payments were made on time in accordance with the agreement. II. ORIGINATION
      THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured
      Home Loan Program Handbook 4000.1 1054 Last Revised: 11/26/2025 (c) Required
      Documentation The Lender must provide the following documentation: • evidence
      of payment in full, if paid prior to settlement; • the payoff statement, if
      paid at settlement; or • the payment arrangement with the creditor, if not paid
      prior to or at settlement, and a subordination agreement for any liens existing
      on title. (8) Bankruptcy (a) Standard: Chapter 7 A Chapter 7 bankruptcy (liquidation)
      does not disqualify a Borrower from obtaining an FHA-insured Loan if, at the
      time of case number assignment, at least two years have elapsed since the date
      of the bankruptcy discharge. During the most recent two years, the Borrower
      must have: • re-established good credit; or • chosen not to incur new credit
      obligations. An elapsed period of less than two years, but not less than 12
      months, may be acceptable, if the Borrower: • can show that the bankruptcy was
      caused by extenuating circumstances beyond the Borrower’s control; and • has
      since exhibited a documented ability to manage their financial affairs in a
      responsible manner. (b) Standard: Chapter 13 A Chapter 13 bankruptcy does not
      disqualify a Borrower from obtaining an FHA-insured Loan, if at the time of
      case number assignment at least 12 months of the payout period under the bankruptcy
      has elapsed. The Lender must determine that during the most recent 12 months,
      the Borrower’s payment performance has been satisfactory and all required payments
      have been made on time, and the Borrower has received written permission from
      bankruptcy court to enter into the loan transaction. (c) Required Documentation
      If the credit report does not verify the discharge date or additional documentation
      is necessary to determine if any liabilities were discharged in the bankruptcy,
      the Lender must obtain the bankruptcy and discharge documents. The Lender must
      also document that the Borrower’s current situation indicates that the events
      which led to the bankruptcy are not likely to recur. II. ORIGINATION THROUGH
      POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured Home Loan
      Program Handbook 4000.1 1055 Last Revised: 11/26/2025 (9) Foreclosure and Deed-in-Lieu
      of Foreclosure (a) Standard A Borrower is generally not eligible for a new FHA-insured
      Loan if the Borrower had a foreclosure or a Deed-in-Lieu (DIL) of Foreclosure
      in the three-year period prior to the date of case number assignment. This three-year
      period begins on the date of the DIL or the date that the Borrower transferred
      ownership of the Property to the foreclosing entity/designee. Exception The
      Lender may grant an exception to the three-year requirement if the foreclosure
      was the result of documented extenuating circumstances that were beyond the
      control of the Borrower, such as a serious illness or death of a wage earner,
      and the Borrower has re-established good credit since the foreclosure. Divorce
      is not considered an extenuating circumstance. An exception may, however, be
      granted where a Borrower’s Mortgage was current at the time of the Borrower’s
      divorce, the ex-spouse received the Property, and the Mortgage was later foreclosed.
      The inability to sell the Property due to a job transfer or relocation to another
      area does not qualify as an extenuating circumstance. (b) Required Documentation
      If the credit report does not indicate the date of the foreclosure or DIL of
      Foreclosure, the Lender must obtain the Settlement Statement, deed or other
      legal documents evidencing the date of property transfer. If the foreclosure
      or DIL of Foreclosure was the result of a circumstance beyond the Borrower’s
      control, the Lender must obtain an explanation of the circumstance and document
      that the circumstance was beyond the Borrower’s control. (10) Pre-Foreclosure
      Sales (Short Sales) (a) Definition Pre-Foreclosure Sales, also known as Short
      Sales, refer to the sales of real estate that generate proceeds that are less
      than the amount owed on the Property and the lien holders agree to release their
      liens and forgive the deficiency balance on the real estate. II. ORIGINATION
      THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured
      Home Loan Program Handbook 4000.1 1056 Last Revised: 11/26/2025 (b) Standard
      A Borrower is generally not eligible for a new FHA-insured Loan if they relinquished
      a Property through a Short Sale within three years from the date of case number
      assignment. This three-year period begins on the date of transfer of title by
      Short Sale. (i) Exception for Borrower Current at the Time of Short Sale A Borrower
      is considered eligible for a new FHA-insured Loan if, from the date of case
      number assignment for the new Loan: • all Mortgage Payments on the prior Mortgage
      were made within the month due for the 12-month period preceding the Short Sale;
      and • installment debt payments for the same time period were also made within
      the month due. (ii) Exception for Extenuating Circumstances The Lender may grant
      an exception to the three-year requirement if the Short Sale was the result
      of documented extenuating circumstances that were beyond the control of the
      Borrower, such as a serious illness or death of a wage earner, and the Borrower
      has re-established good credit since the Short Sale. Divorce is not considered
      an extenuating circumstance. An exception may, however, be granted where a Borrower’s
      Mortgage was current at the time the Borrower’s divorce, the ex-spouse received
      the Property, and there was a subsequent Short Sale. The inability to sell the
      Property due to a job transfer or relocation to another area does not qualify
      as an extenuating circumstance. (c) Required Documentation If the credit report
      does not indicate the date of the Short Sale, the Lender must obtain the Settlement
      Statement, deed or other legal documents evidencing the date of property transfer.
      If the Short Sale was the result of a circumstance beyond the Borrower’s control,
      the Lender must obtain an explanation of the circumstance and document that
      the circumstance was beyond the Borrower’s control. II. ORIGINATION THROUGH
      POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured Home Loan
      Program Handbook 4000.1 1057 Last Revised: 11/26/2025 (11) Credit Counseling/Payment
      Plan Participating in a consumer credit counseling program does not disqualify
      a Borrower from obtaining an FHA-insured Loan, provided the Lender documents
      that: • one year of the payout period has elapsed under the plan; • the Borrower’s
      payment performance has been satisfactory and all required payments have been
      made on time; and • the Borrower has received written permission from the counseling
      agency to enter into the loan transaction. (D) Evaluating Liabilities and Debt
      (1) General Liabilities and Debt (a) Standard The Lender must determine the
      Borrower’s monthly liabilities by reviewing all debts listed on the credit report,
      the URLA (Fannie Mae Form 1003/Freddie Mac Form 65), and required documentation.
      All applicable monthly liabilities must be included in the qualifying ratio.
      Closed- end debts do not have to be included if they will be paid off within
      six months and the cumulative payments of all such debts are less than or equal
      to 5 percent of the Borrower’s gross monthly income. The Borrower may not pay
      down the balance in order to meet the six-month requirement. Accounts for which
      the Borrower is an authorized user must be included in a Borrower’s DTI ratio
      unless the Borrower provides written certification that they do not make payments,
      and are not expected by the account owner to make any payments. Negative income
      must be subtracted from the Borrower’s gross monthly income, and not treated
      as a recurring monthly liability unless otherwise noted. Loans secured against
      deposited funds, where repayment may be obtained through extinguishing the asset
      and these funds are not included in calculating the Borrower’s assets, do not
      require consideration of repayment for qualifying purposes. (b) Required Documentation
      The Lender must document that the funds used to pay off debts prior to closing
      came from an acceptable source, and the Borrower did not incur new debts that
      were not included in the DTI ratio. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1
      1058 Last Revised: 11/26/2025 (2) Undisclosed Debt and Inquiries (a) Standard
      When a debt or obligation is revealed during the application process or the
      interview with the Borrower that was not listed on the loan application and/or
      credit report, the Lender must: • verify the actual monthly payment amount;
      • include the monthly payment amount in the Borrower’s DTI; • ensure that the
      Borrower did not incur the indebtedness in connection with the FHA-insured transaction;
      and • determine that any unsecured funds borrowed will not be used for the Borrower’s
      MCI. The Lender must obtain a written explanation from the Borrower for all
      material inquiries shown on the credit report that were made in the last 90
      Days. Material Inquiries refer to inquires which may potentially result in obligations
      incurred by the Borrowers for other Mortgages, auto loans, leases, or other
      Installment Loans. Inquiries from department stores, credit bureaus, and insurance
      companies are not considered material inquiries. (b) Required Documentation
      The Lender must document all undisclosed debt and support for its analysis of
      the Borrower’s debt. (3) Federal Debt (a) Definition Federal Debt refers to
      debt owed to the federal government for which regular payments are being made.
      (b) Standard The Lender must include the debt. The amount of the required payment
      must be included in the calculation of the Borrower’s total DTI. (c) Required
      Documentation The Lender must include documentation from the federal agency
      evidencing the repayment agreement and verification of payments made, if applicable.
      II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs
      4. Manufactured Home Loan Program Handbook 4000.1 1059 Last Revised: 11/26/2025
      (4) Alimony, Child Support, and Other Maintenance (a) Definition Alimony, Child
      Support, and Other Maintenance are court-ordered or otherwise agreed upon payments.
