How to get a loan for a manufactured & mobile home

June 24, 2022
Posted in Programs
June 24, 2022 derekevansteam

Mobile and manufactured homes can be a great option for prospective homebuyers who are on a budget. They’re inexpensive and highly customizable if you’re choosing to build. These “trailer homes” have gotten a bad rap over the years, but in reality they’re nearly the same as any regular home – sometimes even nicer! However, while they’re most definitely less expensive than traditional homes, doesn’t mean they’re always more affordable or accessible. The U.S. Census Bureau reports the average sale price of a new manufactured home was $111,900 in November 2021. Not many people have over $100k in cash lying around. 

It follows, then, that a lot of people have questions about financing options for manufactured and mobile homes. Keep reading to learn more!

Manufactured VS Mobile

While these two terms are often mistakenly used interchangeably, there is a difference between a manufactured home and a mobile home! It’s quite simple actually: a mobile home is a prefabricated home structure that was built prior to June 15, 1976 that is now affixed to a permanent chassis. A manufactured home is essentially the same but constructed after June 15, 1976. 

This is because in 1976, the U.S. Department of Housing and Urban Development (HUD) enacted new and improved safety standards to make these structures more secure and habitable. Mobile homes were often built to be moved around (hence, the ‘mobile’ in the name) while manufactured homes are intended to be a permanent fixture once secured into place. 

How to get a loan for a manufactured or mobile home

Manufactured and mobile homes are tricky to secure financing for as two conditions have to be met in order to qualify for a traditional mortgage. These conditions are:

  1. The home must be permanently affixed to the land on which it’s located. “Affixed” essentially means that the home is secured properly at its final destination on an appropriate site where it should remain indefinitely.
  2. The land upon which the home is affixed must also be owned by the homeowner. If you choose to lease the land you affix your home to, such as a mobile home park, your home will legally be considered as personal property instead of real estate. In this case, it’s unlikely you’ll be able to get a traditional mortgage for your home. Your only options would be to seek financing through the manufacturer of the home, get a chattel loan, or go through a specialty lender.

Best home loan options for manufactured homes

Fannie Mae and Freddie Mac Conventional Loans

Fannie Mae and Freddie Mac conventional loans are great because you can put as little as 3% down. 

FHA loans

FHA loans are awesome in helping lower income borrowers and those with credit score challenges to get an affordable home loan. Because the mortgages are backed by the Federal Housing Administration, borrowers with credit scores as low as 580 can get loans with as little as 3.5 percent down. But again, FHA loans only work for homes that are permanently affixed to land that you own. However, the FHA can help you buy a plot of land for a manufactured home much in the way a construction loan works.

VA manufactured home loans

If you are active or retired military, a VA loan is an excellent resource that you should absolutely take advantage of if you can. The VA loan program offers financing for manufactured homes.

USDA manufactured home loans

USDA loans work for properties in many rural areas and come with lax guidelines. The requirements for a USDA loan for a manufactured home are that it must be permanently affixed, built to the HUD’s post-1976 standards, and be at least 400 square feet.