Financing Manufactured Homes: What You Need to Know
What is a manufactured home? For years manufactured homes were often thought of as synonymous with “mobile homes”, but they have become so much more. Manufactured homes are now a viable option for many families. They face more stringent building codes and are often indistinguishable from traditional homes. Before 1976, mobile homes were financed similarly to cars, but because the perception of what a manufactured home is has changed, there are companies that now offer more traditional home loans.
“Manufactured” vs. “Modular” vs. “Mobile” Homes
There are many different terms used around manufactured homes and it can get confusing in determining what is meant by a “manufactured” home. One major issue is perception, mobile homes are thought of as low quality, but today mobile and manufactured home construction is regulated by the Housing and Urban Development (HUD) branch of the federal government.
All terms, manufactured, modular, and mobile, refer to homes built in a factory and then set up on site. The difference is in the way they are set up. Modular homes are designed to local building codes. They are often built on a permanent foundation and look like a more traditional home.
Manufactured and mobile homes have less stringent local regulations. Because their construction is federally regulated through HUD, they are not inspected for local building codes. Often they are built off-site and then brought on location and hooked up to water, electricity, and sewage (all of which is inspected locally). Unlike modular homes, manufactured homes do not need to be set on a permanent foundation
Do I Need a Special Loan?
No, while in the past manufactured homes were financed differently than traditional homes, today you can finance a manufactured home through standard home loan programs. Conventional, VA, and FHA home loans are available to all those who might want to purchase a manufactured home. The loan option you choose to apply for may be determined by your financial situation.
Conventional Loan
The most stringent program, a conventional loan is also the least popular way to finance a manufactured home. They require a higher down payment, higher credit score, and a lower debt-to-income ratio. There are benefits to a conventional loan though. You can use a conventional loan to finance a manufactured home as your second home or investment property.
VA Loan
VA loans are offered through the US Department of Veteran Affairs and are only applicable to veterans of the United States Armed Forces. If you are a veteran, a VA loan may be the right fit for financing your manufactured home. VA loans will require a higher credit score, but do not require a down payment. This means that you can finance 100% of the value of the manufactured home!
FHA Loan
FHA Loans are usually the most popular route in financing a manufactured home. FHA loans are backed by the Federal Housing Administration and are a great option for lower-income families. Often FHA loans do not require a large down payment, or a perfect credit score.
To qualify for an FHA loan, the home must be permanently attached to a foundation and be built before 1976. If you are interested in obtaining an FHA Loan for a manufactured or modular home, contact one our experts who can help you get started.
What Are My Next Steps?
Once you have found the program you think will work best for you, apply for the loan and get pre-qualified. Make sure you have record of your personal assets, debts, your employment verification, and residential history.
Home Loan PreApproval – How It Works
Knowing what you can afford is a great first step in any purchase decision, why not do the same for what could be the biggest purchase of your life? Getting pre-approved for a home loan can streamline the home buying process and be an informative first step in understanding what loan amounts might be available to you!
Read more about the pre-approval process here.
Be sure that you are financially prepared for the home buying process. When you are ready to buy your manufactured home, our experts can walk you through the whole process. Contact Chris Doering Mortgage to work with our team today!