      (b) Standard For alimony, if the Borrower’s income was not reduced by the amount
      of the monthly alimony obligation in the Lender’s calculation of the Borrower’s
      gross income, the Lender must verify and include the monthly obligation in its
      calculation of the Borrower’s debt. Child support and other maintenance are
      to be treated as a recurring liability and the Lender must include the monthly
      obligation in the Borrower’s liabilities and debt. (c) Required Documentation
      The Lender must obtain the official signed divorce decree, separation agreement,
      maintenance agreement, or other legal order. The Lender must also obtain the
      Borrower’s pay stubs covering no less than 28 Days to verify whether the Borrower
      is subject to any order of garnishment relating to the alimony, child support,
      or other maintenance. (d) Calculation of Monthly Obligation The Lender must
      calculate the Borrower’s monthly obligation from the greater of: • the amount
      shown on the most recent decree or agreement establishing the Borrower’s payment
      obligation; or • the monthly amount of the garnishment. (5) Deferred Obligations
      (a) Definition Deferred Obligations (excluding Student Loans) refer to liabilities
      that have been incurred but where payment is deferred or has not yet commenced,
      including accounts in forbearance. (b) Standard The Lender must include deferred
      obligations in the calculation of the Borrower’s liabilities. II. ORIGINATION
      THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured
      Home Loan Program Handbook 4000.1 1060 Last Revised: 11/26/2025 (c) Required
      Documentation The Lender must obtain written documentation of the deferral of
      the liability from the creditor and evidence of the outstanding balance and
      terms of the deferred liability. The Lender must obtain evidence of the actual
      monthly payment obligation, if available. (d) Calculation of Monthly Obligation
      The Lender must use the actual monthly payment to be paid on a deferred liability,
      whenever available. If the actual monthly payment is not available for installment
      debt, the Lender must utilize the terms of the debt or 5 percent of the outstanding
      balance to establish the monthly payment. (6) Student Loans (a) Definition Student
      Loan refers to liabilities incurred for educational purposes. (b) Standard The
      Lender must include all Student Loans in the Borrower’s liabilities, regardless
      of the payment type or status of payments. (c) Required Documentation If the
      payment used for the monthly obligation is less than the monthly payment reported
      on the Borrower’s credit report, the Mortgagee must obtain written documentation
      of the actual monthly payment, the payment status, and evidence of the outstanding
      balance and terms from the creditor or student loan servicer. The Mortgagee
      may exclude the payment from the Borrower’s monthly debt calculation where written
      documentation from the student loan program, creditor, or student loan servicer
      indicates that the loan balance has been forgiven, canceled, discharged, or
      otherwise paid in full. (d) Calculation of Monthly Obligation For outstanding
      Student Loans, regardless of the payment status, the Mortgagee must use: • the
      payment amount reported on the credit report or the actual documented payment,
      when the payment amount is above zero; or II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1
      1061 Last Revised: 11/26/2025 • 0.5 percent of the outstanding loan balance,
      when the monthly payment reported on the Borrower’s credit report is zero. Exception
      Where a student loan payment has been suspended in accordance with COVID-19
      emergency relief, the Mortgagee may use the payment amount reported on the credit
      report or the actual documented payment prior to suspension, when that payment
      amount is above $0. (7) Installment Loans (a) Definition Installment Loans (excluding
      Student Loans) refer to Loans, not secured by real estate, that require the
      periodic payment of Principal and Interest (P&I). A Loan secured by an interest
      in a timeshare must be considered an Installment Loan. (b) Standard The Lender
      must include the monthly payment shown on the credit report to calculate the
      Borrower’s liabilities. If the credit report does not include a monthly payment
      for the Installment Loan, the Lender must use the amount of the monthly payment
      shown in the loan agreement or payment statement to calculate the monthly payment
      to be included in the Borrower’s debt. (c) Required Documentation If the monthly
      payment shown on the credit report is utilized to calculate the monthly debts,
      no further documentation is required. If the credit report does not include
      a monthly payment for the Installment Loan, or the payment reported on the credit
      report is greater than the payment on the loan agreement or payment statement,
      the Lender must use the loan agreement or payment statement to document the
      amount of the monthly payment. If the credit report, loan agreement or payment
      statement shows a deferred payment arrangement for an Installment Loan, refer
      to the Deferred Obligations section. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1
      1062 Last Revised: 11/26/2025 (8) Revolving Charge Accounts (a) Definition Revolving
      Charge Accounts refer to a credit arrangement that requires the Borrower to
      make periodic payments but does not require full repayment by a specified point
      of time. (b) Standard The Lender must verify and include payments on Revolving
      Charge Accounts in the Borrower’s debts. (c) Required Documentation The Lender
      must use the credit report to document the terms, balance and payment amount
      on the account, if available. Where the credit report does not reflect the necessary
      information on the charge account, the Lender must obtain a copy of the most
      recent charge account statement or use 5 percent of the outstanding balance
      to document the monthly payment. (d) Calculation of Monthly Obligation The Lender
      must include the monthly payment shown on the credit report for the Revolving
      Charge Account. Where the credit report does not include a monthly payment for
      the account, the Lender must use 5 percent of the outstanding balance shown
      on the current account statement. (9) 30-Day Accounts (a) Definition 30-Day
      Accounts refer to a credit arrangement that requires the Borrower to pay off
      the outstanding balance on the account every month. (b) Standard The Lender
      must verify the Borrower paid the outstanding balance in full on every 30-Day
      Account each month for the past 12 months. 30-Day Accounts that are paid monthly
      are not included in the Borrower’s debt ratio. If the credit report reflects
      any late payments in the last 12 months, the Lender must utilize 5 percent of
      the outstanding balance as the Borrower’s monthly debt to be included in the
      debt ratio. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured
      Programs 4. Manufactured Home Loan Program Handbook 4000.1 1063 Last Revised:
      11/26/2025 (c) Required Documentation The Lender must use the credit report
      to document that the Borrower has paid the balance on the account monthly for
      the previous 12 months. The Lender must use the credit report to document the
      balance, and must document sufficient funds are available to pay off the balance
      after loan closing. (10) Business Debt in Borrower’s Name (a) Definition Business
      debt in the Borrower’s name refers to liabilities reported on the Borrower’s
      personal credit report, but payment for the debt is attributed to the Borrower’s
      business. (b) Standard When business debt is reported on the Borrower’s personal
      credit report, the debt must be included in the DTI calculation, unless the
      Lender can document that the debt is being paid by the Borrower’s business.
      (c) Required Documentation When a self-employed Borrower states debt appearing
      on their personal credit report is being paid by their business, the Lender
      must obtain documentation that the debt is paid out of company funds, and the
      debt was considered in the cash-flow analysis of the Borrower’s business. (11)
      Non-derogatory Disputed Accounts and Disputed Accounts Not Indicated on the
      Credit Report (a) Definition Non-Derogatory Disputed Accounts include the following
      types of accounts: • disputed accounts with zero balance; • disputed accounts
      with late payments aged 24 months or greater; or • disputed accounts that are
      current and paid as agreed. (b) Standard If a Borrower is disputing non-derogatory
      accounts, or is disputing accounts which are not indicated on the credit report
      as being disputed, the Lender must analyze the effect of the disputed accounts
      on the Borrower’s ability to repay the Loan. If the dispute results in the Borrower’s
      monthly debt payments utilized in computing the DTI ratio being less than the
      amount indicated on the credit report, the Borrower must provide documentation
      of the lower payments. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title
      I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1 1064 Last
      Revised: 11/26/2025 (12) Contingent Liabilities (a) Definition A Contingent
      Liability is a liability that may result in the obligation to repay only where
      a specific event occurs. For example, a contingent liability exists when an
      individual can be held responsible for the repayment of a debt if another party
      defaults on the payment. Contingent liabilities may include Co- signer liabilities
      and liabilities resulting from a loan assumption without release of liability.
      (b) Standard The Lender must include monthly payments on contingent liabilities
      in the calculation of the Borrower’s monthly obligations unless the Lender verifies
      that there is no possibility that the debt holder will pursue debt collection
      against the Borrower, should the other party default, or the other party has
      made 12 months of timely payments. (c) Required Documentation (i) Loan Assumptions
      The Lender must obtain the agreement creating the contingent liability or assumption
      agreement, and the deed showing transfer of title out of the Borrower’s name.
      (ii) Cosigned Liabilities The Lender does not need to include cosigned liabilities
      if the other party to the debt has been making regular on-time payments during
      the previous 12 months. (iii)Court-Ordered Divorce Decree The Lender must obtain
      a copy of the divorce decree ordering the spouse to make payments. (d) Calculation
      of Monthly Obligation The Lender must calculate the monthly payment on the contingent
      liability based on the terms of the agreement creating the contingent liability.
      II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs
      4. Manufactured Home Loan Program Handbook 4000.1 1065 Last Revised: 11/26/2025
      (13) Collection Accounts (a) Definition A Collection Account is a Borrower’s
      Loan or debt that has been submitted to a collection agency through a creditor.
      (b) Standard If the credit reports used in the analysis show any outstanding
      collection accounts, the Lender must: • verify that the debt is paid in full
      at the time of or prior to settlement using an acceptable source of funds; or
      • verify that the Borrower has made payment arrangements with the creditor and
      has successfully made at least one payment under that arrangement. If the monthly
      payment is unknown, the Lender must use 5 percent of the outstanding balance.
      Medical collections may be excluded from the payoff or payment requirement above
      if the Borrower meets the satisfactory credit history requirements for a traditional
      credit report, and combination references. Accounts are designated as medical
      when clearly shown on the credit report as related to a medical service provider
      (e.g., Dr., MD, Hospital) or when the Borrower can provide documentation that
      the collection is related to a medical expense. (c) Required Documentation The
      Borrower must provide a letter of explanation, which is supported by documentation,
      for each outstanding collection account. The explanation and supporting documentation
      must be consistent with other credit information in the file. The Lender must
      provide the following documentation: • evidence of payment in full, if paid
      prior to settlement; • the payoff statement, if paid at settlement; or • the
      payment arrangement with the creditor, if not paid prior to or at settlement.
      (14) Private Savings Clubs (a) Definition Private Savings Clubs refer to non-traditional
      methods of saving by making deposits into a member-managed resource pool. II.
      ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4.
      Manufactured Home Loan Program Handbook 4000.1 1066 Last Revised: 11/26/2025
      (b) Standard If the Borrower is obligated to continue making ongoing contributions
      under the pooled savings agreement, this obligation must be counted in the Borrowers’
      total debt. (c) Required Documentation The Lender must verify and document the
      establishment and duration of the Borrower’s membership in the club and the
      amount of the Borrower’s required contribution to the club. The Lender must
      also obtain the club’s account ledgers and receipts, and verification from the
      club treasurer that the club is still active. (15) Obligations Not Considered
      Debt Obligations not considered debt include: • medical collections; • federal,
      state, and local taxes, if not delinquent and no payments required; • automatic
      deductions from savings, when not associated with another type of obligation;
      • Federal Insurance Contributions Act (FICA) and other retirement contributions,
      such as 401(k) accounts; • a collateralized loan that secures cash, stock, or
      bond assets; • utilities; • child care; • commuting costs; • union dues; • insurance,
      other than property insurance; • open accounts with zero balances; and • voluntary
      deductions, when not associated with another type of obligation. ii. Income
      Requirements (A) Definition of Effective Income Effective Income refers to income
      that may be used to qualify a Borrower for a Loan. (B) General Income Requirements
      The Lender must document the Borrower’s income and employment history, verify
      the accuracy of the amounts of income being reported, and determine if the income
      can be considered as Effective Income in accordance with the requirements listed
      below. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs
      4. Manufactured Home Loan Program Handbook 4000.1 1067 Last Revised: 11/26/2025
      The Lender may only consider income if it is legally derived and, when required,
      properly reported as income on the Borrower’s Tax Returns. Effective Income
      must be stable, have been received for the previous two years, be reasonably
      likely to continue through at least the first three years of the Loan, and meet
      the specific requirements described below. Negative income must be subtracted
      from the Borrower’s gross monthly income, and not treated as a recurring monthly
      liability unless otherwise noted. If FHA requires Tax Returns as required documentation
      for any type of Effective Income, the Lender must also analyze the Tax Returns
      in accordance with Appendix 2.0 – Analyzing IRS Forms. If the income documents
      are not received in English, the Lender must provide a complete and accurate
      translation for each document. (C) Employment Related Income (1) Definition
      Employment Income refers to income received as an employee of a business that
      is reported on IRS Form W-2. (2) Standard The Lender may use employment related
      income as Effective Income in accordance with the standards provided for each
      type of employment related income. (3) Required Documentation For all employment
      related income, the Lender must verify the Borrower’s most recent two years
      of employment and income, and document it using one of the following methods.
      (a) Traditional Current Employment Documentation The Lender must obtain the
      most recent pay stubs covering a minimum of 30 Days (if paid weekly or biweekly,
      pay stubs must cover a minimum of 28 Days) that show the Borrower’s year-to-date
      earnings, and one of the following to verify current employment: • a written
      Verification of Employment (VOE) covering two years; • direct verification by
      a TPV vendor covering two years, subject to the following requirements: o the
      Borrower has authorized the Lender to verify income and employment; and II.
      ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4.
      Manufactured Home Loan Program Handbook 4000.1 1068 Last Revised: 11/26/2025
      o the date of the data contained in the completed verification conforms with
      FHA requirements in Maximum Age of Mortgage Documents; or • an electronic verification
      acceptable to FHA. Reverification of employment must be completed within 10
      Days prior to loan Disbursement. Verbal reverification of employment is acceptable.
      (b) Alternative Current Employment Documentation If using alternative documentation,
      the Lender must: • obtain copies of the pay stub(s) covering the most recent
      30-Day period (if paid weekly or biweekly, pay stubs must cover a minimum of
      28 Days); • obtain copies of the original IRS Form W-2 from the previous two
      years; and • document current employment by telephone, sign and date the verification
      documentation, and note the name, title, and telephone number of the person
      with whom employment was verified. Reverification of employment must be completed
      within 10 Days prior to loan Disbursement. Verbal reverification of employment
      is acceptable. (c) Past Employment Documentation Direct verification of the
      Borrower’s employment history for the previous two years is not required if
      all of the following conditions are met: • the current employer confirms a two-year
      employment history, or a paystub reflects a hiring date; • only base pay is
      used to qualify (no overtime or bonuses); and • the Borrower executes IRS Form
      4506, Request for Copy of Tax Return, or IRS Form 8821, Tax Information Authorization,
      for the previous two tax years. If the applicant has not been employed with
      the same employer for the previous two years and/or not all conditions immediately
      above can be met, then the Lender must obtain one or a combination of the following
      for the most recent two years to verify the applicant’s employment history:
      • IRS Form W-2(s); • verbal or written VOE(s); • electronic verification acceptable
      to FHA; or • evidence supporting enrollment in school or the military during
      the most recent two full years. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1
      1069 Last Revised: 11/26/2025 (D) Primary Employment (1) Definition Primary
      Employment is the Borrower’s principal employment, unless the income falls within
      a specific category identified below. Primary employment is generally full-time
      employment and may be either salaried or hourly. (2) Standard The Lender may
      use primary income as Effective Income. (3) Calculation of Effective Income
      (a) Salary For employees who are salaried and whose income has been and will
      likely be consistently earned, the Lender must use the current salary to calculate
      Effective Income. (b) Hourly For employees who are paid hourly and whose hours
      do not vary, the Lender must consider the Borrower’s current hourly rate to
      calculate Effective Income. For employees who are paid hourly and whose hours
      vary, the Lender must average the income over the previous two years. If the
      Lender can document an increase in pay rate the Lender may use the most recent
      12-month average of hours at the current pay rate. (E) Part-Time/Secondary Employment
      (1) Definition Part-Time Employment refers to employment that is not the Borrower’s
      primary employment and is generally performed for less than 40 hours per week.
