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About 97% of the U.S. land mass is USDA loan eligible, an area encompassing 109 million people. The best thing about a USDA loan is that there is no down payment required. When you wonder how to buy a mobile home with no money down, think USDA. You are also allowed to finance 100% of the home’s appraised value. Housing assistance programs began in the New Deal era when the government wanted to provide better homes for the rural population.
Even if the mobile home is in poor shape or too old to finance, you could still be approved based on your credit history and debt-to-income ratio. If your manufactured home is still on wheels, or is not financeable for some other reason, personal loans could be worth looking into. Not all lenders offer this program, so you’ll need to call around or search online for lenders who offer FHA Title I financing.
What critical items to check off when considering buying a mobile home in a park?
Builders that sell manufactured homes typically arrange financing to make it easier for customers to purchase. They are especially popular because they feature low down payments, fixed interest rates, and consumer-friendly rules. The APR on chattel loans averages about 1.5% higher than mortgage loans. As with personal property loans, you're financing only the home itself, not the land it sits upon. What you call a “mobile home” is probably a “manufactured home,” even though the home is—or once was—mobile.
With an older mobile home purchase, you will likely also need to employ someone with knowledge and inspection skills to ensure you buy a good home. Bankrate follows a strict editorial policy, so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles.
Government Loan Programs
Several mortgage lenders specialize in loans for mobile and manufactured homes, and land as well, if necessary. Title II loans are real estate loans, so you’ll have to purchase the land and the home together, and the home must be permanently installed on an approved foundation system. The only catch is whenever you buy a home on a rented lot you typically need to be approved through the rental company and they often use credit scores. We didn’t have great credit and was fortunate enough to find a home on a half an acre of land in WV through a private seller. I found it in a weekly trader newspaper but I’ve seen lots of them on Craigslist.
Buying a new mobile home and having it delivered to a leased-land park can lower your monthly mortgage costs and provide you with more money for leisure spending. Not having to purchase land upfront also helps many first-time buyers qualify for home loans 2021. It is always recommended to check different options before buying a new mobile home. In fact, it can be much easier to get financing for a manufactured home than for a traditional frame or block house.
What does your credit score need to be to buy a new mobile home?
It’s not usually the distance that costs the most, it’s the breakdown and setup of the home. Here in WV, you’d probably be charged a minimum of $3500 to move a single wide under 50 miles. You’ll be paying to have the home moved twice in a short amount of time and that could pose additional stress on the home, especially if the transporters aren’t careful.
Generally speaking, lending options are more numerous for site-built homes than mobile homes. However, your credit score, income level and debt burden also have an impact on the underwriting process. If you are on a fixed income you may qualify for an FHA mobile home loan for $90,000, but lack the cash to qualify for a higher dollar loan on a traditional house.
If that doesn’t work and you’re comfortable with paying higher interest rates and losing the ability to refinance then a manufactured home dealer would be the next possibility. The larger dealers like Clayton have their own in-house finance companies and can get people financed that likely can’t get approved through banks. Make sure to read every word in the contracts before you agree to anything and do not sign anything until a 3rd party has reviewed it – not even a permission slip to pull credit. A modular home is completely different from a manufactured home and I am not knowledgeable about them. Modular homes are built in sections in a factory and installed together on site. Manufactured homes are built completely in a factory on a chassis and only need to pass a national code.
If you don't qualify for a government loan, talk to your bank or credit union about a conventional mortgage. You don't have to meet the same requirements as you do for a government loan, but there are still restrictions. Your credit score is a key factor that lenders will consider when deciding whether to approve a mobile home loan.
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Chattel loans are often used for mobile and manufactured homes going into a park or manufactured home community. They are home-only loans, unlike loans for homes and land together. Repayment terms are typically longer than with chattel loans, up to 30 years. A study found that loan amounts and processing fees were 40% to 50% lower on chattel loans when compared to standard mortgage loans. Consumer-friendly FHA Title I and Title II loans are available for manufactured homes built after June 15, 1976, that meet all local and federal codes.
Whenever you apply for any financing, a lender will consider your credit as part of your loan application. Clean credit histories and solid credit scores make securing loans easier and receiving better rates and terms from lenders. Government-backed loan programs are probably your best options for borrowing, but not all mobile and manufactured homes will qualify. I’ve been trying to raise my score as well but it is a very slow process.
You may be able to obtain conventional financing for a manufactured home through the Freddie Mac Home Possible mortgage program. The loan program has other requirements relating to the terms of the loan. Modular homes must be constructed to the same state, local or regional building codes as site-built homes. You’ll often hear the terms mobile, manufactured and modular used interchangeably when discussing these similar types of homes.
Long term costs
If you need additional help or have questions about your personal credit and finances, you may want to discuss your financial situation with acredit counselor. Veterans Administration loans are another way to buy a manufactured home. Nonprofits like InCharge Housing Counseling havecredit counselorswho work to improve your credit and find out if you qualify for down payment assistance.
Qualified borrowers may choose between fixed-rate mortgages and 7/1 or 10/1 adjustable-rate mortgages. You may be able to secure a loan with as little as 3 percent down and, in some cases, use gifted or grant money to help cover your down payment. Several government-backed loan programs can make borrowing for a manufactured home more affordable. So you’ve got a low score, maybe a really low score, is all hope lost? Of course not.You can search for a lender who specializes in making loans to folks with bad credit. Whether you are purchasing a stick built home or a manufactured home you still need legal representation to close the transaction.
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