How a mobile home refinance works

Refinancing manufactured homes or mobile homes can be very similar to refinancing a site-built home. There are some differences, however, related to the types of loans available for manufactured and mobile homes, and whether your home is classified as property or real estate. Learn more about who qualifies, how the refinancing process works, typical costs and closing timelines, and the pros and cons of refinancing a mobile home.

What’s the difference between a mobile and a manufactured home?

The terms mobile home and manufactured home are often used interchangeably, but there is a significant difference.

Manufactured homes are built in a factory on a permanent chassis and attached to a permanent foundation. They meet standards set by the U.S. Department of Housing and Urban Development (HUD) that took effect June 15, 1976.

So all such homes built after that date are considered manufactured homes. Homes built before that date and designed to be transported to another location to be installed permanently are mobile homes.

Manufactured homes may be classified as real property, which means they can qualify for the same financing options as traditional homes. This hinges on a handful of factors, such as whether it's permanently affixed to a foundation, local regulations, and lender and insurer guidelines.

Mobile homes were often built with lower-quality materials and were never meant to be used as permanent housing. It's unclear how many mobile homes are still being used today. Most mobile homes won't qualify for a traditional home loan, but you may be able to refinance with a personal loan or a chattel loan.

Can you refinance a manufactured or mobile home?

Yes, you can refinance a mortgage for a manufactured home that's permanently attached to land that's not leased with a conventional, FHA, VA, or USDA loan. If you own a mobile or manufactured home that's not permanently attached to a foundation or installed on leased land, you'll likely need to refinance with a chattel loan.

Mortgage refinancing requirements for manufactured homes

While the requirements to refinance the mortgage on a manufactured home vary, here are some general qualifications:

• The home must have a permanent foundation. Your home must be attached to a permanent foundation that meets HUD criteria.
• You must own the land the home is attached to. You can't lease the land your home is affixed to.
• Your home must meet a specific square footage range. Your mobile home must be at least 400 square feet and at least 12 feet wide.
• Credit score. Depending on your loan type, you may need a minimum credit score. The better your credit, the greater your odds of getting approved.
• Debt-to-income ratio (DTI). Although the maximum DTI that lenders accept can vary, you'll typically want to keep it under 43%. Lower is better.
• Loan-to-value ratio (LTV) limits: Lenders usually prefer an LTV of 80% or less.

Lender rules vary from state to state. In turn, you'll want to work closely with a loan officer or mortgage originator to understand the specific requirements.

Refinancing options for mobile homes

There are a handful of refinancing options that are available if you have a manufactured or mobile home.¹

Conventional refinance

A conventional loan on a manufactured home is not backed or guaranteed by the government. Many homeowners with FHA or USDA loans refinance into a conventional loan. Rocket Mortgage currently doesn't offer USDA loans.

The main benefits can include a lower interest rate or loan terms. You might save on interest charges, reduce your monthly payments, or pay off your loan sooner.

You usually need at least 20% equity, and you'll need to pay closing costs. You can use a refinance calculator to figure out how much you might save by refinancing.

FHA loan programs

FHA loans have refinancing programs for manufactured homes that can make your monthly payments more affordable. For example, the FHA Streamline refinance program can help you refinance to a lower interest rate or to a different type of mortgage.²

To qualify, you'll need to be current on your loan payments. Rocket Mortgage requires a credit score of at least 580.³ Other lenders may require a higher or lower credit score. If you're doing a cash-out refinance, you'll need a higher credit score.

FHA Title I loans for manufactured homes

FHA Title I loans are available to buy or refinance a manufactured home. You don't have to own the land your mobile home sits on. If you don’t own the land your home is installed on, you'll need an initial lease of at least 3 years.

The loan limits depend on nationwide loan limits, cash investments, credit score, and your LTV.

FHA streamline refinance

The FHA Streamline refinance program lets you speedily refinance an existing FHA loan on a manufactured home. For example, if you've been on top of your mortgage payments in the last 12 months, you can reduce the rate of your mortgage without a credit check or income verification. You might be able to skip the appraisal, too.

VA loan programs

A VA refinance can help reduce monthly payments on manufactured homes for veterans and military personnel.⁴

VA Streamline

The VA Streamline can help you refinance your existing VA mortgage to a lower interest rate or convert your adjustable-rate mortgage to a fixed-rate loan.⁵

VA cash-out refinance

With a VA cash-out refinance, you can refinance to a new VA loan based on your home's current value. After you repay your current loan, you can keep the difference in cash to use as you wish. You repay what you borrow with your new mortgage payment.

USDA streamline refinance

A USDA streamline refinance can help you qualify for lower rates, usually without an appraisal or verification of income or employment. To get a USDA refinance, you need to have an existing USDA loan. You'll need to demonstrate that you've been on top of your payments over the past 6 months. Your lender also may check your credit.