      (2) Standard The Lender may use part-time income as Effective Income if the
      Borrower has worked a part-time job uninterrupted for the past two years and
      the current position is reasonably likely to continue. II. ORIGINATION THROUGH
      POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured Home Loan
      Program Handbook 4000.1 1070 Last Revised: 11/26/2025 (3) Calculation of Effective
      Income The Lender must average the income over the previous two years. If the
      Lender can document an increase in pay rate the Lender may use a 12-month average
      of hours at the current pay rate. (F) Overtime, Bonus, or Tip Income (1) Definition
      Overtime, Bonus, or Tip Income refers to income that the Borrower receives in
      addition to the Borrower’s normal salary. (2) Standard The Lender may use Overtime,
      Bonus, or Tip Income as Effective Income if the Borrower has received this income
      for the past two years and it is reasonably likely to continue. Periods of Overtime,
      Bonus, or Tip Income less than two years may be considered Effective Income
      if the Lender documents that the Overtime, Bonus, or Tip Income has been consistently
      earned over a period of not less than one year and is reasonably likely to continue.
      (3) Calculation of Effective Income For employees with Overtime, Bonus, and
      Tip Income, the Lender must average the income earned over the previous two
      years to calculate Effective Income. However, if the Overtime, Bonus, or Tip
      Income from the current year decreases by 20 percent or more from the previous
      year, the Lender must use the current year’s income. (G) Seasonal Employment
      (1) Definition Seasonal Employment refers to employment that is not year round,
      regardless of the number of hours per week the Borrower works on the job. (2)
      Standard The Lender may consider Seasonal Employment as Effective Income if
      the Borrower has worked the same line of work for the past two years and is
      reasonably likely to be rehired for the next season. The Lender may consider
      unemployment income as Effective Income for those with effective seasonal employment
      income. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured
      Programs 4. Manufactured Home Loan Program Handbook 4000.1 1071 Last Revised:
      11/26/2025 (3) Calculation of Effective Income For employees with seasonal income,
      the Lender must average the income earned over the previous two full years to
      calculate Effective Income. For seasonal employees with unemployment income,
      the Lender must document the unemployment income for two full years and there
      must be reasonable assurance that this income will continue. (H) Employer Housing
      Subsidy (1) Definition Employer Housing Subsidy refers to employer-provided
      loan assistance. (2) Standard The Loan may utilize the Employer Housing Subsidy
      as Effective Income. (3) Required Documentation The Lender must verify and document
      the existence and the amount of the housing subsidy. (4) Calculation of Effective
      Income For employees receiving an Employer Housing Subsidy, the Lender may add
      the Employer Housing Subsidy to the total Effective Income, but may not use
      it to offset the Loan Payment. (I) Employed by Family-Owned Business (1) Definition
      Family-Owned Business Income refers to income earned from a business owned by
      the Borrower’s family, but in which the Borrower is not an owner. (2) Standard
      The Lender may consider Family-Owned Business Income as Effective Income if
      the Borrower is not an owner in the family-owned business. (3) Required Documentation
      The Lender must verify and document that the Borrower is not an owner in the
      family-owned business by using official business documents showing the ownership
      percentage. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured
      Programs 4. Manufactured Home Loan Program Handbook 4000.1 1072 Last Revised:
      11/26/2025 Official business documents include corporate resolutions or other
      business organizational documents, business Tax Returns or Schedule K-1 (IRS
      Form 1065), U.S. Return of Partnership Income, or an official letter from a
      certified public accountant on their business letterhead. In addition to traditional
      or alternative documentation requirements, the Lender must obtain copies of
      signed personal Tax Returns or tax transcripts. (4) Calculation of Effective
      Income (a) Salary For employees who are salaried and whose income has been and
      will likely continue to be consistently earned, the Lender must use the current
      salary to calculate Effective Income. (b) Hourly For employees who are paid
      hourly and whose hours do not vary, the Lender must consider the Borrower’s
      current hourly rate to calculate Effective Income. For employees who are paid
      hourly and whose hours vary, the Lender must average the income over the previous
      two years. If the Lender can document an increase in pay rate the Lender may
      use the most recent 12-month average of hours at the current pay rate. (J) Commission
      Income (1) Definition Commission Income refers to income that is paid contingent
      upon the conducting of a business transaction or the performance of a service.
      (2) Standard The Lender may use Commission Income as Effective Income if the
      Borrower earned the income for at least one year in the same or similar line
      of work and it is reasonably likely to continue. (3) Required Documentation
      For Commission Income, the Lender must obtain signed Tax Returns, including
      all applicable schedules, for the last two years. In lieu of signed Tax Returns
      from the Borrower, the Lender may obtain a signed IRS Form 4506, IRS Form 4506-C,
      IVES Request for Transcript of Tax Return, or IRS Form 8821 and tax transcripts
      directly from the IRS. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title
      I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1 1073 Last
      Revised: 11/26/2025 (4) Calculation of Effective Income The Lender must calculate
      Effective Income for commission by using the lesser of (a) the average net Commission
      Income earned over the previous two years, or the length of time Commission
      Income has been earned if less than two years; or (b) the average net Commission
      Income earned over the previous one year. The Lender must calculate net Commission
      Income by subtracting the unreimbursed business expenses from the gross Commission
      Income. (K) Self-Employment Income (1) Definition Self-Employment Income refers
      to income generated by a business in which the Borrower has a 25 percent or
      greater ownership interest. There are four basic types of business structures.
      They include: • sole proprietorships; • corporations; • limited liability or
      “S” corporations; and • partnerships. (2) Standard (a) Minimum Length of Self-Employment
      The Lender may consider self-employed borrower income if the Borrower has been
      self-employed for at least two years. If the Borrower has been self-employed
      between one and two years, the Lender may only consider the income as Effective
      Income if the Borrower was previously employed in the same line of work in which
      the Borrower is self-employed or in a related occupation for at least two years.
      (b) Stability of Self-Employment Income Income obtained from businesses with
      annual earnings that are stable or increasing is acceptable. If the income from
      businesses shows a greater than 20 percent decline in Effective Income over
      the analysis period, the Lender must document that the business income is now
      stable. A Lender may consider income as stable after a 20 percent reduction
      if the Lender can document the reduction in income was the result of an extenuating
      circumstance, the Borrower can demonstrate the income has been stable or increasing
      for a minimum of 12 months, and the Borrower qualifies for the Loan utilizing
      the reduced income. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title
      I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1 1074 Last
      Revised: 11/26/2025 (3) Required Documentation (a) Individual and Business Tax
      Returns The Lender must obtain complete individual and business Tax Returns
      for the most recent two years, including all schedules. In lieu of signed individual
      or business Tax Returns from the Borrower, the Lender may obtain a signed IRS
      Form 4506, IRS Form 4506-C, or IRS Form 8821 and tax transcripts directly from
      the IRS. (b) Profit and Loss Statements and Balance Sheets The Lender must obtain
      a year-to-date Profit and Loss (P&L) statement and balance sheet if more than
      a calendar quarter has elapsed since the date of the most recent calendar or
      fiscal year-end Tax Return was filed by the Borrower. A balance sheet is not
      required for self-employed Borrowers filing Schedule C income. If income used
      to qualify the Borrower exceeds the two-year average of Tax Returns, an audited
      P&L or signed quarterly Tax Return must be obtained from the IRS. (c) Business
      Credit Reports The Lender must obtain a business credit report for all corporations
      and “S” corporations. (4) Calculation of Effective Income The Lender must analyze
      the Borrower’s Tax Returns to determine gross Self- Employment Income. Requirements
      for analyzing self-employment documentation are found in Appendix 2.0 – Analyzing
      IRS Forms. The Lender must calculate gross Self-Employment Income by using the
      lesser of: • the average gross Self-Employment Income earned over the previous
      two years; or • the average gross Self-Employment Income earned over the previous
      one year. (L) Additional Required Analysis of Stability of Employment Income
      (1) Frequent Changes in Employment If the Borrower has frequently changed jobs
      more than three times in the prior 12- month period, or has changed lines of
      work, the Lender must take additional steps II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1
      1075 Last Revised: 11/26/2025 to verify and document the stability of the Borrower’s
      Employment Income. The Lender must obtain: • transcripts of training and education
      demonstrating qualification for a new position; or • employment documentation
      evidencing continual increases in income and/or benefits. (2) Addressing Gaps
      in Employment For Borrowers with gaps in employment of six months or more (an
      extended absence), the Lender may consider the Borrower’s current income as
      Effective Income if they can verify and document that: • the Borrower has been
      employed in the current job for at least six months at the time of case number
      assignment; and • the Borrower has a two-year work history prior to the absence
      from employment using standard or alternative employment verification. (3) Addressing
      Temporary Reduction in Income (a) Standard For Borrowers with a temporary reduction
      of income due to a short-term disability or similar temporary leave, the Lender
      may consider the Borrower’s current income as Effective Income, if it can verify
      and document that: • the Borrower intends to return to work; • the Borrower
      has the right to return to work; and • the Borrower qualifies for the Loan,
      taking into account any reduction of income due to the circumstance. For Borrowers
      returning to work before or at the time of the first Loan Payment due date,
      the Lender may use the Borrower’s pre-leave income. For Borrowers returning
      to work after the first Loan Payment due date, the Lender may use the Borrower’s
      current income plus available surplus liquid asset Reserves, above and beyond
      any required Reserves, as an income supplement, up to the amount of the Borrower’s
      pre-leave income. The amount of the monthly income supplement is the total amount
      of surplus Reserves divided by the number of months between the first payment
      due date and the Borrower’s intended date of return to work. (b) Required Documentation
      The Lender must provide the following documentation for Borrowers on temporary
      leave: • a written statement from the Borrower confirming the Borrower’s intent
      to return to work, and the intended date of return; II. ORIGINATION THROUGH
      POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured Home Loan
      Program Handbook 4000.1 1076 Last Revised: 11/26/2025 • documentation generated
      by current employer confirming the Borrower’s eligibility to return to current
      employer after temporary leave; and • documentation of sufficient liquid assets,
      in accordance with Sources of Funds, used to supplement the Borrower’s income
      through the intended date of return to work with the current employer. (M) Other
      Sources of Effective Income (1) Disability Benefits (a) Definition Disability
      Benefits are benefits received from the Social Security Administration (SSA),
      Department of Veterans Affairs (VA), or a private disability insurance provider.
      (b) Required Documentation The Lender must verify and document the Borrower’s
      receipt of benefits from the SSA, VA, or private disability insurance provider.
      The Lender must obtain: • a copy of the last Notice of Award letter which states
      the SSA’s or private disability insurer’s determination on the Borrower’s eligibility
      for disability benefits; or • equivalent documentation that establishes the
      award of benefits to the Borrower. If any disability income is due to expire
      within three years from the date of loan application, the Lender should treat
      that income as a temporary reduction in income. If the Notice of Award or equivalent
      document does not have a defined expiration date, the Lender may consider the
      income effective and reasonably likely to continue. The Lender may not rely
      upon a pending or current re- evaluation of medical eligibility for benefit
      payments as evidence that the benefit payment is not reasonably likely to continue.
