There are other options than FHA loans for manufactured and mobile home financing, some from traditional sources and others less so. Depending on the status of your home and your own financial situation, you could choose from any of the following options. VA loans are backed by the government through the Department of Veterans Affairs (VA), and are available to current or veteran service members for purchasing homes, including manufactured homes. Borrowers who qualify for a VA loan may be able to buy with no money down and no monthly mortgage insurance. If you meet the eligibility requirements for a VA loan, your manufactured home must meet further qualifications: A VA loan could finance 100% of your manufactured home’s purchase price if you can prove your property is permanently attached to your land. You can also use a VA loan to refinance your current manufactured home that you plan to move to land that you own.VA Loans
USDA Loans
The U.S. Department of Agriculture (USDA) offers Rural Development loans, more commonly known as USDA loans, that could be used to finance the purchase of a manufactured home.
Your home must meet certain geographical requirements, which can be determined on the USDA’s eligibility site, and you’ll need a credit score of 640 or more. Another caveat is that your annual gross income mustn’t exceed 115% of the area’s median income. A USDA loan also comes with an upfront guarantee fee equal to 1% of your loan amount, and an annual fee worth .35% of your loan balance.
While you can’t get around those additional fees, a USDA loan offers no money down financing, just like with a VA loan. The loan could also finance up to 100% of a home’s appraised value.
Fannie Mae And Freddie Mac
Traditional mortgage sources Fannie Mae and Freddie Mac both offer specialized manufactured home loans – if you can meet their criteria. While we'll discuss other special offerings below, our friends at Rocket Mortgage®offer loans with terms of 10 – 30 years as long as you make a 5% down payment.
Fannie Mae offers the MH Advantage® program for financing manufactured home purchases with 30-year financing and down payments as low as 3%. The drawback, however, is that your manufactured home must meet similar criteria as traditional site-built homes, such as construction, architectural and energy efficiency standards. You may also have to install a driveway and connecting sidewalk in order to qualify for the program.
Freddie Mac can finance manufactured homes through their Home Possible® program. Like MH Advantage, it offers down payments of 3%, and qualified borrowers can choose between a 15-, 20- or 30-year fixed-rate mortgage if they meet certain income requirements.Home Possible loans come with a loan level price adjustment (LLPA) credit of 1% of the loan amount up to $3,500. If the loan is below $200,000, the credit will be $2,000 as opposed to 1%. Home Possible also allows gift money or funds to help cover your down payment.
Chattel Loans
A chattel loan is typically used to purchase vehicles as personal property, such as planes, boats and farm equipment. These loans can also be used to finance the purchase of a mobile home. As the loan is for the home only, and not the land, it can be ideal if you’re planning to live in a park or community – or if you already own land and just want to buy the home. The home can secure the loan as collateral.
As a chattel loan covers the cost of the home only, the loan amount and processing fees would theoretically be smaller than with real property. Additionally, the closing process can be quicker and less involved than with more traditional mortgages.
There are some downsides when using a chattel loan in place of a home loan. First of all, the loan terms are much shorter, only lasting 15 – 20 years, and that could mean higher monthly payments for the homeowner. The upside of this is that you may be able to pay off your debt sooner than you could otherwise, depending on your financial situation. Chattel loans have also been found to have higher interest rates than traditional mortgages by approximately .5 – 5%.
Personal Loans
If for any reason your other loan options wouldn’t work out, you may want to consider getting a personal loan. An advantage with taking this route is that the condition of your home doesn’t play a role in your approval for the loan. Rather, what matters most is your credit score and debt-to-income ratio (DTI). So, if your home is a mobile home that doesn’t meet the HUD Code standards, you can still get approved for the loan.
Personal loans offer fixed rates and lower minimum borrowing amounts than many other loans, and depending on your lender, you could borrow up to $100,000. You can also receive your funds within a week, or even days. If that sounds like a good deal to you, read more on how to get a personal loan for your mobile home.
