For those looking to finance a mobile or manufactured home, you have a few options. Let’s explore each one and the pros and cons that come along with them.
Conventional Loans
Most lenders will not give you a conventional loan for a mobile or manufactured home because these structures are not considered real property. Rocket Mortgage offers conventional loan financing on manufactured homes that have been permanently attached to land and converted to real property. If you have a manufactured home that meets some very specific criteria, however, conventional mortgage sources Freddie Mac and Fannie Mae do actually offer specialized loans.
Fannie Mae
While not all lenders finance manufactured homes, some may offer Fannie Mae’s MH Advantage® program, which allows buyers to finance manufactured homes with loan terms of 30 years with down payments as low as 3%. To qualify, however, your home will need to fit very specific criteria. For instance, the home must be at least 12 feet wide, have a minimum of 600 square feet and can’t be on leased land.
Freddie Mac
Freddie Mac also offers conventional loans for manufactured homes if they meet all of Freddie Mac’s requirements. These requirements are similar to Fannie Mae’s – the home must be built on a permanent chassis, must be considered real property and has to have at least 400 square feet of living space.
Keep in mind that not all lenders will finance mobile or manufactured homes, but Fannie Mae and Freddie Mac do both offer conventional loan options for qualifying properties.
FHA Loans
The Federal Housing Administration (FHA) offers home loans with fixed interest rates and lower credit, debt-to-income ratio and down payment requirements. These are popular with first-time home buyers. They also offer manufactured home loans called Title I and Title II loans.
Title I loans can be used to purchase manufactured homes but not the land on which they sit. There are a few stipulations, such as that the property must be your primary residence, it has to meet FHA guidelines before being placed on a rental site and must be connected to utilities. These loans tend to have short terms (typically up to 20 years) and low loan limits.
Title II loans can be used to purchase both a manufactured home and the land it sits on jointly. You can't be renting your land from a mobile home park or community. A real property loan means the land is yours.
Only manufactured homes built after June 15, 1976 can qualify for this type of financing. These loans also require that the manufactured home in question counts as real property and meet FHA standards for permanent foundations on manufactured homes.
If the home you’re considering meets the minimum requirements, an FHA loan may be easier to qualify for. You’ll be able to get the loan without having to make a large down payment and may even save money on interest compared to other financing options.
VA Loans
If you want to buy a manufactured home and the land it sits on, you can also get a VA loan. VA loans are only available to veterans and qualifying active duty service members through the Department of Veterans Affairs. There are many benefits that come with a VA loan, including the ability to put no money down and avoid paying mortgage insurance.
To qualify for a VA loan for a manufactured home, your home must be on a permanent foundation, meet HUD guidelines and must be purchased with the land underneath it; mobile homes or manufactured homes not on permanent foundations do not qualify.
Chattel Loans
A chattel loan can be used to purchase different kinds of property like cars, boats and mobile homes. These loans typically have shorter terms and lower loan limits than traditional mortgages, and they also hold the property being financed as collateral for the loan, which can be risky. This means that if you default on payments, your home could be taken to satisfy the debt. Chattel loans aren't offered by Rocket Mortgage.
That said, they are a common financing choice for mobile, manufactured and even modular homes.
Personal Loans
If all else fails, you may be able to use a personal loan to finance your manufactured or mobile home. Personal loans don’t have the same types of restrictions on how your house is built, so you can likely qualify even if your house is a fully movable mobile home not attached to a permanent foundation. Some lenders will offer borrowers up to $100,000 for a personal loan, which may be more than enough to finance a manufactured home.
Keep in mind that if you have bad credit, this option may cost you. Personal loans tend to have higher interest rates for those with poor credit (20% or higher, in some cases).
For home buyers who aren’t sure that traditional financing is the right fit or those interested in properties that don’t meet the minimum requirements, personal loans may be the easiest way to buy a manufactured home. You’ll be able to use the money to buy any manufactured home you’re interested in without having to worry about loan restrictions.
FAQs
Prepare to meet these requirements to qualify for a chattel mortgage: Credit score: You'll need an excellent credit score (around 680 or higher) to qualify for this type of loan.