      Under no circumstance may the Lender inquire into or request documentation concerning
      the nature of the disability or the medical condition of the Borrower. (i) Social
      Security Disability For Social Security disability income, including Supplemental
      Security Income (SSI), the Lender must obtain one of the following documents:
      • Tax Returns; II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured
      Programs 4. Manufactured Home Loan Program Handbook 4000.1 1077 Last Revised:
      11/26/2025 • the most recent bank statement evidencing receipt of income from
      the SSA; • a Proof of Income Letter, also known as a “Budget Letter” or “Benefits
      Letter” that evidences income from the SSA; or • a copy of the Borrower’s form
      SSA-1099/1042S, Social Security Benefit Statement. (ii) Department of Veterans
      Affairs Disability For VA disability benefits, the Lender must obtain from the
      Borrower a copy of the veteran’s last Benefits Letter showing the amount of
      the assistance, and one of the following documents: • Tax Returns; or • the
      most recent bank statement evidencing receipt of income from the VA. If the
      Benefits Letter does not have a defined expiration date, the Lender may consider
      the income effective and reasonably likely to continue for at least three years.
      (iii)Private Disability For private disability benefits, the Lender must obtain
      documentation from the private disability insurance provider showing the amount
      of the assistance and the expiration date of the benefits, if any. (c) Calculation
      of Effective Income The Lender must use the most recent amount of benefits received
      to calculate Effective Income. (2) Alimony, Child Support, and/or Maintenance
      Income (a) Definition Alimony, Child Support, and/or Maintenance Income refers
      to income received from a former spouse or partner or from a noncustodial parent
      of the Borrower’s minor dependent. (b) Required Documentation The Lender must
      obtain a copy of the Borrower’s final divorce decree, legal separation agreement,
      court order, or voluntary payment agreement with documented receipt. When using
      a final divorce decree, legal separation agreement or court order, the Lender
      must obtain evidence of receipt using deposits on bank statements, II. ORIGINATION
      THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured
      Home Loan Program Handbook 4000.1 1078 Last Revised: 11/26/2025 canceled checks,
      or documentation from the child support agency for the most recent three months
      that supports the amount used in qualifying. The Lender must document the voluntary
      payment agreement with 12 months of canceled checks, deposit slips, or Tax Returns.
      The Lender must provide evidence that the claimed income will continue for at
      least three years. Use the front and pertinent pages of the divorce decree/
      settlement agreement and/or court order showing the financial details. (c) Calculation
      of Effective Income When using a final divorce decree, legal separation agreement
      or court order, if the Borrower has received consistent Alimony, Child Support,
      and/or Maintenance Income for the most recent three months, the Lender may use
      the current payment to calculate Effective Income. When using evidence of voluntary
      payments, if the Borrower has received consistent Alimony, Child Support, and/or
      Maintenance Income for the most recent six months, the Lender may use the current
      payment to calculate Effective Income. If Alimony, Child Support, and/or Maintenance
      Income has been received for less than two years, the Lender must use the average
      over the time of receipt. If the alimony, child support, or other maintenance
      payments have not been consistently received for the most recent six months,
      the Lender must use the average of the income received over the previous two
      years to calculate Effective Income. (3) Military Income (a) Definition Military
      Income refers to income received by military personnel during their period of
      active, Reserve, or National Guard service, including: • base pay • Basic Allowance
      for Housing • clothing allowances • flight or hazard pay • Basic Allowance for
      Subsistence • proficiency pay The Lender may not use education benefits as Effective
      Income. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured
      Programs 4. Manufactured Home Loan Program Handbook 4000.1 1079 Last Revised:
      11/26/2025 (b) Required Documentation The Lender must obtain a copy of the Borrower’s
      military Leave and Earnings Statement (LES). The Lender must verify the Expiration
      Term of Service date on the LES. If the Expiration Term of Service date is within
      the first 12 months of the Loan, Military Income may only be considered Effective
      Income if the Borrower represents their intent to continue military service.
      (c) Calculation of Effective Income The Lender must use the current amount of
      Military Income received to calculate Effective Income. (4) Loan Credit Certificates
      (a) Definition Loan Credit Certificates refer to government loan payment subsidies
      other than Section 8 Housing Choice Vouchers. (b) Required Documentation The
      Lender must verify and document that the Governmental Entity subsidizes the
      Borrower’s Loan Payments either through direct payments or tax rebates. (c)
      Calculating Effective Income Loan Credit Certificate income that is not used
      to directly offset the Loan Payment before calculating the qualifying ratios
      may be included as Effective Income. The Lender must use the current subsidy
      rate to calculate the Effective Income. (5) Section 8 Housing Choice Vouchers
      (a) Definition Section 8 Housing Choice Vouchers refer to housing subsidies
      received under the Housing Choice Voucher homeownership option from a Public
      Housing Agency (PHA). (b) Required Documentation The Lender must verify and
      document the Borrower’s receipt of the Housing Choice Voucher homeownership
      subsidies. The Lender may consider that this income is reasonably likely to
      continue for three years. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E.
      Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1 1080
      Last Revised: 11/26/2025 (c) Calculation of Effective Income The Lender may
      only use Section 8 Housing Choice Voucher subsidies as Effective Income if it
      is not used as an offset to the monthly Loan Payment. The Lender must use the
      current subsidy rate to calculate the Effective Income. (6) Other Public Assistance
      (a) Definition Public Assistance refers to income received from government assistance
      programs. (b) Required Documentation Lenders must verify and document the income
      received from the government agency and that the income is reasonably likely
      to continue for three years. (c) Calculation of Effective Income The Lender
      must use the current rate of Public Assistance received to calculate Effective
      Income. (7) Automobile Allowance (a) Definition Automobile Allowance refers
      to the funds provided by the Borrower’s employer for automobile related expenses.
      (b) Required Documentation The Lender must verify and document the Automobile
      Allowance received from the employer for the previous two years. The Lender
      must also obtain IRS Form 2106, Employee Business Expenses, for the previous
      two years. (c) Calculation of Effective Income The Lender must determine the
      portion of the allowance that can be considered Effective Income. The Lender
      must subtract automobile expenses as shown on IRS Form 2106 from the Automobile
      Allowance before calculating Effective Income based on the current amount of
      the allowance received. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E.
      Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1 1081
      Last Revised: 11/26/2025 If the Borrower uses the standard per-mile rate in
      calculating automobile expenses, as opposed to the actual cost method, the portion
      that the IRS considers depreciation may be added back to income. Expenses that
      must be treated as recurring debt include: • the Borrower’s monthly car payment;
      and • any loss resulting from the calculation of the difference between the
      actual expenditures and the expense account allowance. Automobile Allowance
      refers to the amount of the Automobile Allowance that exceeds the Borrower’s
      actual automobile expenditures. (8) Retirement Income Retirement Income refers
      to income received from Pensions, 401(k) distributions, and Social Security.
      (a) Social Security Income (i) Definition Social Security Income or Supplemental
      Security Income (SSI) refers to income received from the SSA other than disability
      income. (ii) Required Documentation The Lender must verify and document the
      Borrower’s receipt of income from the SSA and that it is likely to continue
      for at least a three-year period from the date of case number assignment. For
      SSI, the Lender must obtain any one of the following documents: • Tax Returns
      (minimum one year); • the most recent bank statement evidencing receipt of income
      from the SSA; • a Proof of Income Letter, also known as a “Budget Letter” or
      “Benefits Letter” that evidences income from the SSA; or • a copy of the Borrower’s
      form SSA-1099/1042S. In addition to verification of income, the Lender must
      document the continuance of this income by obtaining from the Borrower (1) a
      copy of the last Notice of Award letter which states the SSA’s determination
      on the Borrower’s eligibility for SSA income, or (2) an equivalent document
      that establishes award benefits to the Borrower (equivalent document). If any
      income from the SSA is due to expire within three years from the date of case
      number assignment, that income may not be used for qualifying. If the Notice
      of Award or equivalent document does not have a defined expiration date, the
      Lender must consider the income effective and II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1
      1082 Last Revised: 11/26/2025 reasonably likely to continue. The Lender should
      not request additional documentation from the Borrower to demonstrate continuance
      of SSA income. If the Notice of Award letter or equivalent document specifies
      a future start date for receipt of income, this income may only be considered
      effective on the specified start date. (iii)Calculation of Effective Income
      The Lender must use the current amount of Social Security Income received to
      calculate Effective Income. (b) Pension (i) Definition Pension refers to income
      received from the Borrower’s former employer(s). (ii) Required Documentation
      The Lender must verify and document the Borrower’s receipt of periodic payments
      from the Borrower’s Pension and that the payments are likely to continue for
      at least three years. The Lender must obtain any one of the following documents:
      • Tax Returns (minimum one year); • the most recent bank statement evidencing
      receipt of income from the former employer; or • a copy of the Borrower’s pension/retirement
      letter from the former employer. (iii)Calculation of Effective Income The Lender
      must use the current amount of Pension income received to calculate Effective
      Income. (c) Individual Retirement Account and 401(k) (i) Definition Individual
      Retirement Account (IRA)/401(k) Income refers to income received from an IRA.
      II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs
      4. Manufactured Home Loan Program Handbook 4000.1 1083 Last Revised: 11/26/2025
      (ii) Required Documentation The Lender must verify and document the Borrower’s
      receipt of recurring IRA/401(k) Income and that it is reasonably likely to continue
      for three years. The Lender must obtain the most recent IRA/401(k) statement
      and any one of the following documents: • Tax Returns; or • the most recent
      bank statement evidencing receipt of income. (iii)Calculation of Effective Income
      For Borrowers with IRA/401(k) Income that has been and will be consistently
      received, the Lender must use the current amount of IRA Income received to calculate
      Effective Income. For Borrowers with fluctuating IRA/401(k) Income, the Lender
      must use the average of the IRA/401(k) Income received over the previous two
      years to calculate Effective Income. If IRA/401(k) Income has been received
      for less than two years, the Lender must use the average over the time of receipt.
