How to Finance a Mobile Home

The journey to homeownership may be both thrilling and nerve-wracking, especially considering the many options available. The mobile home stands out as an affordable and versatile choice, offering the freedom to customize your space and in some cases, the flexibility to relocate. Yet, the financing process may seem overwhelming if you’re unsure where to start.

In this article, we’ll navigate the different types of mobile homes and financing options to help you turn your dream of homeownership into a reality.

Mobile home vs. manufactured home vs. modular home: what’s the difference?

These three terms are often used interchangeably and may get a bit confusing when trying to get down to the financing aspect of your home purchase. Let’s break them down below:

Mobile home

A mobile home, or trailer home, is typically constructed on a steel chassis with wheels. These homes were designed to be movable but are often placed on a permanent foundation. Mobile homes built after June 15, 1976, must meet the construction standards set by the Department of Housing and Urban Development (HUD).

Manufactured home

Manufactured homes are factory-built structures constructed after June 15, 1976, following HUD’s Manufactured Home Construction and Safety Standards (HUD Code).¹ Unlike mobile homes, manufactured homes are transported in sections and assembled on-site. They come in various sizes and designs, offering a wide range of options.

Modular home

Modular homes, also known as prefab homes, are also built in factories but adhere to local building codes rather than HUD standards.² These homes are constructed in sections or modules transported to the building site for assembly and are permanently attached to their foundations. Modular homes look very similar to traditional site-built homes once they’re assembled.

Types of mobile home financing

When it comes to mobile home loans, several options cater to different financial situations and eligibility criteria, including conventional loans, FHA loans, VA loans and even personal loans.

Conventional loans

Conventional loans, offered by banks, credit unions and mortgage companies, are not backed by any government agency. These loans typically require higher credit scores and larger down payments compared to government-backed loans. Conventional loans may be available for both the purchase and refinance of mobile homes, but eligibility requirements may vary among lenders.

FHA loans

The Federal Housing Administration (FHA) offers loans tailored explicitly for manufactured homes, providing financing options with low down payments and flexible credit requirements.

The U.S. government ensures FHA loans, making them more accessible to borrowers with less-than-perfect credit. Borrowers must meet FHA loan requirements, including the home meeting HUD standards and being affixed to a permanent foundation. There are two types of FHA loans for manufactured home financing:

Title I loans

Title I loans provide insurance to borrowers to purchase, refinance or make improvements to a manufactured home. This type of loan does not allow borrowers to purchase land.³

Title II loans

Title II loans provide insurance to borrowers looking to finance a qualified manufactured home and the land to place it on.

VA loans

The Department of Veterans Affairs (VA) offers VA loans to eligible veterans, active-duty service members and their spouses that could be used to purchase or refinance manufactured homes. VA loans often feature competitive interest rates, no down payment requirement (in some cases), and no private mortgage insurance (PMI) premiums. To qualify for a VA loan, borrowers must meet the VA’s eligibility criteria and obtain a Certificate of Eligibility (COE).

Personal loans

When traditional mortgage financing is not feasible, a personal loan may be an alternative solution for mobile home financing. Personal loans are unsecured loans that borrowers may use for various purposes, including purchasing a mobile home. However, personal loans typically have higher interest rates and shorter repayment terms than mortgage loans.

Unlock the freedom of homeownership with a mobile home

No matter where you are on your journey to buying a mobile home, it’s important to consider your financial circumstances and explore all available financing options. Whether you’re leaning toward a traditional loan or believe a personal loan better suits your needs, you’ll soon be able to enjoy the flexibility of a space you can truly call your own.

Sources:
1.https://www.bankrate.com/real-estate/what-is-a-manufactured-home/#what-is
2.https://www.bankrate.com/real-estate/what-is-a-modular-home/#mod-vs-manufactured 3.https://www.hud.gov/program_offices/housing/rmra/mhs/faqs