Financing a mobile or manufactured home can be more complex than traditional home financing. While these homes are an affordable housing option, the process requires careful consideration of various loan options, from FHA and VA loans to personal loans. Explore the key steps to take when financing a manufactured home, including loan types, eligibility, and what to expect during the application process.
Editor
Zarina S
Update 16.01.2025
Manufactured homes, formerly known as mobile homes, are a more affordable housing option than site-built homes. They’re built in a factory to meet federal standards, and many of today’s models come with unexpected amenities like walk-in closets, fireplaces, and vaulted ceilings. While they’re cheaper, around $124,300 vs $409,872 for a site-built home, manufactured homes can be a good choice for buyers looking for flexibility and affordability. However, financing these homes can be tricky since many lenders don’t like to take out loans on depreciating properties. Knowing the right financing options and the pros and cons is key to making a manufactured home a smart investment.
Manufactured vs Mobile Homes
The terms “mobile home” and “manufactured home” are used interchangeably, but they refer to different types of homes based on when they were built and the construction standards they meet. Mobile homes were built before June 15, 1976, and were designed to be moved easily, often without meeting modern building codes. After that date new federal regulations, known as the HUD Code, were introduced and homes built to those standards are called manufactured homes. While both are factory-built homes, the main difference is the safety standards and design improvements of manufactured homes, which are much more durable and meet higher construction standards than older mobile homes.
What Is a Manufactured Home?
A manufactured home is a factory-built house that meets strict safety and construction standards set by the U.S. Department of Housing and Urban Development (HUD). These homes are built on a permanent chassis, with wheels for transport. Once delivered, the wheels and axles are removed, and the house is attached to a foundation, permanent or semi-permanent. Recently a new type of manufactured home called “CrossMod” has emerged which is built to the same standards but is placed on a permanent foundation and may have drywall interiors and garages, so they look and feel like traditional site-built homes.
Pros and Cons of Manufactured Homes
Pros
Manufactured homes are often cheaper than site-built homes due to the factory-built process.
They offer customization options, so buyers can personalize the floor plan, interior design, and exterior features.
Manufactured homes have a faster construction timeline since the factory-built process eliminates delays and streamlines production.
Cons
Manufactured homes require a permanent or semi-permanent foundation and can’t be moved easily, so they need to be placed on private land or in a manufactured home community.
Depending on the location, homeowners may have to pay community fees which can increase over time and add to the cost of living.
Manufactured homes don’t appreciate as much as traditional homes since they’re considered personal property, not real property.
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Buying a Manufactured Home
Determine your budget. The first step in buying a manufactured home is to know the total cost involved, which includes not only the price of the home but also site preparation, utilities, and ongoing costs like property taxes and insurance. Prices vary greatly based on location, size, and features. Single-section homes are generally more affordable than double-wide or multi-section homes.
Choose the location. Choosing the right location for your manufactured home is key. You need to decide if you want to rent or buy land or buy a land-home package that includes both the home and the land. If you place your home outside a community, you’ll need to check local zoning laws to see if manufactured homes are allowed in the area.
Get financing. Financing a manufactured home is more complex than financing a traditional home. While some conventional loan programs are available, many buyers use specialized loans like Title I and Title II loans, which are offered by the Federal Housing Administration (FHA). Be prepared to shop around for the best financing option for your situation and needs.
Prepare the home site. If you’re placing your manufactured home on new land, you’ll need to prepare the site. This includes getting the necessary permits, leveling the land, and getting utilities connected. Site preparation can be expensive and should be included in your overall budget.
Get mobile home insurance. Traditional homeowners' insurance doesn’t cover manufactured homes, so you’ll need to get mobile home insurance. This will cover dwelling, personal property, liability, and other structures on your property but may not cover flood or earthquake damage which may require additional coverage depending on your location.
Arrange for delivery and installation. After you purchase the home, the manufacturer will handle delivery and installation. Depending on the complexity of the project, this can take anywhere from one to several months. Make sure to confirm the timeline with the manufacturer so you can prepare for the move-in date and any site preparation.