      (9) Rental Income (a) Definition Rental Income refers to income received or
      to be received from the subject Property or other real estate holdings. (b)
      Rental Income from Other Real Estate Holdings (i) Standard Rental Income from
      other real estate holdings may be considered Effective Income if the documentation
      requirements listed below are met. If Rental Income is being derived from the
      Property being vacated by the Borrower, the Borrower must be relocating to an
      area more than 100 miles from the Borrower’s current Principal Residence. (ii)
      Required Documentation The Lender must obtain the Borrower’s last two years’
      Tax Returns with Schedule E. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1
      1084 Last Revised: 11/26/2025 (iii)Calculation of Effective Net Rental Income
      The Lender must calculate the net Rental Income by averaging the amount shown
      on Schedule E, provided the Borrower continues to own all Properties included
      on Schedule E. Depreciation, mortgage interest, taxes, insurance, and any HOA
      dues shown on Schedule E may be added back to the net income or loss. If the
      Property has been owned for less than two years, the Lender must annualize the
      Rental Income for the length of time the Property has been owned. For Properties
      with less than two years of Rental Income history, the Lender must document
      the date of acquisition by providing the deed, Settlement Statement or similar
      legal document. Positive net Rental Income must be added to the Borrower’s Effective
      Income. Negative net Rental Income must be included as a debt/liability. (c)
      Boarders of the Subject Property (i) Definition Boarder refers to an individual
      renting space inside the Borrower’s Dwelling Unit. (ii) Standard Rental Income
      from Boarders is only acceptable if the Borrower has a two-year history of receiving
      income from Boarders that is shown on the Tax Return and the Borrower is currently
      receiving boarder income. (iii)Required Documentation The Lender must obtain
      two years of the Borrower’s Tax Returns evidencing income from Boarders and
      the current lease. For purchase transactions, the Lender must obtain a copy
      of the executed written agreement documenting their intent to continue boarding
      with the Borrower. (iv) Calculation of Effective Income The Lender must calculate
      the Effective Income by using the lesser of the two-year average or the current
      lease. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs
      4. Manufactured Home Loan Program Handbook 4000.1 1085 Last Revised: 11/26/2025
      (10) Investment Income (a) Definition Investment Income refers to interest and
      dividend income received from assets such as certificates of deposits, mutual
      funds, stocks, bonds, money markets, and savings and checking accounts. (b)
      Required Documentation The Lender must verify and document the Borrower’s Investment
      Income by obtaining Tax Returns for the previous two years and the most recent
      account statement. (c) Calculation of Effective Income The Lender must calculate
      Investment Income by using the lesser of: • the average Investment Income earned
      over the previous two years; or • the average Investment Income earned over
      the previous one year. The Lender must subtract any of the assets used for the
      MCI to purchase the subject Property from the Borrower’s liquid assets prior
      to calculating any interest or dividend income. (11) Expected Income (a) Definition
      Expected Income refers to income from cost-of-living adjustments, performance
      raises, a new job, or retirement that has not been, but will be received within
      60 Days of loan closing. (b) Required Documentation The Lender must verify and
      document the existence and amount of Expected Income with the employer in writing
      and that it is guaranteed to begin within 60 Days of loan closing. For expected
      Retirement Income, the Lender must verify the amount and that it is guaranteed
      to begin within 60 Days of the loan closing. (c) Calculation of Effective Income
      Income is calculated in accordance with the standards for the type of income
      being received. The Lender must also verify that the Borrower will have sufficient
      income or Cash Reserves to support the Loan Payment and any other obligations
      between loan closing and the beginning of the receipt of the income. II. ORIGINATION
      THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured
      Home Loan Program Handbook 4000.1 1086 Last Revised: 11/26/2025 (12) Trust Accounts
      (a) Definition Trust Income refers to income that is regularly distributed to
      a Borrower from a trust. (b) Required Documentation The Lender must verify and
      document the existence of the Trust Agreement or other trustee statement. The
      Lender must also verify and document the frequency, duration, and amount of
      the distribution by obtaining a bank statement or transaction history from the
      bank. The Lender must verify that regular payments will continue for at least
      the first three years of the loan term. (c) Calculation of Effective Income
      The Lender must use the income based on the terms and conditions in the Trust
      Agreement or other trustee statement to calculate Effective Income. (13) Annuities
      or Similar (a) Definition Annuity Income refers to a fixed sum of money periodically
      paid to the Borrower from a source other than employment. (b) Required Documentation
      The Lender must verify and document the legal agreement establishing the annuity
      and guaranteeing the continuation of the annuity for the first three years of
      the Loan. The Lender must also obtain a bank statement or a transaction history
      from a bank evidencing receipt of the annuity. (c) Calculation of Effective
      Income The Lender must use the current rate of the annuity to calculate Effective
      Income. The Lender must subtract any of the assets used for the MCI to purchase
      the subject Property from the Borrower’s liquid assets prior to calculating
      any Annuity Income. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title
      I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1 1087 Last
      Revised: 11/26/2025 (14) Notes Receivable Income (a) Definition Notes Receivable
      Income refers to income received by the Borrower as payee or holder in due course
      of a promissory Note or other similar credit instrument. (b) Required Documentation
      The Lender must verify and document the existence of the Note. The Lender must
      also verify and document that payments have been consistently received for the
      previous 12 months by obtaining Tax Returns, deposit slips or canceled checks
      and that such payments are guaranteed to continue for the first three years
      of the Loan. (c) Calculation of Effective Income For Borrowers who have been
      and will be receiving a consistent amount of Notes Receivable Income, the Lender
      must use the current rate of income to calculate Effective Income. For Borrowers
      whose Notes Receivable Income fluctuates, the Lender must use the average of
      the Notes Receivable Income received over the previous year to calculate Effective
      Income. (15) Nontaxable Income (Grossing Up) (a) Definition Nontaxable Income
      refers to types of income not subject to federal taxes, which includes, but
      is not limited to: • some portion of Social Security Income; • some federal
      government employee Retirement Income; • Railroad Retirement benefits; • some
      state government Retirement Income; • certain types of disability and public
      assistance payments; • child support; • Section 8 Housing Choice Vouchers •
      military allowances; and • other income that is documented as being exempt from
      federal income taxes. (b) Required Documentation The Lender must document and
      support the amount of income to be Grossed Up for any Nontaxable Income source
      and the current tax rate applicable to the Borrower’s income that is being Grossed
      Up. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs
      4. Manufactured Home Loan Program Handbook 4000.1 1088 Last Revised: 11/26/2025
      (c) Calculation of Effective Income The amount of continuing tax savings attributed
      to Nontaxable Income may be added to the Borrower’s gross income. The percentage
      of Nontaxable Income that may be added cannot exceed the greater of 15 percent
      or the appropriate tax rate for the income amount, based on the Borrower’s tax
      rate for the previous year. If the Borrower was not required to file a Tax Return
      for the previous tax reporting period, the Lender may Gross Up the Nontaxable
      Income by 15 percent. The Lender may not make any additional adjustments or
      allowances based on the number of the Borrower’s dependents. iii. Asset Requirements
      (A) General Asset Requirements The Lender must verify that the Borrower has
      sufficient funds to cover the required downpayment and other costs to be paid
      in cash at closing. The Lender may only consider assets derived from acceptable
      sources in accordance with the requirements outlined below. Closing costs, prepaid
      items, and other fees may not be applied toward the Borrower’s minimum downpayment
      requirement. (B) Earnest Money Deposit The Lender must verify and document the
      deposit amount and source of funds if the amount of the earnest money deposit
      exceeds 1 percent of the sales price or is excessive based on the Borrower’s
      history of accumulating savings, by obtaining: • a copy of the Borrower’s canceled
      check; • certification from the deposit-holder acknowledging receipt of funds;
      • a Verification of Deposit (VOD) or bank statement showing that the average
      balance was sufficient to cover the amount of the earnest money deposit at the
      time of the deposit; or • direct electronic verification by a TPV vendor, subject
      to the following requirements: o the Borrower has authorized the Mortgagee to
      verify assets; o the date of the completed verification conforms with FHA requirements
      in Maximum Age of Mortgage Documents; and o the information shows that the average
      balance was sufficient to cover the amount of the earnest money deposit at the
      time of the deposit. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title
      I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1 1089 Last
      Revised: 11/26/2025 (C) Cash to Close and Reserves The Lender must document
      all funds that are used for the purpose of qualifying for or closing the Loan,
      including those to satisfy debt or pay costs outside of closing. (1) Cash to
      Close The Lender must verify and document that the Borrower has sufficient funds
      from an acceptable source to facilitate the closing. (a) Determining the Amount
      Needed for Closing For a purchase transaction, the amount of cash needed by
      the Borrower to close an FHA-insured Loan is the difference between the total
      cost to acquire the Property and the Total Loan Amount. For a refinance transaction,
      the amount of cash needed by the Borrower to close an FHA-insured Loan is the
      difference between the total payoff requirements of the Loan being refinanced
      and the Total Loan Amount. (b) Lender Responsibility for Estimating Settlement
      Requirements In addition to the minimum downpayment, additional Borrower expenses
      must be included in the total amount of cash that the Borrower must provide
      at loan settlement. Refer to Fees and Charges below for details on which fees
      are allowed to be financed and which fees must be collected in cash from the
      Borrower. (2) Fees and Charges The Lender or sponsored TPO may charge and collect
      from Borrowers those customary and reasonable closing costs necessary to close
      the Loan, in compliance with permissible fees and charges described in this
      section. Fees and charges must not exceed the actual costs. In addition to the
      minimum downpayment, additional Borrower expenses must be included in the total
      amount of cash that the Borrower must provide at loan settlement. Fees and charges
      may be levied to the Borrower in amounts that are reasonable and customary for
      the area, and where permissible as described below. (a) Financeable Fees and
      Charges (i) General The fees and charges listed below incurred in connection
      with a Manufactured Home Loan may be included in the loan amount: II. ORIGINATION
      THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured
      Home Loan Program Handbook 4000.1 1090 Last Revised: 11/26/2025 • origination
      fees (payable to the Lender or sponsored TPO), not to exceed the greater of
      2 percent of the Base Loan Amount or $2000, before adding the UFIP. The origination
      fee includes other Lender costs of doing business. Related expenses are not
      permitted in addition to the origination fee, such as document preparation,
      copying, processing, underwriting, and courier fees; • state and local sales
      taxes; • premiums paid for hazard insurance for the first year of the loan term,
      including premiums for Flood Insurance where applicable; • credit report costs;
      • a fee for the services of a qualified third-party closing agent to act on
      behalf of a Lender in closing a Direct Loan transaction; • appraisal fees in
      connection with the purchase or refinancing of an Existing Manufactured Home;
      • fees for determining whether the Property is in an SFHA; • recording fees,
      recording taxes, filing fees, and documentary stamp taxes; • a fee for inspection
      of the Property by the Lender or its agent, not to exceed a maximum set by HUD;
      and • such other items as may be specified by HUD. Their inclusion must not
      increase the total principal loan balance beyond the Nationwide Loan Limits
      permitted. The Dealer may advance the funds for the fees and charges and be
      reimbursed by the Lender from the loan proceeds. Alternatively, a Lender may
      pay these fees and charges and deduct them from the loan proceeds paid to the
      Dealer. In either case, there must be full disclosure to the Borrower. (ii)
      Upfront Insurance Premium Any portion of this UFIP may be financed into the
      Loan provided that the final loan amount does not exceed the Nationwide Loan
      Limits. For Loans originated by a Dealer, the Upfront Insurance Premium Rider
      must be included in the case binder. Any UFIP amounts paid in cash are added
      to the total cash settlement requirements. (b) Allowable Fees and Charges That
      May Not be Financed The following fees and charges incurred by a Lender in connection
      with a Manufactured Home Loan may be collected from a Borrower, but may not
      be included in the loan amount or otherwise financed or advanced by a Dealer,
      a manufacturer, or any other party to the loan transaction: II. ORIGINATION
      THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured
      Home Loan Program Handbook 4000.1 1091 Last Revised: 11/26/2025 • Discount Points
      to be paid by the Borrower to the Lender, in compliance with Fees and Charges
      that May be Collected, but May Not be Financed; • a fee for the services of
      a qualified Closing Agent to act on behalf of the Lender in closing a Direct
      Loan transaction. The fee for a Closing Agent includes, and is not in addition
      to, the document signing fee; • premiums for credit life insurance or credit
      disability insurance; • payments into an insurance escrow account; • other fees
      necessary to establish the validity of a lien. This fee category includes preparation
      of the lien instrument by a third party that is unaffiliated with the Lender.
      Preparation of the lien instrument by the Lender or its Affiliate is represented
      by the allowed origination fee; • title insurance costs (applicable only for
      lot/real estate); • survey costs (applicable only for lot/real estate); • payments
      into a tax escrow account for the current year (applicable only for lot/real
      estate); and • such other items as may be specified by HUD. (c) Fee for Third-Party
      Originator The Lender may pay a reasonable fee to the sponsored TPO, but the
      fee must not be charged to the Borrower. (3) Seller Payments When described
      in a standard real estate contract for a Manufactured Home Lot or Combination
      Loan, the seller may pay costs that are normally paid by a real estate seller,
      such as preparing and recording the deed that transfers title to the buyer.
      (4) Other Costs In addition to the minimum downpayment, the following are additional
      borrower expenses that must not be financed, and must be included in the total
      amount of cash that the Borrower must provide at loan settlement. (a) Prepaid
      Items (Including Per Diem Interest) Prepaid items may include annual insurance
      premiums, property taxes, and per diem interest. (b) Ineligible Contract Options
      and Accessories Items listed in the sales contract that may not be financed
      into the Loan must be included in the total cash requirements for the Loan.
