A mobile home is usually more affordable than a traditional home, but you still might need financing. Learn more about how mobile home financing works and how to get a loan that suits your needs.
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Caliber Home Loans of Coppell, Texas, offers mortgage products nationwide. Options include conventional, adjustable-rate, jumbo, refinancing, Federal Housing Administration, U.S. Department of Agriculture and Department of Veterans Affairs loans. Caliber has been in business since 2008, and is solely focused on home lending products.
Carrington Mortgage Services, founded in 2007, offers an array of mortgage and refinancing options to borrowers seeking conventional or government-backed loans. Its California-based parent company, Carrington Holding Co., was established in 2003 and provides a range of real estate services. Carrington Mortgage Services is based in California and also has offices in Arizona, Connecticut, Florida, Indiana and Maryland.
Pentagon Federal Credit Union, widely known as PenFed, offers borrowers access to many types of mortgages: conventional, adjustable rate, jumbo and Department of Veterans Affairs, plus refinancing loans and home equity lines of credit. The financial institution, which serves 2.5 million members, was established in 1935 and is based in McLean, Virginia.
North American Savings Bank, or NASB, is a Missouri-based bank and lender founded in 1927 that offers home mortgages nationally. NASB provides a variety of mortgage options, including conventional, Federal Housing Administration and Department of Veterans Affairs loans, and products for borrowers who might otherwise have trouble getting a mortgage.
AmeriSave Mortgage Corp. is an online lender that has been in business since 2002. It was one of the first to offer an offsite, digital mortgage experience for customers. The company says it has financed more than 664,000 borrowers since it began operating. With headquarters in Atlanta, AmeriSave services loans in 49 states and Washington, D.C.
Mobile homes aren’t the same as traditional “stick-built” or “site-built” homes, which are built directly on top of the site where they’ll stand. Instead, mobile homes, also known as manufactured homes, are prefabricated and then moved to the location where the owner wants to live.
Getting a mobile home loan may be different from taking out a traditional mortgage. It will depend on the specific characteristics of your home. For instance, if you pay fees to the state department of motor vehicles or the mobile home still has wheels, it’s considered a vehicle or personal property. If that’s the case, you’ll need to rely on a chattel loan or personal loan to finance the mobile home purchase.
If your mobile home meets certain requirements, it may be considered real property and can qualify for mobile home financing.
- The home needs to be at least 400 square feet.
- It should have its wheels removed and be permanently affixed to a foundation.
- You need to own the land under it.
- The home must meet strict guidelines regarding its age and condition.
Whether you’re looking to get a mobile home loan, chattel loan or personal loan, lenders will expect you to meet certain qualifications. You’ll need to show that you’re a trustworthy borrower in order to qualify for a loan and the best terms possible.
“There is usually a slightly higher loan cost with manufactured homes on a permanent foundation, and the financing rules are slightly stricter,” says Khari Washington, a mortgage broker and owner of 1st United Realty & Mortgage of Riverside, California. “To get approved for a mobile home loan, a person needs the same things they need for any other home.” These are the major requirements:
- Down payment. If your mobile home meets the standards for being considered “real property,” you can get a loan with as little as 3% to 5% down, depending on the type of loan and individual lender requirements. However, if you pursue a conventional mortgage to finance your mobile home purchase, some types of property may be ineligible, such as single-wide homes or investment properties.
- Credit score. Generally, you’ll need a credit score in the mid-600s to qualify for a conventional mobile home loan. However, the best interest rates and loan terms are reserved for borrowers with scores of more than 650. If you finance using a Federal Housing Administration loan, you may qualify with a score as low as 500, provided you pay a 10% down payment.
- DTI. Your debt-to-income ratio measures how much of your monthly gross income goes toward paying off debt. When financing a home in general, most lenders prefer that your back-end DTI, which includes your potential home loan payment along with all other debt obligations, be no more than 43%. Some allow up to 50%. However, when financing a mobile home, some lenders may require a lower DTI.
Whether you need to be a landowner or not depends on the type of loan you are going to get. Most mobile homes are on leased land, says Dawn Pfaff, president of My State MLS, a nationwide multiple listing service. In those instances, the home is considered chattel, or personal property, and you’d get a corresponding chattel or personal loan.
“When you buy a mobile home on land that you own, as long as that home is permanently affixed to the land, the terms are much different,” Pfaff says. In this case, you can borrow a mobile home loan that works essentially the same as a mortgage. However, not all mortgage lenders approve loans for mobile homes, so you’ll need to find one that offers this type of financing.
There are a number of factors to consider when choosing a mobile home loan.
- Classification of your home. What type of loan you qualify for will depend on a number of conditions like size, wheels and land ownership. If your mobile home doesn’t meet certain conditions, you will have to get a personal loan instead.
- Interest rates. Mobile home interest rates are dependent on a number of factors. As the Federal Reserve has raised interest rates in 2022, the rates for mobile home loans have also increased.
- Products available. Find a lender that has mortgage options you are looking for, like certain term lengths, FHA or VA loans.
