Mobile and Manufactured Home Loans are growing in popularity due to the rising cost of homes. Many are looking for alternatives to traditional housing, as home prices continue to rise. A manufactured or mobile home is an option that can be cheaper than traditional homes but still has all the necessary features.
The Richard Woodward Mortgage Team of Nexa Mortgage is able to finance mobile and manufactured homes. This housing option is financed differently from your average home. Let's take a look at how you can get a loan to finance your mobile or manufactured home.
What's the Difference Between Manufactured and Mobile Homes?
Before we get into financing, let's clarify the differences between a manufactured and mobile home. They are often interchangeable. A mobile home is a prefabricated structure that has been built on a permanent chassis constructed before June 15, 1976.
A manufactured house is a similar structure built after July 15, 1976. The U.S. Department of Housing and Urban Development (HUD), in 1976, established new safety standards for mobile homes and changed their names to "manufactured" rather than "mobile".
Mobile homes and manufactured homes are different in that manufactured houses comply with the new safety regulations established by HUD, while mobile homes were constructed prior to these regulations being implemented. Mobile homes were often designed to be mobile, while manufactured homes are built to remain in place. HUD also required all manufactured home to come with a HUD tag or certificate. This tag include information like the serial number and model designation of the unit, the date the unit was manufactured, and the manufacturer's name.
How to Qualify for Mobile Home Financing
A mobile or manufactured home can be financed but the process is just a little different and specific. Most lenders don't consider these homes eligible for the majority of types of mortgages. If your manufactured home meets all their requirements and is supported by a permanent foundation, some lenders may approve you for a loan. However, it's often difficult or impossible to consider manufactured homes real property, particularly if you don’t own the land beneath it.
Check your credit score
Lenders will take into account your credit score when deciding whether or not to approve a mobile-home loan. You will be eligible for lower rates and more favorable terms on most loans if you have a high credit score (typically around 740+) as well as a solid credit history. The Richard Woodward Mortgage Team will finance manufactured homes for credit scores as low as 500. Low rates can help you save thousands over the term of your loan. It's vital to check your credit before applying. Although different lenders may have different credit requirements, it is a good idea to ensure your credit score is high enough to qualify for any loan.
You can save for a down payment
Although it is not necessary in the case of VA and USDA home loans, you might want to save for a down payment on your mobile or manufactured home. A majority of lenders require that you pay a minimum of 3.5% down, but it is a good idea to put down a higher amount if possible. This will lower your monthly payments on your manufactured home loans.
There are four types of mobile or manufactured home loans:
There are many options for those who want to finance a mobile home or manufactured home. Let's take a look at each option and the requirements, as well as the pros and cons.
Conventional loans
Because these structures are not real property, most lenders won't give you a conventional loan to finance a mobile home or manufactured home unless it is permanently attached to owned loan. Conventional mortgage sources Fannie Mae and Freddie Mac offer specialized loans for manufactured homes that meet certain criteria.
Fannie Mae
Although not all lenders will finance manufactured homes, there are some that may offer Fannie Mae MH Advantage(r), which allows buyers to finance manufactured houses for up to 30 years with as little as 3% down payment. Your home must meet very strict criteria to be eligible. To qualify, your home must be at minimum 12 feet in width, 600 square feet minimum, and not be located on leased land.
Freddie Mac
Freddie Mac offers conventional loans for manufactured houses if they meet all the requirements of Freddie Mac. Fannie Mae's requirements are the same as Fannie Mae's: The home must be constructed on a permanent chassis and must be considered real estate. It must also have at least 400 sq. feet of living space.
Be aware that not all lenders will finance mobile and manufactured homes. However, Fannie Mae as well as Freddie Mac offer loan options for qualified properties.
Conventional:
- 620 min qualifying fico score with 20% down, lower down payments will require much higher credit scores.
- Singlewide, Doublewide & Triplewide units allowed
- Doublewide and Triplewide must have been constructed AFTER June 15, 1976
- Singlewide cannot be more than 10 years old on the date of appraisal
- Purchase/Rate-Term to 95% LTV and Cash Out up to 65% LTV. (Cash Out not allowed on Singlewide)
- Real Property conversion allowed at closing
- Not previously installed or occupied at another site. The home must have been moved from the dealer directly to the owned land site.
- Primary residence and 2nd Home allowed
FHA Loans
The Federal Housing Administration offers home loans that have fixed interest rates, lower credit and debt-to-income ratios, and lower down payment requirements. This is a popular choice for first-time homebuyers. We can even provide financing for the home and the lot all in one loan for NEW installations.
- 500 min qualifying fico
- Singlewide, Doublewide & Triplewide units allowed
- Purchase/Rate-Term up to 96.5 LTV and Cash Out up to 80 LTV
- Manual Underwrites Allowed
- Real Property Conversion allowed at closing
- Not previously installed or occupied at another site. The home must have been moved from the dealer directly to the owned land site.
- Primary residence only
- Home must have been constructed AFTER June 15, 1976
VA Loans
A VA loan is available for those who want to purchase a manufactured home. It works in the same way as the FHA loan. VA loans are available only to qualifying veterans through the Department of Veteran's Affairs. A VA loan offers many benefits, including the ability not to pay any down and no mortgage insurance.
You must have a permanent foundation and meet the HUD guidelines to qualify for a VA loan. Mobile homes are not eligible.
- 500 min qualifying fico
- Singlewide, Doublewide & Triplewide units allowed
- Purchase, Rate-Term and Cash Out up to 100% LTV
- Manual Underwrites allowed
- Real Property Conversion allowed at closing
- Can be previously installed or occupied at another site. The home must have been moved from the dealer directly to the owned land site.
- Primary residence only
- Home must have been constructed AFTER June 15, 1976
USDA Manufactured Pilot Program
A USDA loan is available for those who want to purchase a manufactured home in a rural area. It works in the similar way to the FHA loan.
- 550 min qualifying fico score
- Singlewide, Doublewide & Triplewide units allowed
- Purchase up to 100% LTV
- Home must be a 2006 model or newer
- Manual Underwrite Required. Max DTI 29/41
- Real Property Conversion allowed at closing
- Not previously installed or occupied at another site
- Home must be located in a USDA eligible rural area
- Primary residence only
The bottom line
It can be challenging to finance a mobile home or manufactured home, especially if you are looking for a mortgage. Most lenders won't consider mobile or manufactured homes real property unless they have been permanently attached to a proper foundation and had the wheels and tongue removed. There are many requirements you must meet to be eligible for a mortgage. Make sure you research all options before buying a mobile or manufactured home.