Why is it hard to get a mortgage on a mobile home? ›
Since the structure isn't always “attached” to the land they're on, mobile or manufactured homes aren't considered eligible by many lenders for most types of mortgages. We'll take a closer look at why financing these types of properties can be a challenge and what types of financing options may be available to you.
Is a mobile home loan the same as a mortgage? ›
A borrower can use a chattel loan to purchase different kinds of personal property, including cars, boats and mobile homes. These loans typically have a shorter term and lower loan limit than a traditional mortgage, but the application process for a chattel loan tends to be easier.
What is a method for financing manufactured homes? ›
Types of manufactured home loans
Financing options include fixed-rate mortgages with credit scores starting at 540 and programs with low and zero-down payments. Conventional: 5 percent down payment, credit scores as low as 620. FHA financing: 3.5 percent down payment, credit scores as low as 580*
What credit score is needed to buy a house with no money down? ›
You'll need a minimum qualifying credit score of 620 or better. Your qualifying FICO® Score is generally the middle one among your Equifax®, Experian™ and TransUnion® scores. Like your down payment, your credit score is one of the biggest factors impacting your interest rate.
How much credit score required for mobile loan? ›
You should maintain a credit score of more than 750 to increase the instant Mobile Loan approval possibility.
Why do banks not like manufactured homes? ›
Many lenders will not approve a conventional loan for a mobile home because they are not considered “real property.” However, homes that are attached to a permanent foundation could qualify.
How long are most mobile home loans for? ›
How long can I finance a mobile home? The length of mobile home financing depends on the lender. However, you can expect to find loans of anywhere from five to 30 years, depending on the loan type.
Why are mortgage rates higher for mobile homes? ›
Many manufactured home purchases do not include the land they sit on. Thus, the asset is less secure for banks to lend against. Over 40% of manufactured homes are chattel loans – these contracts are designed for mobile homes and non-stationary property, and often have higher rates.
What is the oldest mobile home that can be financed? ›
(Note that the FHA does not issue mortgages on mobile homes built before June 15, 1976.)
Permanent foundations include basem*nt, crawl space, and slab with block skirting foundations. Non-permanent foundations, on the other hand, can be detached from your home. However, if you choose a non-permanent foundation, you may not be able to receive real estate loans or financing.
What is the primary difference between a mobile home and a manufactured home? ›
The only difference between the two types of homes is the date they were built. According to HUD, a factory-built home prior to June 15, 1976 is a mobile home and one built after June 15, 1976 is a manufactured home.
How do you build equity in a mobile home? ›
There are several ways through which mobile homes can acquire equity. The most important one is by making mortgage payments on time. As the homeowner makes payments over time, the amount of equity in the mobile home increases, making it easier for them to sell, or refinance the home.
Which type of loan product can be used to finance the purchase of a manufactured home on leased land? ›
A Title I loan may be used for the purchase or refinancing of a manufactured home, a developed lot on which to place a manufactured home, or a manufactured home and lot in combination.
What are chattel loans? ›
A chattel mortgage is a loan to purchase movable personal property, such as a manufactured home or construction equipment. The property, or chattel, secures the loan, and the lender holds an ownership interest.
Can I buy a mobile home with a credit score of 600? ›
Typically, most lenders will require minimum credit scores of 580 to 620 to buy a mobile home. If you have a score below that range, you can still get a loan, but the interest rates will be substantially greater than if you have a good score. Checkout the advantages to buying a mobile home vs. renting.
What does your credit score have to be for Clayton Homes? ›
Credit Score Requirements:
Clayton Homes typically requires a credit score of at least 620 for conventional financing options. If your credit score is lower, alternative financing solutions, such as FHA loans or lease-to-own arrangements, may be available.
What credit score do you need for a FHA loan? ›
FHA minimum credit score
If you put just 3.5 percent down, the minimum credit score for an FHA loan is 580. You can qualify with a score as low as 500, but you'll need to make at least a 10 percent down payment.
