Can I Get a Mortgage for a Manufactured or Mobile Home?

Manufactured homes, previously called “mobile homes,” have evolved from the “trailers” of the past into beautiful and affordable options for many homebuyers.

With a variety of features and designs, not only can they look just like regular “stick-built” or “on-site” homes, but today’s manufactured homes meet stringent safety standards, are energy-efficient, and can be purchased for much less than traditional houses.

And yes, you can get a mortgage for your manufactured home. Just be aware that some lenders avoid manufactured homes because they are seen as a greater risk. But good news—Atlantic Bay offers financing for manufactured homes, including a one-time closing construction-to-permanent option. If you’d like to learn more about your options regarding manufactured homes, our Mortgage Bankers are always happy to discuss!

What Is a Manufactured Home?

First, let’s clear up some terminology.

A manufactured home is the U.S. Department of Housing and Development (HUD) term for homes built completely in a factory according to federal HUD codes and transported to the property on a permanent steel “chassis” that provides structural support after the home is installed on the site. To get a mortgage on a manufactured home, it must be “real property,” meaning it’s attached to land you own or lease, rests on a permanent concrete foundation, and the axles have been removed. Manufactured homes depreciate over time.

Mobile home is an obsolete term that only applies to homes built in a factory before June 15, 1976, when HUD enacted the National Manufactured Housing Construction and Safety Standards Act.

Modular homes are manufactured homes that are built in pieces in a factory, then transported and assembled on-site. They do not have wheels and are installed just as a traditional home. For this reason, modular homes appreciate or depreciate with the market just like a regular home.

For the purposes of this article, we will focus on manufactured homes.

Expert Tip

In your research, you may also come across the term “prefabricated” homes. This is an umbrella term that covers all types of homes made in factories, including manufactured, modular, concrete, kit, panelized, and log homes.

What Do Manufactured Homes Cost?

The most recent U.S. Census data shows that the average price of a manufactured home is around $88,000. Your home’s price will depend on a few criteria. For example, there are single-, double-, and triple-wide floor plans available, as well as dozens of amenities. Because the home must be affixed to permanent property, you’ll need to:

• Own your own lot

• Purchase an existing home and lot (like a regular home), or

• Lease land in addition to the cost of the home you place there

If you want to purchase land and a newly-built home at the same time, a popular option is the one-time closing construction-to-permanent loan, which combines the construction of your new manufactured home with the land purchase and permanent mortgage into a single closing, saving you fees.

Financing Your Manufactured Home

Buying a manufactured home is not unlike buying a car. You can buy a new home through a retailer, buy a used home, or, in some states, buy directly from an owner. You can also use a real estate agent to help you, just like a traditional home.

All the traditional loan programs have options for manufactured homes as long as you meet certain requirements. For example, your home must be at least 400 square feet and 12 feet wide, be attached to a permanent foundation, and include basic features like eating and sleeping areas and sanitary facilities. Credit score requirements vary, but 580-620 is a good rule of thumb. And if you need help with your down payment and closing costs, down payment assistance programs apply to manufactured homes, too!

Expert Tip

Homeowner’s insurance for manufactured homes can be harder to find and is typically higher than that of traditional homes. But there are companies that specialize in insuring manufactured homes. Shop around for quotes as they may vary widely.

Conventional Loans

With Fannie Mae’s MH Advantage program, the home must meet certain construction, architectural design, and energy-efficiency standards, much like stick-builtA traditional home built directly on a lot, versus manufactured homes, which are built in factories and shipped to the lot.stick-builtA traditional home built directly on a lot, versus manufactured homes, which are built in factories and shipped to the lot. homes. MH Advantage loans come with 30-year terms and down payments as low as 3%.

Like Fannie Mae, Freddie Mac’s Home Possible loans offer fixed-rate mortgages of 15, 20 and 30 years, adjustable-rate mortgages, and a 3% down payment. For those with strong credit, Freddie’s CHOICEHome program requires 5% down and can be used toward both primary and second homes.

Government-Backed Loans

FHA, VA, and USDA loans are a common financing choice for manufactured homes because their underwriting standards tend to be more flexible than that of Conventional loans.

FHA Title I loans finance the manufactured homes that typically appear in manufactured home communities or parks. The home must be your primary residence, and you must provide a signed lease for its lot with an initial term of at least three years.

Title II loans are used to finance the home and land, and only as a primary residence. They are not for leased spaces. FHA down payments begin as low as 3.5%.

For service members and their spouses, VA loans cover manufactured homes with zero down payment. But they have shorter terms of 15-25 years—meaning you pay a little more each month, but you will pay off the debt faster. You must meet VA manufactured home guidelines and provide an “affidavit of affixture” to demonstrate the home is “improved real estate” (real property). You can roll your VA funding fee into the loan balance.

As with all USDA loans, you can finance your manufactured home with no down payment. However, the home must be brand-new and double-wide or larger. You must meet certain income restrictions, and the home must be in an area that meets USDA population requirements.

Other Financing Options

If all else fails, you can try financing through your manufactured home dealer, a personal loan, or a chattel loan, which is a special loan for expensive vehicles like manufactured homes, planes, and farm equipment. Rates for all of these loans tend to be higher, but there is less paperwork at closing. Always shop around before committing to any kind of home loan.

As you can see, you have many options for financing a manufactured home—you might just need to put in a little extra work. But remember, Atlantic Bay is always here to help!