How to Finance a Mobile or Manufactured Home

01.03.2023

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23 min.

Mobile, Modular, and Manufactured Homes
Financing Manufactured Homes vs. Mobile Homes
How to get a Mobile Home Financing
What to Consider When Buying a Mobile Home
How to get a Manufactured Home Financing
Personal loans for manufactured homes
FHA-manufactured home loans
VA loans for manufactured homes
USDA manufactured home loans
What to Consider When Buying a Manufactured Home
FAQ
What is the longest you can finance a mobile home?
Is it harder to get a loan for a manufactured home?
Can I get a mobile home with a 600-credit score?
Can you borrow money for a mobile home?
Is buying a trailer home a good investment?
Do trailer homes hold their value?

People who like tiny houses or don't have enough money to buy homes built the traditional way often choose cheaper options like mobile, manufactured, or modular housing. You can purchase these unusual dwellings with a conventional mortgage if that's what you're interested in.

How to Finance a Mobile or Manufactured Home

To get a traditional mortgage many lenders may require that you either already own the land or buy it to build your home. However, financing a mobile home differs from getting a regular house mortgage.

Read this article for helpful information on funding a manufactured or mobile home.

Mobile, Modular, and Manufactured Homes

To buy a manufactured, mobile, or modular home, you need to know what makes them different.

Mobile Homes. One type of "mobile home" refers to a manufactured house constructed before 1976, another is a "mobile home" that you may move from place to place. As personal property, these houses typically cannot be financed through a bank. You may need a personal or chattel loan to pay for a mobile home. "Mobile home finance" or "mobile home loans" refers to this type of loan. If your mobile home has a fixed foundation but is on rented land, like a lot in a mobile home park, you may need help to get a regular mortgage. In this case, a personal or chattel loan may be more appropriate.
Modular Homes. Modular homes, like manufactured homes, are constructed in a controlled environment away from the actual lot. Modular houses resemble conventional dwellings. This type of building usually has a regular foundation and a variety of crawlspace and basement features. Two or more modules may be shipped to the construction site, and the house is assembled there. Their modularity is what gives them their name. Usually, a local contractor is hired to make sure that all of these parts come together into a finished house. Builders must follow state, local, and regional building codes when building modular homes. Because they are made to local building codes and are supported by a permanent foundation, these houses are frequently eligible for conventional mortgage financing. FHA loan options can help you buy the house and the lot it will sit on.
Manufactured Homes. Manufactured homes are houses constructed in a factory before being transported to their eventual location by you or their manufacturer. They are also set up on a stable base. You can finance manufactured homes if they meet the Department of Housing and Urban Development's or HUD's safety standards for homes built after June 15, 1976. Many banks consider mobile homes "real property" and offer unique mortgage financing options because they are stable over time. Lending institutions, including the Federal Housing Administration, the Department of Agriculture, and government-sponsored enterprises, all offer manufactured home financing choices.

Financing Manufactured Homes vs. Mobile Homes

People often use the terms "mobile homes" and "manufactured homes" interchangeably, but there is a big difference between the two kinds of homes. The difference is essential when trying to secure financing for a new home.

Loans backed by real property are available for mobile homes constructed on June 15, 1976. On the other hand, manufactured homes are built after June 15, 1976, and they must meet safety rules set by the government to be considered legal homes. You could obtain a mortgage loan for one of these properties. And if that's not an option, there are a few more possibilities.

On June 15, 1976, the National Manufactured Housing Construction and Safety Standards became law. The Department of Housing and Urban Development (HUD) began regulating the safety of manufactured homes. Most of the time, "HUD tags" are put on houses that meet the strict safety standards set by HUD.

A conventional mortgage will only pay for your new manufactured home if it was built according to HUD's rules. You may want a different loan if the house cannot pass a few more qualification requirements.

How to get a Mobile Home Financing

After settling on its amenities and placement, you must choose how to pay for your mobile home loan. You can do financing for a mobile home in a few different ways.

Chattel loans. A chattel loan, a type of personal property loan, can be used to buy a mobile home. Mobile home loans are backed by the property's value, making them an attractive option for high-priced financing assets like planes, boats, mobile homes, and farm equipment. A chattel mortgage could be an option for financing if you still need to own the property on which you will build your new home. As a result, they are a popular choice among those looking for financing for manufactured homes and land rentals. The Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA), and the Rural Housing Service (RHS) of the U.S. Department of Agriculture all insure loans to buy manufactured homes from specific lenders. It's possible to discover lending companies that provide both chattel loans and traditional mortgages, but it's essential to understand their differences.
Fannie Mae. Some banks that finance mobile homes with land and credit unions participate in the Manufactured Housing Advantage Program (MH Advantage) by providing Fannie Mae mortgages to qualified borrowers purchasing manufactured homes. You must meet several requirements before you can apply, and one of them is having a driveway and walkway installed that go up to your property from your carport, detached garage, or driveway. To qualify for this program, the house must meet the same construction, architectural design, and energy efficiency standards as site-built houses. A 3% down payment might be sufficient to acquire one of these 30-year loans. Loans for manufactured homes through MH Advantage typically have lower interest rates than conventional mortgages.
Freddie Mac. With the Freddie Mac Home Possible mortgage program, it's possible to get conventional financing for a mobile or manufactured home. Borrowers who qualify can select from various mortgage options, including fixed-rate personal loans (15, 20, and 30 years) and adjustable-rate personal loans (7/6 or 10/6). The conventional wisdom is that you can get a mortgage with as little as 3% down, and in some situations, you can even utilize gift or grant money to meet the down payment.
Who can get a manufactured home loan? The same criteria determine loan eligibility for a manufactured home as for a site-built home: the borrower's credit, income, and down payment must all meet or exceed the lender's minimal standards. It is the case even though manufactured homes are not built on a permanent foundation. The mortgage will also be contingent on the manufactured home's ability to meet the requirements. In addition to complying with HUD's post-June 15, 1976, safety criteria, the following conditions must be completed by the home:

Do not be considered "personal property" but "real property."
Having a living space that is at least 400 square feet in size is required.
Be permanently tied to a foundation and located on land you own.

