Getting a manufactured home mortgage isn’t quite the same as getting a regular mortgage for a traditional, stick-built home.
While not every lender offers these types of loans, you do have a range of options to pick from. Some manufactured homes can be purchased with conventional mortgages, and government-backed loans like FHA, USDA, and VA loans are also on the table when you’re thinking about financing a mobile home.
The best manufactured home loan for your journey will depend on your eligibility as a borrower, the age and type of home you’re buying, and whether your new home is considered “real property” or “personal property.”
In this article (Skip to. )
A manufactured home mortgage is a type of loan specifically designed for purchasing manufactured homes, which are factory-built houses installed on a permanent site. They may have higher interest rates, shorter loan terms, and different down payment and credit score requirements.
Manufactured home mortgages can be used to finance both the purchase of the manufactured home itself and the land it will be placed on, or just the home only if it will be located in a rented lot or mobile home park.
The terms mobile, manufactured, and modular frequently get tossed around as if they’re synonymous. However, each type of home comes with its own unique characteristics and advantages. Here’s what you should know when evaluating mortgage loans for manufactured homes.
Since their inception, manufactured homes, formerly known as “mobile homes,” have evolved and improved. HUD (U.S. Department of Housing and Urban Development) has been regulating construction and safety standards of these factory-built homes since 1976. Here are some key features:
Manufactured homes built to HUD’s safety standards usually have a “HUD tag” attached to them.
Mobile homes
Mobile homes, a term often used interchangeably with manufactured homes, refers to homes built before the HUD Code came into effect in 1976. This is when the National Manufactured Housing Construction and American Safety Standards Act was enacted to set new, more rigorous standards for the construction and safety of these types of factory-built homes.
Even though the words are often used interchangeably, knowing the difference between them is important when comparing loans for manufactured homes.
Modular homes, also known as prefabricated homes, are built in factories like manufactured and mobile homes. However, there are differences in their construction, regulation, and overall design.
If the manufactured house meets the necessary guidelines, you may be eligible to finance it through a traditional mortgage program, such as those backed by Fannie Mae, Freddie Mac, or government agencies.
However, if you’re purchasing a mobile home that doesn’t meet those qualifications, your financing options will be limited to chattel loans or personal loans. Here’s a breakdown of what you can expect when seeking a loan for a manufactured or mobile home:
Both Freddie Mac and Fannie Mae provide manufactured home mortgage options aimed at making homeownership more affordable. You can start with just 3% down, but expect slightly higher interest rates because of additional risk associated with these loans.
Freddie Mac’s manufactured home loan program, part of its “Duty to Serve” plan, provides fixed-rate mortgages for manufactured homes. Key features of this program include:
Fannie Mae offers two main programs:
When it comes to manufactured home mortgages, the Federal Housing Administration (FHA) provides two main loan options: Title I and Title II loans. These loan programs offer borrower-friendly terms, making them appealing choices, especially for first-time home buyers.
A Title I loan allows you to finance the purchase of a manufactured home only, not the land it will sit on. There are a few key requirements:
These loans tend to have relatively short repayment periods, maxing out around 20 years, and loan limits on the lower end.
You can purchase both the manufactured home and the land it will permanently occupy as real property with a Title II loan. However, you must own or purchase the land; you cannot rent a lot in a manufactured home community.
If your manufactured home ticks those boxes, a Title II loan could be a great option. The relaxed FHA credit history qualifications make it easier to get approved with a modest down payment. And the interest rates can be lower than for other types of manufactured home mortgages.
If you qualify, you can use a VA loan to purchase a manufactured home and the land it sits on without making a down payment or paying for mortgage insurance.
Because the U.S. Department of Veterans Affairs guarantees these loans for veterans, active-duty service members, and qualifying surviving spouses, they have some of the lowest fees and most competitive rates available.
If you want to purchase a manufactured home with a VA loan, you must not only buy the land it will sit on but also ensure that it is affixed to a permanent foundation and meets HUD guidelines.
Rural homebuyers looking to finance a manufactured home or home-and-land package may qualify for the USDA’s Single Family Housing Guaranteed Loan Program (SFHGLP).
A major advantage of USDA Rural Housing loans is that they do not require a down payment. However, to buy a manufactured home with a USDA loan, you’ll need to meet these requirements:
Like all USDA loans, eligibility is only available in rural and suburban areas identified on the agency’s maps. Applicants must also demonstrate that their household income falls within the program’s limits.