      These items include furniture and small appliances. II. ORIGINATION THROUGH
      POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured Home Loan
      Program Handbook 4000.1 1092 Last Revised: 11/26/2025 (c) Repairs and Improvements
      The cost of repairs and improvements may not be financed into the Loan. (d)
      Premium Pricing on FHA-Insured Loans Premium Pricing refers to a credit from
      a Lender for the interest rate chosen. Premium Pricing may be used to pay a
      Borrower’s actual closing costs and/or prepaid items. Closing costs paid in
      this manner do not need to be included as part of the interested party limitation.
      The funds derived from a premium priced Loan: • must be disclosed as required,
      and in accordance with RESPA where applicable; • must be used to reduce the
      principal balance if the credit amount exceeds the actual dollar amount for
      closing costs and prepaid expenses; and • may not be used for payment of debts,
      collection accounts, escrow shortages or missed Loan Payments, or Judgments.
      (e) Referral Fees Neither the Lender nor the Borrower may pay a referral fee
      to any Dealer, home manufacturer, contractor, supplier, real estate broker,
      loan broker, or any other party in connection with the origination of a Loan
      insured under Title I. (f) Third Party Origination Fees Lenders may negotiate
      payment with third parties for their origination of Title I Loans. Lenders engaged
      with sponsored TPOs must comply with the Sponsor/Sponsored Third-Party Originator
      Relationship requirements. (g) Interested Party Contributions on the Settlement
      Statement The Lender may apply interested party credits to the closing costs
      and prepaid items, including any items Paid Outside Closing (POC). The refund
      of the Borrower’s POC may be used toward the Borrower’s downpayment, if the
      Lender documents that the POC was paid with the Borrower’s own funds. The Lender
      must identify the total interested party credits on the Settlement Statement
      or similar legal document or in an addendum. The Lender must identify each item
      paid by Interested Party Contributions. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1
      1093 Last Revised: 11/26/2025 (5) Minimum Verified and Documented Cash Reserves
      (a) Definition Reserves refer to the sum of the Borrower’s verified and documented
      liquid assets minus the total funds the Borrower is required to pay at closing.
      (b) Standard Borrowers must have a minimum of two months of Cash Reserves following
      loan settlement from their own funds when the Borrower’s credit does not meet
      Sufficiency of Non-traditional Credit References. (6) Sources of Funds The Lender
      must verify liquid assets for cash to close and Reserves as indicated. (a) Checking
      and Savings Accounts (i) Definition Checking and Savings Accounts refer to funds
      from Borrower-held accounts in a financial institution that allows for withdrawals
      and deposits. (ii) Standard The Lender must verify and document the existence
      of and amounts in the Borrower’s checking and savings accounts. For recently
      opened accounts and recent individual deposits of more than 1 percent of the
      loan amount, the Lender must obtain documentation of the deposits. The Lender
      must also verify that no debts were incurred to obtain part, or all, of the
      downpayment. (iii)Required Documentation Documentation must show that at least
      one Borrower is an owner of the account. Traditional Documentation The Lender
      must obtain a written VOD and the Borrower’s most recent statement for each
      account. Alternative Documentation If a VOD is not obtained, a statement provided
      by the financial institution showing the previous month’s ending balance for
      the most recent month is II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E.
      Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1 1094
      Last Revised: 11/26/2025 required. If the previous month’s balance is not shown,
      the Lender must obtain statement(s) for the most recent two months. (b) Cash
      on Hand (i) Definition Cash on Hand refers to cash held by the Borrower outside
      of a financial institution. (ii) Standard The Lender must verify that the Borrower’s
      Cash on Hand is deposited in a financial institution or held by the Lender or
      retailer. (iii)Required Documentation The Lender must verify and document the
      Borrower’s Cash on Hand by obtaining an explanation from the Borrower describing
      how the funds were accumulated and the amount of time it took to accumulate
      the funds. The Lender must also determine the reasonableness of the accumulation
      based on the time period during which the funds were saved and the Borrower’s:
      • income stream; • spending habits; • documented expenses; and • history of
      using financial institutions. (c) Retirement Accounts (i) Definition Retirement
      Accounts refer to assets accumulated by the Borrower for the purpose of retirement.
      (ii) Standard The Lender may include up to 60 percent of the value of assets,
      less any existing Loans, from the Borrower’s retirement accounts, such as IRAs,
      thrift savings plans, 401(k) plans, and Keogh accounts, unless the Borrower
      provides conclusive evidence that a higher percentage may be withdrawn after
      subtracting any federal income tax and withdrawal penalties. The portion of
      the assets not used to meet closing requirements, after adjusting for taxes
      and penalties, may be counted as Reserves. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1
      1095 Last Revised: 11/26/2025 (iii)Required Documentation The Lender must obtain
      the most recent monthly or quarterly statement to verify and document the existence
      and amounts in the Borrower’s retirement accounts, the Borrower’s eligibility
      for withdrawals, and the terms and conditions for withdrawal from any retirement
      account. If any portion of the asset is required for funds to close, evidence
      of liquidation is required. (d) Stocks and Bonds (i) Definition Stocks and Bonds
      are investment assets accumulated by the Borrower. (ii) Standard The Lender
      must determine the value of the stocks and bonds from the most recent monthly
      or quarterly statement. If the stocks and bonds are not held in a brokerage
      account, the Lender must determine the current value of the stocks and bonds
      through third- party verification. Government-issued savings bonds are valued
      at the original purchase price, unless the Lender verifies and documents that
      the bonds are eligible for redemption when cash to close is calculated. (iii)Required
      Documentation The Lender must verify and document the existence of the Borrower’s
      stocks and bonds by obtaining brokerage statement(s) for each account for the
      most recent two months. Evidence of liquidation is not required. For stocks
      and bonds not held in a brokerage account the Lender must obtain a copy of each
      stock or bond certificate. (e) Private Savings Clubs (i) Definition Private
      Savings Club refers to a non-traditional method of saving by making deposits
      into a member-managed resource pool. (ii) Standard The Lender may consider Private
      Savings Club funds that are distributed to and received by the Borrower as an
      acceptable source of funds. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1
      1096 Last Revised: 11/26/2025 The Lender must verify and document the establishment
      and duration of the club, and the Borrower’s receipt of funds from the club.
      The Lender must also determine that the received funds were reasonably accumulated,
      and not borrowed. (iii)Required Documentation The Lender must obtain the club’s
      account ledgers and receipts, and verification from the club treasurer that
      the club is still active. (f) Gifts (Personal and Equity) (i) Definition Gifts
      refer to contributions of cash or equity with no expectation of repayment. (ii)
      Standards for Gifts Acceptable Sources of Gifts Funds Gifts may be provided
      by: • the Borrower’s Family Member; • the Borrower’s employer or labor union;
      • a close friend with a clearly defined and documented interest in the Borrower;
      • a charitable organization; or • a governmental agency or public entity that
      has a program providing homeownership assistance to: o low- or moderate-income
      families; or o first-time homebuyers. Any Gift of the Borrower’s downpayment
      must also comply with the additional requirements set forth in Sources of Funds
      for the Borrower’s downpayment. The gift donor may not be a person or entity
      with an interest in the sale of the Property, such as the seller, Dealer, manufacturer,
      real estate broker, or any person or any other affiliated entity. Gifts from
      these sources are not permitted on Title I Manufactured Home Loans. Reserves
      Gift funds in excess of funds needed to close may not be considered as Cash
      Reserves. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured
      Programs 4. Manufactured Home Loan Program Handbook 4000.1 1097 Last Revised:
      11/26/2025 Donor’s Source of Funds Cash on Hand is not an acceptable source
      of donor gift funds. Required Documentation The Lender must obtain a gift letter
      signed and dated by the donor and Borrower that includes the following: • the
      donor’s name, address, and telephone number; • the donor’s relationship to the
      Borrower; • the dollar amount of the Gift; and • a statement that no repayment
      is required. Documenting the Transfer of Gifts The Lender must verify and document
      the transfer of Gifts from the donor to the Borrower in accordance with the
      requirements below: • For Gifts that will be verified prior to settlement, the
      Lender must obtain one of the following: o the donor’s bank statement showing
      the withdrawal and evidence of the deposit into the Borrower’s account; o a
      copy of the donor’s canceled check and evidence of deposit into the Borrower’s
      account; o a copy of the donor’s withdrawal receipt and evidence of deposit
      into the Borrower’s account; or o evidence of the electronic transfer of funds
      from the donor’s account to the Borrower’s account. • For Gifts that will be
      verified at settlement, the Lender must obtain one of the following evidencing
      payment to the settlement agent: o evidence of electronic transfer of funds
      from the donor’s account; o bank certified check; o cashier’s check; or o other
      official bank check. Who May Provide Gifts of Land Only Family Members may provide
      equity credit as a Gift on Property being sold to other Family Members. For
      Gifts of land, the Lender must obtain: • proof of ownership by the donor; and
      • evidence of the transfer of title to the Borrower. Regardless of when gift
      funds are made available to a Borrower or settlement agent, the Lender must
      be able to make a reasonable II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1
      1098 Last Revised: 11/26/2025 determination that the gift funds were not provided
      by an unacceptable source. (iii)Standards for Gifts of Equity Who May Provide
      Gifts of Equity Only Family Members may provide equity credit as a Gift on Property
      being sold to other Family Members. Required Documentation The Lender must obtain
      a gift letter signed and dated by the donor and Borrower that includes the following:
      • the donor’s name, address, and telephone number; • the donor’s relationship
      to the Borrower; • the dollar amount of the Gift; and • a statement that no
      repayment is required. (g) Interested Party Contributions (i) Definitions Interested
      Parties refer to sellers, real estate agents, builders, developers, lenders,
      Third-Party Originators (TPO), or other parties with an interest in the transaction.
      (ii) Standard Interested Parties are not permitted to contribute toward the
      Borrower’s origination fees, other closing costs and Discount Points. Interested
      Parties are also not permitted to contribute toward: • payment for permanent
      and temporary interest rate buydowns, and other payment supplements; • payments
      of loan interest for fixed rate Loans; • Loan Payment protection insurance;
      and • payment of the UFMIP. Payment of real estate agent commissions or fees,
      typically paid by the seller under local or state law, or local custom, is not
      considered an Interested Party Contribution. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1
      1099 Last Revised: 11/26/2025 (h) Inducements to Purchase (i) Definition Inducements
      to Purchase refer to certain expenses paid by the seller and/or another Interested
      Party on behalf of the Borrower and result in a dollar- for-dollar reduction
      to the Adjusted Value of the Property before applying the appropriate LTV percentage.
      These inducements include, but are not limited to: • decorating allowances;
      • repair allowances; • excess rent credit; • moving costs; • paying off consumer
      debt; • Personal Property; • sales commission on the Borrower’s present residence;
      and • below market rent, except for Borrowers who meet the Identity-of- Interest
      exception for Family Members. (ii) Personal Property Replacement of existing
      Personal Property items listed below are not considered an inducement to purchase,
      provided the replacement is made prior to settlement and no cash allowance is
      given to the Borrower. The inclusion of the items below in the sales agreement
      is also not considered an inducement to purchase if inclusion of the item is
      customary for the area: • range • refrigerator • dishwasher • washer • dryer
      • carpeting (iii)Sales Commission An inducement to purchase exists when the
      seller and/or Interested Party agrees to pay any portion of the Borrower’s sales
      commission on the sale of the Borrower’s present residence. An inducement to
      purchase also exists when a Borrower is not paying a Real Estate Commission
      on the Sale of their present residence, the same real estate broker or agent
      is involved in both transactions, and the seller is paying a Real Estate Commission
      on the Sale of the Property being purchased by the Borrower that exceeds what
      is typical for the area. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E.
      Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1 1100
      Last Revised: 11/26/2025 (iv) Rent Below Fair Market Rent may be an inducement
      to purchase when the sales agreement reveals that the Borrower has been living
      in the Property rent-free or has an agreement to occupy the Property at a rental
      amount greater than 10 percent below fair market rent. When such an inducement
      exists, the amount of inducement is the difference between the rent charged
      and the fair market rent pro-rated over the period between execution of the
      sales contract and execution of the Title I Loan. Rent below FMV is not considered
      an inducement to purchase when a builder fails to deliver a Property at an agreed-upon
      time, and permits the Borrower to occupy an existing or other unit for less
      than market rent until construction is complete. (i) Downpayment Assistance
      Programs FHA does not “approve” downpayment assistance programs administered
      by charitable organizations, such as nonprofits. FHA also does not allow nonprofit
      entities to provide Gifts to pay off: • Installment Loans • credit cards • collections
      • Judgments • liens • similar debts The Lender must ensure that a Gift provided
      by a charitable organization meets the appropriate FHA requirements, and that
      the transfer of funds is properly documented. (i) Gifts from Charitable Organizations
      that Lose or Give Up Their Federal Tax-Exempt Status If a charitable organization
      makes a Gift that is to be used for all, or part, of a Borrower’s downpayment,
      and the organization providing the Gift loses or gives up its federal tax-exempt
      status, FHA will recognize the Gift as an acceptable source of the downpayment,
      provided that: • the Gift is made to the Borrower; • the Gift is properly documented;
      and • the Borrower has entered into a contract of sale (including any amendments
      to purchase price) on or before the date the IRS officially announces that the
      charitable organization’s tax-exempt status is terminated. II. ORIGINATION THROUGH
      POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured Home Loan
      Program Handbook 4000.1 1101 Last Revised: 11/26/2025 (ii) Lender Responsibility
      for Ensuring that Downpayment Assistance Provider is a Charitable Organization
      The Lender is responsible for ensuring that an entity providing downpayment
      assistance is a charitable organization as defined by Section 501(a) of the
      Internal Revenue Code (IRC) of 1986 pursuant to Section 501(c) (3) of the IRC.
      One resource for this information is the IRS Exempt Organization Select Check,
      which contains a list of organizations eligible to receive tax- deductible charitable
      contributions. (j) Secondary Financing Secondary Financing is any financing
      other than the first Loan that creates a lien against the Property. Any such
      financing that does create a lien against the Property is not considered a Gift
      or a grant even if it does not require regular payments or has other features
      forgiving the debt. Secondary Financing is not permitted under the Manufactured
      Home Loan program. (k) Loans Loan means a Disbursement of proceeds (funds) or
      an advance of credit to or for the benefit of a Borrower who promises to repay
      the principal amount of such Disbursement or advance, plus interest, if any,
      at a stated annual rate over time, with the Borrower’s obligation evidenced
      by the Borrower’s execution of a Note. Loan also means a purchase by a Lender
      of a Note evidencing such obligation, or a refinancing of an existing obligation
      with or without an additional Disbursement of proceeds or advance of credit.
      (i) Collateralized Loans Definition A Collateralized Loan is a loan that is
      fully secured by a financial asset of the Borrower, such as deposit accounts,
      certificates of deposit, investment accounts, or Real Property. These assets
      may include stocks, bonds, and real estate other than the Property being purchased.
      Standard The minimum investment and funds to close may be derived from a collateralized
      loan, provided that the funds are secured by other property II. ORIGINATION
      THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured
      Home Loan Program Handbook 4000.1 1102 Last Revised: 11/26/2025 that the applicant
      owns. The security must not be against the home being purchased. Loans secured
      against deposited funds, where repayment may be obtained through extinguishing
      the asset, do not require consideration of repayment for qualifying purposes.
      The Lender must reduce the amount of the corresponding asset by the amount of
      the collateralized loan. Who May Provide Collateralized Loans Only an independent
      third party may provide the borrowed funds for collateralized loans. The seller,
      Lender, or other Interested Party may not provide such funds. Unacceptable borrowed
      funds include: • unsecured signature loans; • cash advances on credit cards;
      • borrowing against household goods and furniture; and • other similar unsecured
      financing. Any loan of the Borrower’s MCI must also comply with the additional
      requirements set forth in Sources of Funds for the Borrower’s downpayment. Required
      Documentation The Lender must verify and document the existence of the Borrower’s
      assets used to collateralize the Loan, the promissory Note securing the asset,
      and the loan proceeds. (ii) Retirement Account Loans Definition A Retirement
      Account Loan is a loan that is secured by the Borrower’s retirement assets.
      Standard The Lender must reduce the amount of the retirement account asset by
      the amount of the outstanding balance of the retirement account loan. Required
      Documentation The Lender must verify and document the existence and amounts
      in the Borrower’s retirement accounts and the outstanding loan balance. II.
      ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4.
      Manufactured Home Loan Program Handbook 4000.1 1103 Last Revised: 11/26/2025
      (iii)Disaster Relief Loans Definition Disaster Relief Loans refer to loans from
      a Governmental Entity that provide immediate housing assistance to individuals
      displaced due to a natural disaster. Standard Secured or unsecured disaster
      relief loans administered by the Small Business Administration (SBA) may be
      used. If the SBA loan will be secured by the Property being purchased, it must
      be clearly subordinate to the FHA-insured Loan, and meet the requirements for
      Secondary Financing. Any loan of the Borrower’s MCI must also comply with the
      additional requirements set forth in Sources of Funds for the Borrower’s MCI.
      Any monthly payment arising from this type of loan must be included in the qualifying
      ratios. Required Documentation The Lender must verify and document the promissory
      Note. (l) Grants (i) Disaster Relief Grants Definition Disaster Relief Grants
      refer to grants from a Governmental Entity that provide immediate housing assistance
      to individuals displaced due to a natural disaster. Disaster relief grants may
      be used for the Borrower’s downpayment. Required Documentation The Lender must
      verify and document the Borrower’s receipt of the grant and terms of use. Any
      grant of the Borrower’s MCI must also comply with the additional requirements
      set forth in Sources of Funds for the Borrower’s downpayment. II. ORIGINATION
      THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured
      Home Loan Program Handbook 4000.1 1104 Last Revised: 11/26/2025 (ii) Federal
      Home Loan Bank Homeownership Set-Aside Grant Program Standard The Federal Home
      Loan Bank’s (FHLB) Affordable Housing Program (AHP) Homeownership Set-Aside
      Grant Program is an acceptable source of downpayment assistance and may be used
      in conjunction with FHA- insured financing. Secondary financing that creates
      a lien against the Property is not considered a Gift or grant even if it does
      not require regular payments or has other features forgiving the debt. Any AHP
      Set-Aside funds used for the Borrower’s MCI must also comply with the additional
      requirements set forth in Sources of Funds for the Borrower’s MCI. Required
      Documentation The Lender must verify and document the Borrower’s receipt of
      the grant and terms of use. The Lender must also verify and document that the
      Retention Agreement required by the FHLB is recorded against the Property and
      results in a Deed Restriction, and not a second lien. The Retention Agreement
      must: • provide that the FHLB will have ultimate control over the AHP grant
      funds if the funds are repaid by the Borrower; • include language terminating
      the legal restrictions on conveyance if title to the Property is transferred
      by foreclosure or DIL, or assigned to the Secretary of HUD; and • comply with
      all other FHA regulations. (m)Employer Assistance (i) Definition Employer Assistance
      refers to benefits provided by an employer to relocate the Borrower or assist
      in the Borrower’s housing purchase, including closing costs, prepaid items,
      insurance premiums, or any portion of the minimum cash investment. Employer
      Assistance does not include benefits provided by an employer through secondary
      financing. A salary advance cannot be considered as assets to close. II. ORIGINATION
      THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured
      Home Loan Program Handbook 4000.1 1105 Last Revised: 11/26/2025 (ii) Standard
      Relocation Guaranteed Purchase The Lender may allow the net proceeds (relocation
      guaranteed purchase price minus the outstanding liens and expenses) to be used
      as cash to close. Employer Assistance Plans The amount received under Employer
      Assistance Plans may be used as cash to close. (iii)Required Documentation Relocation
      Guaranteed Purchase If the Borrower is being transferred by their company under
      a guaranteed sales plan, the Lender must obtain an executed buyout agreement
      signed by all parties, and a receipt of funds indicating that the employer or
      relocation service takes responsibility for the outstanding loan debt. The Lender
      must verify and document the agreement guaranteeing employer purchase of the
      Borrower’s previous residence and the net proceeds from sale. Employer Assistance
      Plans The Lender must verify and document the Borrower’s receipt of assistance.
      If the employer provides this benefit after settlement, the Lender must verify
      and document that the Borrower has sufficient cash for closing. (n) Sale of
      Personal Property (i) Definition Personal Property refers to tangible property,
      other than Real Property, such as cars, recreational vehicles, stamps, coins,
      or other collectibles. (ii) Standard The Lender must use the lesser of the estimated
      value or actual sales price when determining the sufficiency of assets to close.
      (iii)Required Documentation Borrowers may sell Personal Property to obtain cash
      for closing. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured
      Programs 4. Manufactured Home Loan Program Handbook 4000.1 1106 Last Revised:
      11/26/2025 The Lender must obtain a satisfactory estimate of the value of the
      item, a copy of the bill of sale, evidence of receipt, and deposit of proceeds.
      A value estimate may take the form of a published value estimate issued by organizations
      such as automobile dealers, philatelic or numismatic associations, or a separate
      written appraisal by a qualified Appraiser with no financial interest in the
      loan transaction. (o) Trade-In of Manufactured Home (i) Definition Trade-In
      of Manufactured Home refers to the Borrower’s sale or trade-in of one Manufactured
      Home that is not considered real estate to a Dealer or an independent third
      party. (ii) Standard The net proceeds from the Trade-In of a Manufactured Home
      may be used as the Borrower’s source of funds for the purchase of another Manufactured
      Home. Trade-ins cannot result in cash back to the Borrower from the Dealer or
      independent third party. (iii)Required Documentation The Lender must verify
      and document the sales contract or other agreement evidencing a transaction
      and the value of the trade-in or sale. The Lender must obtain documentation
      to support the Trade Equity. (p) Sale of Real Property (i) Definition The Sale
      of Real Property refers to the sale of Property currently owned by the Borrower.
      (ii) Standard Net proceeds from the Sale of Real Property may be used as an
      acceptable source of funds. (iii)Required Documentation The Lender must verify
      and document the actual sale and the Net Sale Proceeds by obtaining a fully
      executed Settlement Statement or similar legal document. II. ORIGINATION THROUGH
      POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured Home Loan
      Program Handbook 4000.1 1107 Last Revised: 11/26/2025 The Lender must also verify
      and document that it was an Arm’s Length Transaction, and that the Borrower
      is entitled to the Net Sale Proceeds. (q) Real Estate Commission from Sale of
      a Subject Property (i) Definition Real Estate Commission from Sale of Subject
      Property refers to the Borrower’s portion of a real estate commission earned
      from the sale of the Property being purchased. (ii) Standard Lenders may consider
      Real Estate Commissions from the Sale of the Subject Property as part of the
      Borrower’s acceptable source of funds if the Borrower is a licensed real estate
      agent. A Family Member entitled to the commission may also provide it as a Gift,
      in compliance with standard gift requirements. (iii)Required Documentation The
      Lender must verify and document that the Borrower, or Family Member giving the
      commission as a Gift, is a licensed real estate agent, and is entitled to a
      Real Estate Commission from the Sale of the Property being purchased. (r) Rent
      Credits (i) Definition Rent Credits refer to the amount of the rental payment
      that exceeds the Appraiser’s estimate of fair market rent. (ii) Standard The
      Lender may use the cumulative amount of rental payments that exceeds the Appraiser’s
      estimate of fair market rent toward the MCI. (iii)Required Documentation The
      Lender must obtain the rent with option to purchase agreement, the Appraiser’s
      estimate of market rent, and evidence of receipt of payments. II. ORIGINATION
      THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured
      Home Loan Program Handbook 4000.1 1108 Last Revised: 11/26/2025 iv. Final Underwriting
      Decision The Lender is ultimately responsible for making an underwriting decision
      on behalf of their Lender in compliance with HUD requirements. The Lender must
      complete the interview with the Borrower before making a final underwriting
      decision on the Loan. (A) Duty of Care/Due Diligence The underwriter must exercise
      the same level of care that would be used in underwriting a Loan entirely dependent
      on the Property as security. Compliance with FHA requirements is deemed to be
      the minimum standard of due diligence required in originating and underwriting
      an FHA-insured Loan. (B) Specific Underwriter Responsibilities The underwriter
      must review each Loan as a separate and unique transaction, recognizing that
      there may be multiple factors that demonstrate a Borrower’s ability and willingness
      to make timely Loan Payments, in order to make an underwriting decision on behalf
      of their Direct Endorsement (DE) Lender in compliance with HUD requirements.
