Key takeaways
- A manufactured home is a lower-cost housing option able to be financed in many ways. These include mortgages, chattel loans and personal loans.
- The type of financing that’s right for you depends on whether you plan to buy or lease the land or lot, your credit and other factors.
- Depending on the type of financing, you might have anywhere from a few years to up to 30 years to repay your manufactured home loan. The interest rates also vary significantly across loan types.
Manufactured or mobile homes are typically more affordable compared to single-family homes and condos. There are also many ways to finance this type of property, including manufactured home mortgages and personal loans. Here’s a guide to your options.
Key terms
- Manufactured home: A manufactured home is a home built after June 15, 1976 to the U.S. Department of Housing and Urban Development’s Manufactured Home Construction and Safety Standards (also known as HUD Code). It’s built in a factory on a permanent chassis and fixed to a permanent foundation once on site. It can be moved to the site in one or more parts, but it doesn’t require much assembly. Typically, these homes are at least 320 square feet and up to 1,000 square feet, and at least 12 feet wide.
- Mobile home: A mobile home is a home built in a factory prior to June 15, 1976. The term is often used interchangeably with “manufactured home,” though they aren’t the same.
- Modular home: Modular homes are also built in a factory and moved in parts, but they’re assembled on site, on a foundation. Once assembled, they look similar to a traditionally constructed home.
- Single-wide, double-wide, multi-section or multi-width home: These are manufactured homes of varying sizes. A single-wide home has the smallest square footage.
Types of manufactured home financing
| Loan type | Credit score minimum | Down payment minimum | Interest rate structure | Loan terms |
|---|---|---|---|---|
| Conventional manufactured home loans | 620 | 3%-5% depending on loan product | Fixed or adjustable | Up to 30 years |
| FHA manufactured home loans | 580 | 3.5% | Fixed | Up to 25 or 30 years depending on loan product |
| VA manufactured home loans | No formal requirement, but generally 620 | 0% | Fixed or adjustable | Up to 20, 23 or 25 years depending on size of home |
| USDA manufactured home loans | 640 | 0% | Fixed | Up to 30 years |
| Chattel loans | As low as 575 | As low as 0%, or between 5% and 35% | Fixed | Up to 30 years |
| Personal loans | As low as 580 | None | Fixed | Up to 7 years |
Conventional manufactured home loans
Mortgage lenders nationwide offer conventional loans, which can be used to purchase a manufactured home, including the cost of the land and transporting the property to the site. These conventional financing options include:
- Standard Manufactured Housing
- MH Advantage
- CHOICEHome
To qualify for a conventional loan, you’ll need a credit score of at least 620. Depending on the loan product, the home might need to meet additional criteria, such as being located in an approved development or built to certain specifications, like having a covered porch and dormers. Your mortgage loan officer can help you determine which loan would work best and the applicable requirements.
Those aged 60 to 69 live in manufactured homes more so than other age groups, and the highest proportions of these properties are in Louisiana, Mississippi and West Virginia, according to the Consumer Financial Protection Bureau.
FHA Title I and Title II loans
An FHA loan is another type of mortgage that can help you buy a manufactured home, along with the land or lot if desired. An FHA loan is insured by the Federal Housing Administration, but you’ll get one through a regular mortgage lender, similar to a conventional loan.
FHA manufactured home loans are known as Title I and Title II loans. Generally, Title I loans are for homes not on a permanent foundation. With a Title I loan, you can borrow:
- Up to $148,909 for a single-wide home and lot
- Up to $237,096 for a multi-width home and lot
These limits are lower if you’re just buying the home or just buying the lot.
If you get an FHA loan, however, you’ll be required to pay for FHA mortgage insurance — additional costs at closing and with your monthly mortgage payment. Because of this, it’s better to get an FHA loan only if your credit doesn’t qualify you for a conventional loan.
VA manufactured home loans
If you’re an eligible service member, veteran or surviving spouse, you might be able to buy a manufactured home using a VA loan. You can also use this type of loan to buy the land or lot. These loans don’t require a down payment, but do require you to pay a one-time funding fee.
USDA manufactured home loans
If you’re buying a manufactured home in a rural area, you might be eligible for a no-down payment mortgage guaranteed by the U.S. Department of Agriculture (USDA). This loan program is only for homes purchased in special USDA-approved areas. (You can check whether your location qualifies here.) Like a VA loan, USDA loans don’t require a down payment, but do charge an upfront and annual fees.
You can’t use a manufactured home mortgage to finance furniture or other personal property. You can use it to pay for major appliances, like a refrigerator, or wall-to-wall carpeting.
Chattel loans
A chattel loan helps finance property not fixed to a permanent foundation nor titled as real estate. Unlike a manufactured home mortgage secured by the home and the lot it sits on — “real property” — a chattel loan is secured only by the home as personal property. An FHA Title I loan for a home on a leased site, for example, is a type of chattel loan. This financing option can also be used for movable property like an RV.
Personal loans
In contrast to a mortgage or chattel loan which is secured by the home and/or property, a personal loan doesn’t typically require collateral. You can use a personal loan for any purpose, including a manufactured home. The downsides: These types of loans have higher interest rates and lower loan amounts, and need to be repaid over a shorter period of time, anywhere from one to seven years.
FAQ
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The interest rates for manufactured home financing vary by loan type. For a chattel loan, for example, the rate could be anywhere from 8 percent to 14 percent, while personal loan rates could run up to 36 percent. Conventional, FHA, VA and USDA loans tend to have cheaper rates due to the home serving as collateral.
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Just 27 percent of manufactured home mortgage applications were approved in 2019, according to the Consumer Financial Protection Bureau. One key reason: It’s tough to know which lenders offer these types of loans, so some borrowers inadvertently apply to lenders who don’t and their applications get denied.
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Yes, you can use an FHA loan to buy a manufactured home, provided the home meets the Title I or Title II loan program requirements.
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While the best lender for manufactured homes depends on your finances and needs, there are some that specialize in this type of financing. The biggest lenders for manufactured homes in 2023 were 21st Mortgage Corporation, Triad Financial Services, Vanderbilt Mortgage, New American Funding and United Wholesale Mortgage, according to Home Mortgage Disclosure Act data.
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