Borrowers can use a type of financing called a chattel loan to purchase personal property such as vehicles, watercraft, and mobile homes. Compared to a traditional mortgage, these loans tend to have easier approval requirements but come with some tradeoffs:
Because the financed property itself serves as collateral, defaulting on a chattel loan can put you at risk of having that asset seized to satisfy the remaining debt. This presents an elevated risk compared to traditional manufactured home mortgages.
Chattel loans often result in higher monthly payments compared to mortgages due to their combination of higher rates and shorter loan terms, despite the application process being more streamlined. Before opting for a chattel loan to purchase a manufactured home, borrowers should carefully consider the costs and risks.
If your manufactured home isn’t permanently affixed or doesn’t meet standard loan requirements, a personal loan may be an option worth considering.
The tradeoff is that personal loan rates are much higher than secured loans like mortgages, potentially as high as credit card debt. And some lenders charge origination fees as high as 6% to 7%—higher than the average mortgage loan’s closing costs.
If you’re already a homeowner, you may be able to leverage your existing home equity to finance the purchase of a manufactured home — either as a second home or rental property.
Home equity is the portion of your property’s value that you’ve paid off. For example, if your home is worth $300,000 but you only owe $150,000 on the mortgage, you have $150,000 in equity built up.
You can access this equity through:
Unlike traditional home loans, the mortgage rates for manufactured homes can be a bit different and, sometimes, a bit higher. But don’t let that spook you — knowing how these rates work can actually put you in a position to get a better deal.
Manufactured home mortgage rates vary based on several factors, including your credit score, the size and condition of the home, and the terms of the loan. Some lenders might also offer promotional rates for first-time home buyers, which is a great perk if you’re new to this.
To get a mortgage loan for a manufactured home, you’ll have to qualify as a borrower by meeting the minimum credit score, income, and down payment requirements, just like you would if you were buying a traditional home.
“Real property” must include land as well as property that cannot be quickly or easily removed from the land, such as a house, an in-ground pool, or a paved driveway. Personal property is anything that can be moved and used elsewhere, such as a car, a boat, or a true mobile home.
How do you know if an existing manufactured home is real or personal property? By determining how the current owner pays taxes.
If the taxes go to the DMV, the home is considered personal property. In addition, a home on leased land won’t be considered real property. If you’re buying a new home from a dealer, you’ll need to place the home on land you own or land you’re buying.
The home you’re buying must have at least 400 square feet of living space to qualify for a manufactured home loan.
Most manufactured homes, especially double-wide or modular homes, easily meet this requirement.
But some types of loans for manufactured homes require more space. Fannie Mae’s conventional loan for manufactured homes, for example, requires the home to have at least 600 square feet of living space.
Manufactured homes can arrive in pieces and be assembled on site. Or they can be built off-site and towed to their permanent location.
In either case, upon arrival, the home will need to be attached to a permanent foundation before it qualifies for a conventional loan or for most government-backed loans.
Also, the home can’t be located in a mobile home park or on land someone else already owns and won’t be selling to you.
While similar to obtaining a traditional home loan, applying for manufactured home financing has its own distinct steps. It’s important to note that the eligibility criteria and application process will differ depending on the type of loan you’re applying for, whether it’s an FHA, VA, conventional, or chattel loan.
When evaluating your options for a manufactured home mortgage, it is crucial to consider the age and condition of the property you intend to purchase.
Lenders enforce stringent criteria regarding these aspects because they indicate the risk associated with the loan. Homes that are relatively new and in good condition are more likely to qualify for financing.
For instance, getting a loan for a manufactured home that is 20 years old and poorly maintained might pose challenges. Many lenders are hesitant to finance older homes that show significant wear and tear due to the increased risk of structural issues and decreased market value.
However, some financial institutions specialize in loans for such properties. These lenders might be willing to provide financing but could require compensatory measures to offset the risk, such as charging higher interest rates or demanding a larger down payment.
Carefully consider these factors before choosing the best loan for a manufactured home. By assessing the age, condition, and the lender’s requirements, you can choose the most suitable mortgage option for your needs.
Those who plan on renting a plot for their manufactured homes will have fewer loan options compared to those who intend to buy the land on which their home will be built.
