Mobile Home Loans: Your Quick Guide To Financing A Mobile Or Manufactured Home

With home prices trending high in many places, some people are finding a homeownership opportunity in manufactured homes rather than site-built homes. Rocket Mortgage^® is now offering financing for manufactured homes on permanent foundations.

We don’t, however, offer financing for true mobile homes (those built prior to June 15, 1976) or manufactured homes not attached to a permanent foundation. This housing option often requires a different kind of financing than you’ll need for a traditional home.

If owning a manufactured home interests you, let’s explore how you can secure a loan for a future home purchase.

People sometimes use the terms “mobile home” and “manufactured home” interchangeably, but a mobile home and a manufactured home aren’t exactly the same. A mobile home is a prefabricated home structure built on a permanent chassis before June 15, 1976.

A manufactured home is a very similar structure, but, unlike a mobile home, it was built on or after June 15, 1976. In 1976, the U.S. Department of Housing and Urban Development (HUD) enacted new safety standards for mobile homes and also changed the name of these structures to “manufactured” homes rather than “mobile.”

The main difference between manufactured and mobile homes is that manufactured homes follow the new safety regulations put in place by HUD while mobile homes were built prior to their implementation. Mobile homes were also often built so they could be moved from one location to another with ease, but most manufactured homes aren’t built to be moved after they’ve been assembled.

Modular homes are often mistaken for manufactured homes. They’re likewise factory-built before being assembled on-site, but that’s perhaps the only notable similarity to manufactured homes.

Modular homes are typically subject to building codes based on location rather than the HUD code, and they fall under local zoning laws. They’re also considered real property once they’re finished.

Financing a mobile or manufactured home may be a little different from financing a house. That’s because most lenders don’t consider these homes eligible for most types of mortgage loans. However, some lenders will give you a loan for a manufactured home if it meets their specific requirements and rests on a permanent foundation.

Here are a few ways you can prepare to qualify for the loan you’ll need to pay for a manufactured or mobile home.

1. Check Your Credit Score

Lenders will consider your credit score when deciding whether to approve a mobile home loan application. If you have a good credit score (typically 670+) and solid credit history, you’ll qualify for a lower interest rate and better terms on most loans. A lower rate can save you thousands over the life of your loan, so it’s important to have your credit in order before applying.

The minimum credit score needed to buy a mobile home varies by lender, but it’s a good idea to make sure your score is as high as possible before applying for any loan.

2. Save For A Down Payment

You may also want to save up for a down payment on your manufactured or mobile home. That said, some loan programs don’t require a borrower to put money down. Rocket Mortgage requires a down payment of at least 5% of the purchase price on a manufactured home, although putting a larger sum down will lower your monthly payment amount.

3. Find The Right Lender

Once you’ve decided on a loan type, it’s important to research the pros and cons of each lender when shopping for a mobile home mortgage. The right lender can influence important factors such as your loan’s fees and interest rate. It’s best to compare apples to apples and try to find a loan with the lowest interest rate and fees.

Once you find a lender you’re comfortable with, be sure to ask about for a detailed summary of your options. They’ll be able to help you find the right loan for your needs and your goals.

If you want to become a homeowner by purchasing a manufactured home, you’ll find several options. Let’s explore each one and the pros and cons that come along with them.

Conventional Loans

Most lenders won’t give you a conventional loan for a mobile or manufactured home. That’s because these structures aren’t considered real property. Rocket Mortgage offers conventional loan financing on manufactured homes that have been permanently attached to land and converted to real property. If you have a manufactured home that meets these criteria, conventional conforming loan sources Freddie Mac and Fannie Mae offer specialized loans.

Fannie Mae Mobile Home Loan Options

While not all lenders finance permanent manufactured homes, some may offer Fannie Mae’s MH Advantage^® program, which allows buyers to finance manufactured homes with loan terms of 30 years and down payments as low as 3%. To qualify, your home will need to fit specific criteria. For instance, the home must be at least 12 feet wide and have a minimum of 600 square feet. It also can’t be on leased land.

Freddie Mac Mobile Home Loan Options

Freddie Mac also offers conventional loans for manufactured homes if they meet certain requirements. These requirements are similar to Fannie Mae’s – the home must be built on a permanent chassis, be considered real property and have at least 400 square feet of living space.

FHA Loans

The Federal Housing Administration (FHA) offers home loans with fixed interest rates and fairly relaxed credit, debt-to-income ratio and down payment requirements. FHA loans are popular with first-time home buyers. The FHA also offers manufactured home loans called Title I and Title II loans.