Manufactured Home Financing Options
Conventional Loans
Overview. Conventional loans for manufactured homes are offered by government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac. These loans, part of programs like MH Advantage™ and HomeReady/Home Possible, cater to homes that meet specific criteria. They offer competitive interest rates, longer terms, and low down payments, making them ideal for eligible buyers. Backed by GSEs, these loans provide better terms and consumer protections compared to non-conventional options.
Terms. To qualify, borrowers need a minimum credit score of 620, with down payments ranging from 3-5%, depending on credit. The home must be at least 12 feet wide and meet square footage requirements (600 sq. ft. for Fannie Mae, 400 sq. ft. for Freddie Mac). The land must be owned (not leased), and the home should meet energy efficiency and structural standards similar to site-built homes. Loan terms typically span 30 years.
Best for. Conventional loans are ideal for borrowers with good credit purchasing manufactured homes that meet GSE standards. They're perfect for buyers who own the land and seek long-term financing with competitive rates and low down payments.
FHA Loans
Overview. FHA loans, backed by the Federal Housing Administration, come in two types: Title I and Title II. Title I loans help buy or improve manufactured homes or purchase the lot. Title II loans finance both the home and land, but the home must meet specific safety and construction standards. FHA loans are accessible due to flexible credit requirements and lower down payments.
Terms. Title I loans have varying limits: $105,532 for single-section homes, $193,719 for multi-section homes, and $43,377 for the lot alone. Loan terms are 20 years for homes and 25 years for multiunit homes and lots. Title II loans require the home to be the primary residence with a minimum 3.5% down payment. The maximum loan for a home and lot is $237,096 for multi-section homes. No minimum credit score is required, though most lenders expect at least 580 for a 3.5% down payment.
Best for. FHA loans are ideal for first-time buyers or those with lower credit scores. Title I loans are for buyers who don't need land ownership, while Title II loans are for those who want both home and land, with stricter construction standards.
VA Loans
Overview. VA loans are backed by the U.S. Department of Veterans Affairs and are for active duty service members, veterans, and surviving spouses. These loans can be used to purchase a manufactured home with or without land, refinance an existing home, or transport a home to land owned by the borrower. VA loans offer up to 100% financing, so they are a great option for eligible individuals.
Terms. To qualify for a VA loan, borrowers must have a minimum credit score of 620 and a debt-to-income ratio of 41% or lower. The home must be affixed to a permanent foundation and meet HUD code standards. Loan terms are 15 to 25 years, depending on the type of home and whether the land is included. An affidavit of affixture is required to prove the home is permanently attached to the land.
Best for. VA loans are best for service members, veterans, and surviving spouses looking to finance or refinance a manufactured home, especially those who already own land or want to buy both home and land together.
Chattel Loans
Overview. Chattel loans are a type of financing for purchasing movable personal property like mobile homes. Unlike traditional mortgages, chattel loans only finance the property itself and not the land it sits on. These loans are for items like vehicles, boats, and farm equipment where the property is the collateral for the loan. The closing process for chattel loans is faster and less restrictive than traditional home loans but comes with some drawbacks.
Terms. Chattel loans have shorter terms, usually 25 years or less, and require a minimum credit score of 575. Interest rates on chattel loans are higher than traditional mortgages, 8% to 14% depending on the borrower’s credit profile. Loan amounts are lower and lenders will review the borrower’s income, assets, and debt-to-income ratio (DTI) before approval. These loans close faster and have lower closing costs than traditional mortgages.
Best for. Chattel loans are for buyers who want to purchase a manufactured home without financing the land, or those who need faster and more flexible financing options. This loan type is for individuals with a solid income but lower credit scores who can handle higher interest rates and shorter loan terms.
USDA Loans
Overview. USDA loans are backed by the U.S. Department of Agriculture and help rural homebuyers finance manufactured homes, including land and home packages. These loans have favorable terms, no down payment, and are for homes that meet size and construction standards.
Terms. The home must be a new construction (post-2006) with at least 400 sqft and permanently affixed to a USDA-approved foundation. No down payment is required and credit score requirements vary by lender. USDA also offers financing for existing homes built after 2006 in specific states through the Manufactured Housing Pilot Program.
