What are manufactured home loans?
Manufactured home mortgages are chattel loans that finance the purchase or refinance of a mobile home or a manufactured home. This page will address mortgages because chattel loans are for homes on leased land and/or are still moveable. Conventional or government-backed mortgages can be given for mobile and manufactured homes that meet all of the following criteria:
- 12 feet wide and at least 600 square feet
- Situated on owned land
- Built on an approved foundation
- Taxed as real property
Mobile and manufactured homes represent an entry point to home ownership for many, such as recent college graduates, people leaving years of renting or seniors choosing to downsize. Many neighborhoods of mobile or manufactured homes are governed by a Home Owners Association (HOA) and specialized communities that are restricted to owners age 55 or older exist. These are labeled as senior communities and can be found all around the country.
FHA loans for mobile homes are available for individuals that qualify, as are USDA and VA loans for individuals that qualify. These government-backed loans lessen mortgage lenders’ risk of default. For purchasing a mobile or manufactured home, the FHA offers a minimum 3.5% down payment. VA loans for manufactured homes can be financed with no money down for those that qualify. Refinancing an owner-occupied mobile or manufactured home with a government-backed loan can be done at as much as 100% LTV. If the location is rural, look for lenders that offer USDA manufactured home loans. If the borrower is active-duty military, a military spouse or a veteran, then find a lender that offers VA loans. These FHA, VA and USDA loans are only applicable for borrowers that will occupy the home as a primary residence.
Mortgage brokers can help borrowers navigate any of the conventional or government-backed loan scenarios for mobile and manufactured homes, described above.
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What are some common mobile home or manufactured home financing terms?
- Fixed rate, no min. FICO, max. 70% LTV, single or double-wide homes with land, no acreage limit
- No overlays, FHA manufactured home loans 96.5% LTV, VA 100% LTV, USDA 100% LTV, no interest payments during the build
- Nonowner-occupied, up to 65% LTV and up to 90% LTC for renovations
- 5-year balloon with 10 or 15-year amortization, up to 36 months interest only repayment
- Asset based lender, 7-day close, manufactured home loans for bad credit or no credit
- Conventional 30-year mortgage, up to 95% LTV for a purchase
What are the conventional and private lender financing options?
Conventional mortgages are those eligible for Fannie Mae or Freddie Mac purchase. The maximum loan amount in most counties is $484,350 (2019) and the borrower’s credit is fully documented. Banks typically offer these loans.
If your client is self-employed, a real estate developer, or has a non-conventional loan scenario, such as a loan amount that exceeds the conventional county maximum, recent bankruptcy or low credit scores, a non-QM loan might be right for you.
Hard-money lenders also offer loan programs that can be used to finance mobile or manufactured homes. Hard-money loans are attractive to borrowers that require a fast close, have subpar financial histories, or do not have the level of documentation required to obtain a conventional loan. The repayment term on these loans is shorter than for a conventional loan. Hard-money refinances are sometimes used by borrowers in danger of foreclosure on a mobile or manufactured home in order to gain the additional time needed to remedy the issue and avoid foreclosure. Private lenders, such as these, are also more likely to offer bad credit mobile home loans.
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