If you’ve removed the axle and wheels from your mobile home and you own the land, it becomes less likely that you will be able to move it. Thus, you may find that more lenders are willing to finance you.
When applying for a manufactured home mortgage, the process involves several critical steps to ensure you meet the lender’s requirements. This process is not only about proving your ability to repay the loan but also about verifying your financial stability and creditworthiness.
Here’s a detailed breakdown of the types of documents you will need to provide:
Organizing these documents before starting your application can streamline the process, making it quicker and easier to secure approval for your manufactured home mortgage.
Even for the same type of loan, different lenders can have very different terms and rates. So you should shop around for the best deal. Keep in mind, though, that each lender will pull your credit report, and too many hard inquiries can negatively impact your credit score. To mitigate this, try to do all your rate shopping within a short period of time, typically 14 to 45 days.
Buying a mobile home with no money down can be challenging, but certain programs may allow it. For example, VA loans often require no down payment and are available to service members, veterans, and eligible surviving spouses. Also, USDA loans, designed for rural and suburban homebuyers, may offer no-down payment options. Eligibility for these programs is subject to specific requirements, and availability can vary.
What’s the oldest manufactured home that can be financed?The oldest manufactured home that can be financed is usually one built after June 15, 1976. Homes built after this date adhere to the HUD Manufactured Home Construction and Safety Standards, making them eligible for financing.
What is the lowest down payment for a mobile home?The lowest down payment for a mobile home can be as low as 3% through the Fannie Mae MH Advantage program, under certain conditions. Alternatively, FHA loans provide a down payment as low as 3.5% if the borrower’s credit score is 580 or higher; for scores between 570 and 579, a 10% down payment is required.
Can you get a conventional loan for a mobile home?Getting a conventional loan for a mobile home can be difficult. Most conventional lenders require the home to be on a permanent foundation and classified as real property, not personal property. However, some lenders may offer conventional loans for manufactured homes if they meet certain standards, like Fannie Mae’s MH Advantage program.
Are there banks that finance mobile homes with land?Yes, many banks and credit unions finance mobile homes on land. These are usually considered real property loans. Some government-backed loan programs, like FHA Title II loans and certain VA loans, also allow for the financing of mobile homes along with the land they sit on.
Can you get a mortgage on a manufactured home?Yes, you can get a mortgage on a manufactured home. There are several options, including FHA loans, VA loans, and certain conventional loans. The home usually needs to meet specific requirements, such as being on a permanent foundation and classified as real property.
Can you get a reverse mortgage on a manufactured home?Yes, homeowners can get a reverse mortgage on a manufactured home under certain conditions. The home must meet the FHA’s property eligibility requirements, be built after June 1976, be on a permanent foundation, and be taxed as real estate. You must also own the land the home is on. The reverse mortgage program most commonly used for this purpose is the FHA’s Home Equity Conversion Mortgage (HECM) program. Always consult with a qualified professional before making decisions on complex financial matters like reverse mortgages.
Navigating the path to securing a manufactured home mortgage requires careful consideration of your financial situation and the home’s specifications.
Armed with the right information and documents, you’re well-prepared to make informed decisions about your future home. Ready to take the next step?
Begin the application process today by clicking on the links below to explore your financing options.
Authored By: Gina Freeman The Mortgage Reports contributorWith more than 10 years in the mortgage industry, and another 10 years writing about it, Gina Freeman brings a wealth of knowledge to The Mortgage Reports as its Associate Editor. Gina works with a team of world-class real estate and finance writers to bring timely and helpful news and advice to the audience. Her specialty is helping consumers understand complex and intimidating topics.
Updated By: Ryan Tronier The Mortgage Reports EditorRyan Tronier is a personal finance writer and editor. His work has been published on NBC, ABC, USATODAY, Yahoo Finance, MSN Money, and more. Ryan is the former managing editor of the finance website Sapling, as well as the former personal finance editor at Slickdeals.
Reviewed By: Paul Centopani The Mortgage Reports EditorPaul Centopani is a writer and editor who started covering the lending and housing markets in 2018. Previous to joining The Mortgage Reports, he was a reporter for National Mortgage News. Paul grew up in Connecticut, graduated from Binghamton University and now lives in Chicago after a decade in New York and the D.C. area.