Best for. USDA loans are for rural homebuyers looking for no down payment financing, especially new manufactured homes or land and home packages in eligible areas.
Note! USDA loans are for rural areas and are low to moderate income, which varies by location.
Personal Loans
Overview. Personal loans are an alternative financing option for purchasing a mobile home when the home doesn’t need to be permanently affixed to land. These loans are flexible and can be used for various purposes, including buying a mobile home without collateral. The application process is quicker and simpler than that of other loan types, like mortgages.
Terms. Personal loans are $1,000 to $100,000 with interest rates starting at 7.50% for excellent credit. These loans are unsecured meaning no property is used as collateral and generally have higher interest rates than mortgages. Loan approval is based on your creditworthiness, and some lenders may charge origination fees of up to 7%. Repayment terms are shorter and personal loans are more expensive due to higher interest rates.
Best for. Personal loans are for buyers with good credit who want to purchase a mobile home without meeting traditional mortgage requirements like affixing the home to land or meeting HUD code standards. They are for those who want a fast, flexible, and unsecured financing option but may cost more.
How to Get Mobile Home Financing
Check your credit reports. When applying for financing, lenders will review your credit, so it’s a good idea to check your credit history and correct any errors. A clean credit report and good credit score will help you get better loan terms and lower interest rates.
Decide whether you’re buying or leasing land. The stability of the home, including if the land is owned or rented, will impact the type of loans available to you. Owning the land with your mobile home increases your chances of being approved for a loan.
Know the details of the home you want to buy. The type, age, and value of the mobile home you plan to buy will impact your eligibility for certain loans. Some loans have price, size, and condition restrictions on the home, so make sure you know what you want before applying.
Shop around. Take your time and compare different loan offers to get the best interest rates and fees. Comparing options will get you the best deal and save you thousands of dollars over the life of the loan.
Apply for the loan. Make sure your application is complete and transparent, and be prepared to put down a down payment if required. A complete application will increase your chances of approval and make the process smoother.
Conclusion
Manufactured and mobile homes are more affordable than traditional homes, but financing them requires more thought. Knowing the different loan types and their requirements is key to getting the best terms. By doing your research and exploring all your financing options, you’ll make an informed decision that fits your budget and long-term plans.
FAQ
What to consider when buying a mobile home?
Location. Location is key, it will determine the ease of installation and the type of financing options available. You can place the mobile home on your land, buy a plot of land or rent in a mobile home community. Check local zoning laws and utility connections before you decide.
Size. Mobile homes come in different sizes, single-wide (under 15 feet wide) or double-wide (about 30 feet wide). The size you choose will impact the cost of the home and the land on which it will be built. Larger homes require bigger lots and more financing.
New or used. One of the biggest considerations is whether to buy new or used. New homes come with modern features and warranties, but are more expensive. Used homes offer a discount, but may show wear and tear and not meet current construction standards.
Long-term costs. Beyond the purchase price, consider the long-term costs of owning a mobile home, like insurance. Mobile home insurance covers the dwelling and personal property, but may not cover natural disasters like floods or earthquakes unless you purchase additional policies.
Do manufactured homes hold their value?
Manufactured homes depreciate over time, but newer models may hold value better than older ones. Unlike traditional homes, they are considered “personal property” which affects their long-term value. However, the land the home is on will likely appreciate, which will help increase the overall value of the property. Several factors impact the value of manufactured homes including market conditions, the community’s desirability, the age and original price of the home, inflation rate, supply and demand, and how well the home is maintained. Also, having a well-organized resale network will impact value retention.
Is it hard to get a manufactured home finance?
Financing a manufactured home is more difficult than traditional homes since many lenders don’t offer conventional loans for them. However, getting a loan becomes easier if the manufactured home is on a permanent foundation and meets certain criteria. There are specialized loan options like FHA, VA, and USDA loans for manufactured homes that meet those requirements. Knowing these options and the home’s classification as real property will increase your chances of approval.
