Manufactured Home Financing
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Best Manufactured (Mobile) Home Loans
There are over 8.5 million mobile homes in the U.S. with an estimated 20 million occupants, so mobile and manufactured homes are an important part of the housing sector. They may be more affordable than bricks and mortar homes, but with the average cost north of $88,000, most people hoping to own one need to find finance.
Many lenders are willing to offer mortgages for more mainstream housing but the majority are loath to lend money for mobile and manufactured homes. However, while traditional finance providers may be of little help, there are other options available.
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What is a mobile home loan?
A mobile home loan, also known as a manufactured home loan, is a type of financing specifically designed for purchasing or refinancing mobile or manufactured homes. Mobile homes are prefabricated homes that are built in factories and then transported to the desired location.
Mobile home loans differ from traditional mortgage loans because they are specifically tailored to the unique characteristics of mobile homes. These loans typically have different eligibility criteria, loan terms, and interest rates compared to standard home mortgage loans.
Can you get a loan for a mobile home on rented land?
Yes, it is possible to obtain a loan for a mobile home on rented land, but the options may be more limited compared to purchasing a mobile home on owned land.
How can I finance a manufactured home?
Overseen by the U.S. Department of Housing and Urban Development (HUD), the Federal Housing Administration (FHA) has two loan programs that are of interest to mobile home and manufactured home buyers:
- Title I loans cater for both those looking to purchase either a home on its own or a home plus the lot. If the lot isn’t being purchased the borrower must have a minimum three-year signed lease. Maximum amounts are $69,678 for a home and $23,226 for the land with repayments spread over up to 20 years (15 if just the lot is being purchased).
- Title II loans are purely for people who want to acquire both a mobile home and the land as a package. It is only for buyers who are going to use the home as their primary residence and for homes that are built on a permanent chassis – not for mobile homes.
The FHA doesn’t lend the money itself, rather it guarantees the loan for approved lenders. FHA loans are designed for those with less than perfect credit and offer many the best chance of securing finance for a home.
Fannie Mae Mortgages
The Federal National Mortgage Association, commonly known as Fannie Mae, was set up by the government in 1938 to help with the housing crisis and it is still doing so today, making mortgages available to low and middle-income borrowers. They carry low interest rates, terms of up to 30 years, and may only require a 3% down payment.
Freddie Mac Mortgages
Freddie Mac mortgages are very similar to those provided through Fannie Mae and are also designed to help those who would struggle to secure a home loan from traditional mortgage providers.
The Department of Veteran Affairs insures loans for those that have a military background for the purchase of manufactured homes and lots, sometimes with no down payment required. VA loans are characterized by their generous terms.
Chattel loans are specifically for the purchase of expensive, moveable property, including mobile homes. The item itself acts as collateral for the loan but that means if you default your home can be seized. Chattel loans tend to have shorter terms and slightly higher interest rates than traditional mortgages.
Personal loans can be used for anything including buying a mobile or manufactured home. Although interest rates are higher than most mortgages charge, the upsides are that a personal loan is easy to organize, there are fewer fees, and if you experience repayment issues your home is not at risk.
Why won’t banks finance manufactured homes?
While it's not accurate to say that banks won't finance manufactured homes, it is true that some traditional banks and lenders may have stricter lending criteria or be more cautious when it comes to financing manufactured homes.
How long can you finance a mobile home for?
Terms vary depending upon the sort of finance you choose. A personal loan is likely to last from two to five years whereas many mortgages are repaid over 20 or more years.
Is it hard to get a loan for a manufactured home?
It is not hard to get a loan for a manufactured home but it is more difficult than finding a mortgage for a conventional home. When seeking finance for a manufactured home you often need to look for specialist mortgage companies and lenders.
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What size down payment will I need for a mobile home loan?
The amount you need for a down payment depends both on the type of loan and the amount your mobile home costs. While there are 100% mortgages available, most need a down payment. Even a Fannie Mae loan requires a 3% down payment which equates to over $2,500 for the average mobile home. Personal loans, of course, have no down payment requirement.
What credit score is needed to finance a mobile home?
If you opt for a government-backed lender you often don’t have to have a high credit score. But for a personal loan, certainly one with a low interest rate, you need a credit score of at least 580 and perhaps 660 or more to secure the best deals.
How do I get approved for a mobile home loan?
- Find out your credit score: All lenders will want to know your credit report – prompt repayments and a good debt-to-income ratio will stand you in good stead and get you the best interest rates.
- Know exactly what you are buying: Loan companies all have different criteria for their loans and will need the specifics before they make you an offer.
- Are you buying a home and a plot? Buying the land as well as the home will make lenders more likely to give you finance.
- Examine your loan options: There are many ways to finance a mobile home and you need to choose the one that is best for you.
- Apply for the loan and make sure you have the down payment ready.
Can I get a mobile home loan with bad credit?
There are loan programs available for those with bad credit but your choices are limited. Certainly, for a personal loan, a poor credit score means high interest rates and short repayment periods – and those monthly payments may be hard to keep up.
Apply for mobile home financing
Steps to apply for a mobile home loan include:
- Research lenders specializing in mobile home financing.
- Gather required documents such as proof of income and credit history.
- Check and improve your credit score if necessary.
- Determine your budget and affordability.
- Consider obtaining pre-approval from a lender.
- Complete the lender's application form accurately.
- Submit supporting documentation.
- Wait for approval from the lender.
- Review the loan terms offered.
- Accept the loan offer and follow instructions to proceed.
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