- Total costs. There is usually a larger cost associated with mobile home loans and they may require a larger deposit, so be sure to consider all the associated costs.
Because mobile home loans are not as common as traditional mortgage loans and the terms tend to be a bit stricter, it’s difficult to pinpoint the average mobile home rate. The interest rate you’re offered will depend on a number of factors, including your creditworthiness, the type of property, the size of the loan and more.
That said, for a mobile home on a permanent foundation, a good interest rate would be slightly higher than the average mortgage rate for a 30-year, fixed-rate loan, according to Washington. As of July 2022, that average was 5.51%, according to Freddie Mac.
When shopping around for a mobile home loan, it’s important to compare offers from several lenders to ensure you’re getting the lowest rate possible.
- Pay lower interest rates. Mobile home loans tend to have lower interest rates than personal loans or chattel loans.
- Secure larger financing. Mobile home loans qualify for larger financing than other loan options, and may also include financing for the land.
- Get longer loan terms. Some mobile home loans can have terms up to 30 years, while other loan options may only be 15 to 20 years.
- Qualify for federally backed loans. If your mobile home meets certain conditions, you may be able to qualify for federally backed mortgage loans like FHA, VA or USDA. These loans tend to allow for lower down payments and longer loan terms.
- It may be difficult to qualify. You must meet numerous conditions in order to qualify for a mobile home loan. Factors like size, whether the home has wheels and whether you own the land can disqualify you from a mobile home loan.
- You will likely pay more. Mobile home loans tend to have higher costs and interest rates than traditional home loans.
- A low DTI ratio is required. To qualify for a mobile home loan, some lenders may require a lower debt-to-income ratio compared to a traditional home loan. This means that less of your income can go towards paying off debt.
The FHA offers two types of mobile home loans.
The FHA Title I program is designed for homes that are considered personal property and not real estate. To get a Title I loan, you don’t need to purchase or own the land the mobile home will be sitting on. Pfaff notes that the amount you can borrow under the Title I program is capped, depending on the use:
- Manufactured home: $69,678
- Manufactured home lot: $23,226
- Manufactured home and lot: $92,904
There are also maximum loan repayment terms, depending on the property type:
- Manufactured home or a single-unit home and lot: 20 years
- Manufactured home lot loan: 15 years
- Multiunit manufactured home and lot: 25 years
The FHA Title II program is for mobile homes that qualify as real property and are taxed as real estate. It works the same way for mobile homes as it does for traditional homes. You can put down as little as 3.5% if your credit score is at least 580, or 10% if your score is between 500 and 579. You will be required to pay a mortgage insurance premium, regardless of the down payment amount. The home must also be your primary residence, and the repayment term can last up to 30 years.
Though mobile homes can be more cost-effective than traditional stick-built homes, they are still pricey. The average sale price of a new manufactured home was $98,100 as of March 2021, according to the U.S. Census Bureau. Opting for a double-wide or a home with certain customizations can drive that price much higher. If you don’t have the cash saved up for the full purchase price of a mobile home, it may be worth taking out a loan to cover the cost.
Another factor to consider is whether you will also need to purchase the land that the home will sit on. If you don’t already own a plot of land, but you want a mobile home that qualifies as real property, you may need to finance the land purchase along with the mobile home purchase.
- Personal loan. If your mobile home is classified as a vehicle or personal property, then it qualifies for a personal loan. Personal loans may not provide as much financing and tend to have higher interest rates.
- Chattel mortgage loan. A chattel loan is a personal loan for movable property. Chattel loans typically have lower costs, but they cannot cover the cost of land.
- Installment agreement. An installment agreement allows you to finance directly from the dealership or the seller of the mobile home. This means you will not deal with a bank, but you will still need to do your due diligence to ensure the home is owned outright.
- Buy it in cash. If you have the finances available, you can buy the mobile home in cash and avoid taking on debt.
Veterans United Home Loans offers mortgages in all 50 states and Washington, D.C., and specializes in Department of Veterans Affairs loans. Since 2016, Veterans United Home Loans has generated the largest number of VA purchase loans per year in the nation. The lender was founded in 2002 and is based in Columbia, Missouri.
Founded in 1990, Freedom Mortgage is one of the country’s largest loan originators and services, operating in all but two states plus the District of Columbia, the U.S. Virgin Islands and Puerto Rico. Based in Mount Laurel, New Jersey, Freedom Mortgage was named No. 1 Veterans Affairs lender and No. 1 Federal Housing Administration lender by the industry publication Inside Mortgage Finance. Freedom Mortgage offers a range of mortgage loans, including conventional, adjustable-rate, refinance, FHA, VA and U.S. Department of Agriculture. But what Freedom Mortgage is known for is its mission to help American military personnel purchase a home.
LoanDepot is a mortgage lender that operates nationally with more than 200 branches and delivers both a digital experience and face-to-face service. The lender offers fixed- and adjustable-rate conventional mortgages, Federal Housing Administration and Department of Veterans Affairs loans, as well as refinance and renovation loans. The company was founded in 2010 and is based in Foothill Ranch, California.
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