      The underwriter must evaluate the totality of the Borrower’s circumstances and
      the impact of layering risks on the probability that a Borrower will be able
      to repay the loan obligation according to the terms of the Loan. As the responsible
      party, the underwriter must: • review appraisal reports, compliance inspections,
      and credit analyses to ensure reasonable conclusions, sound reports, and compliance
      with HUD requirements regardless of who prepared the documentation; • determine
      the acceptability of the appraisal, the inspections, the Borrower’s capacity
      to repay the Loan, and the overall acceptability of the Loan for FHA insurance;
      • identify any inconsistencies in information obtained by the Lender in the
      course of reviewing the Borrower’s application regardless of the materiality
      of such information to the origination and underwriting of a Loan; and • resolve
      all inconsistencies identified before approving the Borrower’s application,
      and document the inconsistencies and the resolutions of the inconsistencies
      in the file. The underwriter must identify and report any misrepresentations,
      violations of HUD requirements, and fraud to the appropriate party within their
      organization. (C) Underwriting of Credit and Debt The underwriter must determine
      the creditworthiness of the Borrower, which includes analyzing the Borrower’s
      overall pattern of credit behavior and the credit report. See Credit Requirements
      above. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs
      4. Manufactured Home Loan Program Handbook 4000.1 1109 Last Revised: 11/26/2025
      The underwriter must ensure that there are no other unpaid obligations incurred
      in connection with the loan transaction or the purchase of the Property. (D)
      Underwriting of Income The underwriter must review the income of a Borrower
      and verify that it has been supported with the proper documentation. See Income
      Requirements above. (E) Underwriting of Assets The underwriter must review the
      assets of a Borrower required to close the Loan and verify that they have been
      supported with the proper documentation. See Asset Requirements above. (F) Verifying
      Insurance Premium and Loan Amount The underwriter must review the insurance
      premium and loan amount and verify that they have been supported with the proper
      documentation. See Underwriting the Borrower. (G) Calculating Qualifying Ratios
      For all transactions, except non-credit qualifying Streamline Refinances, the
      underwriter must calculate the Borrower’s Total Housing Payment to Effective
      Income Ratio and the Total Fixed Payment to Effective Income ratio, or DTI,
      and verify compliance with the ratio requirements listed in the Approvable Qualifying
      Ratios chart. The Lender must exclude any obligation that is wholly secured
      by existing assets of the Borrower from the calculation of the Borrower’s debts,
      provided the assets securing the debt are also not considered in qualifying
      the Borrower. (H) Calculating Maximum Monthly Housing Expenses The total Loan
      Payment includes: • P&I; • real estate taxes; • hazard insurance; • Flood Insurance,
      as applicable; • insurance premium; • Homeowners’ Association (HOA) Fees or
      manufactured home community or park association fees or expenses; • lot rent;
      • special assessments; • payments for any acceptable secondary financing; and
      • any other escrow payments. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1
      1110 Last Revised: 11/26/2025 (I) Estimating Real Estate Taxes The Lender must
      use accurate estimates of monthly tax escrows (as applicable) when calculating
      the total Loan Payment. Tax estimates must be based on lots that will be owned
      by the Borrower. (J) Temporary Interest Rate Buydowns Temporary interest rate
      buydowns are not permitted. Interest rate buydowns must be permanent for the
      duration of the loan term. (K) Calculating Total Fixed Payment The total fixed
      payment includes: • the total Loan Payment; and • monthly obligations on all
      debts and liabilities. The maximum Total Housing Payment to Effective Income
      Ratio and Total Fixed Payments to Effective Income (DTI) ratios applicable to
      manually underwritten Loans are summarized in the matrix below. The qualifying
      ratios for Borrowers with no credit score are computed using income only from
      Borrowers occupying the Property and obligated on the Loan. Non- occupant co-Borrower
      income may not be included. Approvable Qualifying Ratios Credit Sufficiency
      Requirements Maximum Qualifying Ratios (%) Acceptable Compensating Factors Credit
      Sufficiency Requirements Not Met 31/43 Borrowers that do not meet credit sufficiency
      requirements: • must not exceed 31/43 ratios; and • must have documented verification
      of two months Cash Reserves. Exception: Loan financing an Energy Efficient Home
      (EEH): • may have stretch ratios of 33/45; and • must have documented verification
      of two months Cash Reserves. Other compensating factors are permitted in addition
      to these requirements. Requirements for Sufficient Credit is Met 31/43 No compensating
      factors are required. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title
      I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1 1111 Last
      Revised: 11/26/2025 Approvable Qualifying Ratios Credit Sufficiency Requirements
      Maximum Qualifying Ratios (%) Acceptable Compensating Factors Requirements for
      Sufficient Credit is Met 33/45 At least one compensating factor is required.
      (L) Required Documentation for Acceptable Compensating Factors If a DTI ratio
      exceeds HUD’s maximum allowable amount by 2 percent or less, a compensating
      factor may be considered when determining eligibility. The following describes
      the compensating factors and required documentation that may be used to justify
      approval of Loans with the credit sufficiency and qualifying ratios described
      above. (1) Energy Efficient Homes (a) Definition A Manufactured Home is classified
      as an EEH when certified as ENERGY STAR to the Quality Assurance Provider and
      an ENERGY STAR label is affixed inside the home, commonly near the HUD Data
      Plate or inside the electric panel cover of the home. (b) Standard When the
      Loan finances a Manufactured Home that is ENERGY STAR qualified, the Borrower’s
      qualifying ratios may be “stretched” two percentage points higher than the standard
      limits. The qualifying ratio limit for a Manufactured Home that complies with
      EEH standards is 33 percent for the housing-to-income ratio and 45 percent for
      the Debt-to-Income ratio. (c) Required Documentation The case binder must contain
      evidence that the home was manufactured to ENERGY STAR standards, such as: •
      For new homes, the Manufacturer’s Invoice must indicate that the unit is ENERGY
      STAR qualified. • For existing homes, the case binder must contain a photo of
      the ENERGY STAR label. (2) Verified and Documented Cash Reserves Verified and
      documented Cash Reserves may be cited as a compensating factor when the Reserves
      are equal to or exceed three total monthly Loan Payments. II. ORIGINATION THROUGH
      POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 4. Manufactured Home Loan
      Program Handbook 4000.1 1112 Last Revised: 11/26/2025 Reserves are calculated
      as the Borrower’s total assets less: • the total funds required to close the
      Loan; • Gifts; and • borrowed funds. (3) Equivalent or Reduced Housing Payment
      If the proposed monthly Loan Payment is less than or equal to the current total
      monthly housing payment for the previous 12 months, then that may be used as
      a compensating factor. The file must document a 12 month housing payment history
      with no late payments. The Current Total Monthly Housing Payment refers to the
      Borrower’s current total Loan Payment or current total monthly rent obligation.
      (4) Significant Additional Income Not Reflected in Effective Income Additional
      income or benefits not included in effective gross income that directly impacts
      the applicant’s ability to meet financial obligations include: • bonuses, part-time
      or Seasonal Employment that is not reflected in Effective Income; • employee
      benefits (company car, clothing allowance); and • public benefits (nutritional
      assistance/food stamps/seasonal unemployment). The following can also be cited
      as a compensating factor subject to the following requirements: • the Lender
      must verify and document that the Borrower has received this income, and it
      will likely continue; and • the income, if it were included in gross Effective
      Income, is sufficient to reduce the qualifying ratios to not more than 35/47.
      (5) Potential for Increased Future Earnings A Borrower that has potential for
      increased future earnings may be cited as a compensating factor with documented
      justification, such as job training or education in the applicant’s profession.
      (6) Secondary Wage Earner Potential (Employment Relocation) Potential income
      for a secondary wage earner may be cited as a compensating factor under the
      following condition: the secondary wage earner has relocated with a primary
      wage earner, who is purchasing a home as a result of a recent employment relocation.
      II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs
      4. Manufactured Home Loan Program Handbook 4000.1 1113 Last Revised: 11/26/2025
      The case binder must document all of the following: • evidence that the primary
      wage earner relocated for a new job; • at least a 12 month work history for
      the secondary wage earner, prior to relocation; and • the prospects of available
      employment. (7) Residual Income Residual income may be cited as a compensating
      factor provided it can be documented and it is at least equal to the applicable
      amounts for household size and geographic region found in the Table of Residual
      Incomes By Region in the Department of Veterans Affairs (VA) Lenders Handbook
      - VA Pamphlet 26-7, Chapter 4.9 b and e. (a) Calculating Residual Income Residual
      income is calculated as total Effective Income of all occupying Borrowers less:
      • state income taxes; • federal income taxes; • municipal or other income taxes;
      • retirement or Social Security; • proposed total Loan Payment; • estimated
      maintenance and utilities; • job related expenses (e.g., child care); and •
      the amount of the Gross Up of any Nontaxable Income. If available, Lenders must
      use Tax Returns and where applicable, state tax returns, from the most recent
      tax year to document state and local taxes, retirement, Social Security and
      Medicare. If tax returns are not available, Lenders may rely upon current pay
      stubs. For estimated maintenance and utilities, Lenders must multiply the Gross
      Living Area (GLA) of the Property by the maintenance and utility factor found
      in the Lenders Handbook - VA Pamphlet 26-7. (b) Using Residual Income as a Compensating
      Factor To use residual income as a compensating factor, the Lender must count
      all members of the household of the occupying Borrower without regard to the
      nature of their relationship and without regard to whether they are joining
      on title or the Note to determine “family size.” II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      E. Title I Insured Programs 4. Manufactured Home Loan Program Handbook 4000.1
      1114 Last Revised: 11/26/2025 (c) Exception The Lender may omit any individuals
      from “family size” who are fully supported by a source of verified income that
      is not included in the Effective Income in the loan analysis. These individuals
      must voluntarily provide sufficient documentation to verify their income to
      qualify for this exception. From the table provided in Lenders Handbook - VA
      Pamphlet 26-7, select the applicable loan amount, region and household size.
      If residual income equals or exceeds the corresponding amount on the table,
      it may be cited as a compensating factor. v. Borrower Approval or Denial (A)
      Re-underwriting Before closing a Title I Manufactured Home Loan, the Lender
      must re-underwrite a Loan when any data element of the Loan changes and/or new
      Borrower information becomes available. (B) Required Documentation of Final
      Underwriting Review Decision The underwriter must provide an underwriting worksheet
      to document their final underwriting decision. (C) HUD Employee Loans If the
      Loan involves a HUD employee, the Lender must condition the Loan on the approval
      of the Loan by HUD. The Lender must submit the underwritten loan application
      package to the Director of the FOC for final underwriting approval. (D) Responsibilities
      upon Denial When a Loan is denied, the Lender must comply with all requirements
      of the FCRA, and the ECOA, as implemented by Regulation B (12 CFR Part 1002).
      If the Loan has been reported in FHAC, Lenders must cancel any assigned case
      numbers that will not be closed as an FHA Loan.'
  judgment: false