What to Consider When Buying a Mobile Home

When looking for finance for a mobile home, keep in mind the following factors:

Location. Mobile and manufactured homes, like traditional houses, are very location dependent. It would be best to decide where to put your mobile home before you do anything else. It all hinges on the area you pick, so consider it carefully. The location of the mobile home installation should be the first consideration. Your decision regarding the site will affect the remainder of the procedure.
Size. Consider the available home-size options before purchasing a mobile or manufactured home. Extra space is needed for larger homes, which often cost more. You may have to borrow more money if you want a bigger house. Typically, the width of a mobile home is used to categorize its type: "single-wide" and "double-wide" may be the terminology you encounter. Homes in the double-wide category are typically twice as comprehensive as those in the single-wide category (or just under 15 feet). Typically, the length of both is around 70 feet.

How to get a Manufactured Home Financing

The title of your manufactured house will determine which loan alternatives are available to you when you purchase a home and property. There are many options for how to get manufactured home financing.

A personal loan could be possible if you borrow more than $20,000 for your manufactured house. The typical limit for a personal loan is $50,000, while some lenders may go as high as $100,000. A manufactured home loan often has fixed rates and periods between two and five years. However, the interest rates on personal loans are often far higher than those on mortgages and auto loans. Lenders' specific requirements for approving a personal loan can vary, but it's common for them to look at things like your credit history, regular income, and amount of debt.

The Federal Housing Administration (FHA) insures mortgages to purchase manufactured homes. You can use FHA loans to buy either a lot or a manufactured home outright, or you can use them to buy both. A manufactured home placed on leased land also qualifies for FHA loans. In general, 15–25-year loan terms are typical. FHA manufactured home loan might be either one of two varieties:

FHA Title II loans. The minimum required down payment is 3.5%. The maximum length of a loan term is 30 years. Because Title II loans finance a manufactured home, you must purchase the land and the house simultaneously. You must use a permanent foundation system to set the house firmly in place.
FHA Title, I loan. Since these loans are for personal property, ownership of the underlying land is not a prerequisite. Any initial lease of the land must be for a minimum of three years. The minimum required down payment is 5%. Mortgage lenders' minimum loan amounts will differ based on your credit history. Loans under Title I have shorter repayment periods.

Active-duty service members, veterans, and their families can access government-backed loan programs through the Veterans Administration (VA). The land on which the manufactured house will be situated and the home itself must be owned by the borrower to qualify for a VA loan on a manufactured home. The house needs to be considered real estate.

USDA Single Family Housing Guaranteed Loans are available to first-time, low- and moderate-income rural homebuyers purchasing a manufactured house or a home and lot. No minimum credit score or down payment amount is required to qualify for these loans.

What to Consider When Buying a Manufactured Home

When shopping around for a loan to finance your manufactured house, keep in mind the following:

Spending Over Time. Long-term expenses for homeownership are the same regardless of the type of dwelling purchased. You should include the cost of mobile home mortgage insurance when budgeting for a mobile or manufactured house. You are covered in the event of damage to your home or the need for repairs, just like with regular homeowners' insurance. The dwelling and the policyholder's possessions are often insured against loss or damage under a standard policy. Liability insurance can protect you financially if someone is hurt on your property and sues you for medical expenses. You may not include coverage for natural disasters like hurricanes, earthquakes, and floods in a standard mobile home insurance policy or an optional add-on.
New or Used. In contrast to more permanent structures, mobile and manufactured homes typically depreciate. That's why it makes sense to purchase a pre-owned mobile home; you can save money. Used mobile homes usually show signs of age unless they have been cared for well. Researching the location where you intend to set up the mobile home is also essential. In some areas, you may be limited in your housing options if you built your home before a particular year. If you want to buy an older mobile home, you should hire someone to inspect it to ensure you get an excellent place to live.

FAQ

The loan duration for a mobile home will vary from lender to lender. But, depending on the type of loan you need, you can expect to find options with loan terms that range from five to thirty years.

Mobile home financing is similar to site-built home financing if you own the property. Mid-six-figure credit, a down payment of at least 10% (or as little as 3.5% with an FHA loan), and monthly earnings that are at least equal to one-third of the mortgage payment are required.

Yes. Mobile home financing typically requires a minimum credit score of 580 to 620. Manufactured home loans usually require a credit score of 580 or more. In contrast, borrowers with lower scores may be eligible for financing through alternative programs, although they may be required to put down a more significant down payment.

Mobile or manufactured homes are not technically real property, so most traditional lenders will only lend money to buy one. On the other hand, conventional mortgage companies like Freddie Mac and Fannie Mae offer particular loans for manufactured homes that meet specific requirements.

Mobile and manufactured homes can be excellent investments if purchased wisely. When shopping for a new or used mobile home, it's essential to know what to look for. Just like a car loses value when you drive it off the lot, a mobile home's worth plummets quickly after purchase. Buying a mobile home isn't like buying a house.

Homebuyers know that manufactured houses offer the best bargain for housing in the United States, even though factory-built homes are getting older. The ever-increasing level of demand is maintaining the current status of high housing values.

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