6 min read May 14, 2024

Mobile Home Loans: How to Finance Manufactured Homes

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Megha Mulchandani

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Editor
Edited By

Megha Mulchandani

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Megha M. is a content editor who loves to play with words. Apart from this, she is a theater artist and a public speaker who transforms into various personas on stage.

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Manufactured or mobile home loans have made it easy for people to buy mobile homes. This is due to a moderate down payment requirement of only 3%. Apart from this, the average home sales price was also as low as $85,400 in Q2 2023.

However, mobile home prices have risen by an average of 82.6% in the past nine years. Currently, 21.2 million people in the US live in manufactured homes. Mississippi and Texas are the top states where manufactured housing is popular.

📉 Financing for mobile homes

  • There are multiple financing options for mobile homes, like personal loans, chattel loans, FHA loans, etc.
  • To qualify for manufactured home loans you have to fulfill various requirements such as debt-to-income ratio, mortgage insurance, etc.
  • Fannie Mae offers mobile home loans with a down payment as low as 3%.

Mobile vs. Manufactured Homes: The Difference

Mobile homes and manufactured homes are often used interchangeably. However, there are some noteworthy differences between them.

Mobile Homes

Mobile homes refer to prefab homes that are built on a chassis. All the houses constructed before June 15, 1976, come under mobile homes.

Manufactured Homes

Manufactured homes are those that were built after June 15, 1976. These homes were built on the basis of guidelines that HUD implemented in 1976.

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Financing Options for Mobile Homes

There are multiple options that you can opt for to finance a mobile home.

FHA Loans

The Department of Housing and Urban Development offers FHA loans for home purchases. You can opt for an FHA loan to finance a manufactured home as well. FHA loans for manufactured properties are of two types: Title I and Title II.

Title I FHA Loans

FHA loans allow only the purchase of manufactured homes, not the land they are built on. However, there are prerequisites to it. First, the home must be your primary residence, and second, it should have all the basic utilities.

You must submit a signed lease of the land for your mobile home for 3 years to your lender. The maximum loan amount on a manufactured home and lot is $92,904.

Title II FHA Loans

Title II loans are for purchasing manufactured homes and the land they are built on. Manufactured homes built after June 15, 1976, are eligible for this type of manufactured home mortgage. The home should have a minimum area of 400 sq. ft.

VA Loans

The Department of Veterans Affairs offers VA loans to veterans and eligible military personnel. VA loans can be used to purchase both the house and the property or to build a house on land you already own.

Chattel Loans

People use chattel loans to buy cars, planes, farm equipment, etc. You can use a chattel loan toward a mobile home purchase. However, your property will be financed as a guarantee against the loan.

Chattel loans offer a shorter term and higher interest, resulting in high monthly payments. On the other hand, the closing process on a chattel loan is quicker in comparison to traditional mortgages.

Fannie Mae Loans

Fannie Mae loans are another way to obtain mobile home financing under the MH Advantage Program. To qualify for this, your home must be at least 12 feet wide and 600 square feet. Also, it shouldn’t be on leased ground.

Fannie Mae mobile home mortgages are available for 30-year terms with as little as 3% down.

Freddie Mac Loans

You can finance a mobile home through Freddie Mac conventional loans. Your home must have at least 400 square feet and be real property to qualify.

Personal Loans

You can buy mobile homes through personal loans, as they are more affordable than traditional homes. In some cases, you may qualify for a personal loan of up to $100,000 to buy a manufactured home. Personal loans do not require any collateral but carry high interest rates.

Find Homes For Sale by Home Type and Style

The market offers a wider range of homes than ever before. But don’t get overwhelmed! Knowing your preferred style can help you narrow your search. Here are some options to target your search by home style:

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How to Qualify for Manufactured Home Loans

You must follow these steps to learn how to buy a mobile home on the best mortgage terms:

Check Your Credit Score

Your credit score plays a vital role in getting favorable terms on mobile home loans. If you have a credit score of 670+ with a good credit history, you may qualify for lower interest rates.

Prepare for a Down Payment

It’s advisable to save for a down payment on your mobile home. The more money you put down, the better loan terms you qualify for.

Choose the Right Lender

After you decide on the type of loan you wish to opt for, you must choose the right lender. It’s advisable to research which lender offers the best terms on a mortgage.

Bottom Line

Mobile or manufactured homes are cheaper in comparison to traditional homes. Since many lenders don’t consider mobile homes as real properties, there are some prerequisites to getting a mortgage for manufactured homes.

However, if you don’t meet those prerequisites, there are other options, like personal and chattel loans, through which you can purchase a mobile home. Having said that, you must do in-depth market research before selecting any mortgage.

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Frequently Asked Questions

Can I get a conventional loan on a mobile home?

Yes, you can get Fannie Mae and Freddie Mac conventional loans for financing a mobile home.

What is the average credit score needed to buy a mobile home?

Most lenders require a credit score of 580-620 to provide financing for a mobile home.

Is it difficult to get a loan for mobile homes?

The majority of lenders don't consider mobile homes for different types of mortgages. This is because mobile homes depreciate quickly in comparison to traditional homes.

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