Title I Loans

Title I loans can be used to purchase manufactured homes but not the land on which they sit. There are a few stipulations, such as:

• The property must serve as your main residence.
• The home must satisfy FHA guidelines before being placed on a rental site.
• The home must be connected to utilities.

These loan programs tend to have short terms (typically up to 20 years) and low loan limits.

Title II Loans

Title II loans can be used to simultaneously purchase a manufactured home and the land it sits on. You can’t rent land from a mobile home park or manufactured home community. A real property loan requires that the land is yours.

Only true manufactured homes – the ones built on or after June 15, 1976 – can qualify for this type of financing. These loans also require that the manufactured home in question counts as real property and meets FHA standards for permanent foundations on manufactured homes.

If the home you’re considering meets the minimum requirements, it might be easier to qualify for an FHA loan. You’ll be able to get the loan without having to make a large down payment and may even save money on interest compared to other financing options.

VA Loans

If you want to buy a manufactured home and the land it sits on, another potential option is a VA loan, which is a government loan insured by the Department of Veterans Affairs. VA loans are only available to qualifying veterans and qualifying active-duty service members, as well as surviving spouses and members of the National Guard and U.S. Army Reserve who all meet certain eligibility requirements. With a VA loan, you won’t have to make a down payment or pay mortgage insurance, which is required of those who make a down payment of less than 20% on a conventional loan.

To secure a VA loan for a manufactured home, your home must be on a permanent foundation, meet HUD guidelines and be purchased with the land underneath it.

Chattel Loans

A borrower can use a chattel loan to purchase different kinds of personal property, including cars, boats and mobile homes. These loans typically have a shorter term and lower loan limit than a traditional mortgage, but the application process for a chattel loan tends to be easier.

Chattel loan lenders also hold the financed property as collateral for the loan, which can be risky. This means your lender could take your home to satisfy the debt you owe if you default on payments. Rocket Mortgage doesn’t offer chattel loans.

Personal Loans

If all else fails, you may be able to use a personal loan to finance a manufactured or mobile home. Personal loans don’t have the same restrictions on how your house is built, so you can likely qualify even if your house is a fully movable mobile home, not attached to a permanent foundation. Some lenders offer personal loans of up to $100,000, which may be more than enough to finance a manufactured home.

High Interest Rates But Few Limitations

If you have bad credit, a personal loan likely isn’t your best option. Personal loans tend to come with a high interest rate for borrowers with poor credit. In fact, the rate may be 20% or even higher, in some cases.

For home buyers who aren’t sure traditional financing is the right fit or who don’t meet the minimum requirements for the properties they’re interested in, a personal loan may be the most logical source of financing for a manufactured home purchase. You’ll be able to use the money to buy any manufactured home you’re interested in, without having to worry about loan restrictions.

Here are answers to a few questions that people often ask about getting a loan for a mobile home.

Do all lenders issue mobile home loans?

It depends on the type of mobile home you’re getting. If you’re buying a mobile home that won’t be attached to a permanent foundation, you’ll need to find a lender specializing in chattel loans or mortgages for mobile homes that can be moved. Speak with your Home Loan Expert to discuss your options.

What types of interest rates can I expect when applying for a mobile home loan?

If you’re buying a mobile home that’s on a permanent foundation, you can expect an interest rate similar to what you’d find with a conventional mortgage for a standard home. However, if you’re buying a manufactured home that can be moved, the interest rate may be higher. Of course, your exact interest rate will also be influenced by your credit score and your financial situation.

Can I still get financing if I’m purchasing a single-wide home?

Typically, you can. However, every lender is different. Some lenders have minimum square footage requirements that the home will have to meet to qualify for financing. Let your lender know what type of home you’re interested in and see which loan options they offer.

How long will I have to repay my loan?

It depends on the lender. However, if you’re financing a mobile home on a permanent foundation, you’ll likely encounter loans with terms ranging from 15 to 30 years. However, if you’re using a chattel or personal loan, you’ll likely have a shorter repayment term.

Can I get a mortgage on a mobile home?

Financing a mobile home purchase can be harder to do than financing the purchase of a traditional home. However, as long as your finances are in good shape and you look for a lender that specializes in manufactured and mobile home loans, you’ll set yourself up for success.

Financing a mobile or manufactured home can be tricky, particularly if you want to do so with a mortgage. Since many lenders don’t consider manufactured or mobile homes real property, you’ll have to meet several requirements to qualify for a mortgage.

If you can’t meet these requirements, don’t panic, though – other financing options, including personal and chattel loans, may work as an alternative. Before buying a manufactured or mobile home, research all your options so you’ll know what’s best for you.

If you think conventional financing of a manufactured home is right for your needs, you can start the mortgage approval process with Rocket Mortgage. You can also call us at (833) 326-6018.