Chattel loan refinancing

You can also refinance to a chattel mortgage. These are loans backed by the property, not the land. Chattel loans usually have terms of 8 – 30 years and a fixed interest rate. They typically have higher interest rates and fewer consumer protections than mortgages.

How to refinance your manufactured or mobile home

If you're ready to refinance your manufactured or mobile home, here are the steps you need to take.

1. Check your current loan, title status, and eligibility

First, you'll need to check your current loan, title status, and eligibility. You might need to convert your mobile home to real property, which involves converting your title or affixing it to a permanent foundation. The particularities of this process vary from state to state.

2. Gather documentation

Next, gather the required information and documentation. Typically, you'll need to provide the following:

• Proof of income
• Credit score and history
• Proof of ownership
• Photo ID

3. Request multiple refinance quotes from lenders

Getting multiple quotes from different lenders can help you see which loan amounts, mortgage interest rates, and terms you might be able to qualify for. It can help you shop around for the best offer. Getting an initial quote usually results in a soft credit pull, which doesn't typically affect your score.

One thing to note: The number of lenders specializing in manufactured home refinancing is limited. You can start with your existing lender and look for additional lenders to compare.

4. Get an appraisal, if required

Some mobile home refinancing options, such as the FHA and USDA streamline programs, don't require a refinance appraisal. However, if your refinancing option does need one, it's a professional assessment of your home's market value. This can help you gauge how much home equity you can borrow against.

5. Underwriting and loan approval

After you submit your mortgage application, underwriting reviews your income, debt, assets, and credit score to determine whether you meet the criteria for a home refinance. Underwriting usually takes anywhere from a few days to a few weeks.

6. Closing and paying off the old loan

When you close on the old loan, you'll need to pay closing costs. However, you may be able to roll your closing costs on a refinance into the loan amount, or have your lender pay closing costs in exchange for a higher interest rate. These options save you money up front, but may cost you more in overall interest.

The pros and cons of manufactured home refinancing

Now, let's look at the pluses and minuses of a manufactured or mobile home refinance.

Pros

• Lower monthly payment. If you extend the loan term from 15 years to 30 years, or refinance to a lower interest rate, you can reduce your monthly payment.
• Lower interest rates. If you were changing to a shorter loan term or a mobile home refinance, and the rates are lower than when you took out your initial loan, you may save on interest.
• More cash for other goals. If you are saving money with your manufactured home refinance – or you're getting a cash-out refinance – you can put that money toward other financial goals, such as paying off credit cards, student loans, or car loans.

Cons

• Closing costs. When you refinance, you have to pay closing costs.
• Higher monthly payment. In some cases, such as a cash-out refinance, you might have a higher monthly payment.
• Higher interest rate. Depending on the market and current mobile home refinance rates, you might have a higher mortgage interest rate.

The bottom line: Manufactured home refinancing is possible

Before refinancing a manufactured or mobile home, you'll need to weigh the pros against the cons, learn the process, and shop around for the best deal on a mortgage. You'll need to know whether your home is attached to its foundation, and whether you own the land it's installed on or rent it. Then you can decide on the loan types that are available to you.  

If you're ready to refinance your manufactured home, explore your borrowing options today with Rocket Mortgage.

¹Refinancing may increase finance charges over the life of the loan.

²The FHA Streamline program may have stricter requirements in some states. In order to qualify for the FHA Streamline program, an immediate .5% minimum reduction in interest and mortgage insurance premium is required. Some states may require an appraisal.

³To qualify for this offer, you must meet all standard FHA eligibility requirements. In addition, your total mortgage payment, including taxes and insurance, cannot exceed 38% of your income, your debt-to-income (DTI) ratio cannot exceed 45%, and you must have 12 months of verifiable housing history immediately prior to your application, no late payments 30 days or greater in the last 12-months, and no derogatory marks on your credit report. Not available on jumbo loans. Asset statements may be needed, no more than 1 day of non-sufficient fund fees are allowed in the most recent 2 months prior to application. Additional restrictions/conditions may apply.

⁴Rocket Mortgage is a VA-approved lender, not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency.

⁵The VA Streamline program may have stricter requirements in some states. In order to qualify for the VA Streamline program, you must have a VA loan. The VA Streamline is only available on primary residences. Cash-out transactions are not allowed. In order to qualify for a VA Streamline, a 0.5% minimum reduction in interest rate on the previous fixed-rate loan must occur if the new loan will be a fixed rate or a 2% minimum reduction in interest rate on previous adjustable rate mortgage loan must occur; a minimum of 6 months of consecutive mortgage payments must be paid on the current loan at the time of application. Some states may require an appraisal. Additional restrictions/conditions may apply.

Rocket Mortgage is a trademark of Rocket Mortgage, LLC or its affiliates.