From the Blog
How to Finance a Manufactured Home?
Whether you’re looking for a downsize or your first home, understanding the loan and financing process for a manufactured home is an important step in your house buying process.
While it might not be more complicated than usual, there are a few things you have to take into consideration when financing a manufactured home.
Who Can Get a Manufactured Home Loan?
To qualify for traditional home financing or refinancing options, a home must be classified as ‘real estate.’ However, not all manufactured housing is considered real estate.
If your manufactured home is at least 400 square feet, on an approved permanent foundation, and is taxed as real property, you have the ability to apply for conventional or government-backed mortgages.
Also, be aware that many manufactured home loan programs have strict guidelines about the property’s condition and age. That’s because manufactured housing tends to depreciate in value, while traditional home values tend to increase over time.
Whenever you apply for any type of financing, the lender will consider your credit as part of your loan application. Clean credit histories and good credit scores make it easier to secure loans and receive better rates from lenders.
If you happen to find mistakes when you check your credit reports, you can dispute them with the appropriate credit bureau — Experian, TransUnion, or Equifax.
Why it’s important: The better your credit score, the lower your interest rate will likely be. This can save you thousands of dollars over the course of the loan.
United States Department of Housing and Urban Development (HUD) offers manufactured home loans through the Federal Housing Administration loan program. This includes Title I and Title II loans.
Title I loans
A Title I manufactured home loan can be used to finance the purchase of a new or used manufactured home or to alter, repair, or improve one.
Lenders can offer Title I mobile home loans even if the buyer doesn’t own or isn’t planning to purchase the land that the manufactured home will be on. These homes will typically be placed in a manufactured home community or mobile home park.
If the borrower doesn’t own (or isn’t buying) the land, they must provide a signed lease for a mobile home plot with an initial term of at least three years.
The loan program has other requirements relating to the terms of the loan.
- Manufactured home only: $69,678
- Manufactured home lot: $23,226
- Manufactured home & lot: $92,904
- Manufactured home: 20 years
- Single-wide manufactured home & lot: 20 years
- Manufactured home lot: 15 years
- Multi-unit manufactured home & lot: 25 years
Title II loans
This loan program insures loans that borrowers can use to finance a qualifying manufactured home, along with land, as long as it meets the requirements.
For example, you can only use a Title II loan if you plan to live in the manufactured home as your primary residence — real estate investors need not apply. Other requirements for the home include:
- Have a minimum floor area of 400 square feet.
- Be constructed after June 15, 1976.
- Must be classified as real estate, but not necessarily for state tax purposes.
- Must be built and remain on a permanent chassis.
- The loan must cover the home and the land that it’s on.
Title II loans cannot be used for manufactured homes on leased land in manufactured home communities or mobile home parks. Down payments on a Title II loan can go as low as 3.5 percent and terms can last as long as 30 years.
HUD provides two types of consumer protection. The borrower must sign a HUD Placement Certificate agreeing that the home has been installed and set up to their satisfaction by the retailer before the lender can give the proceeds of the loan to the retailer.
After moving in, the borrower can call HUD at (800) 927-2891 to get assistance with any construction problems of the home.
Eligible Borrowers Must
- Have sufficient funds to make the minimum required down payment.
- Be able to demonstrate that they have adequate income to make the payments on the loan and meet their other expenses.
- Intend to occupy the manufactured home as their principal residence.
- Have a suitable site on which to place the manufactured home. The home may be placed on a rental site in a manufactured home park, provided the park and lease agreement meet FHA guidelines. The home may be situated on an individual homesite owned or leased by the borrower.
An Eligible Manufactured Home Must
- Meet Model Manufactured Home Installation Standards.
- Carry a one-year manufacturer’s warranty if the unit is new.
- Be installed on a homesite that meets established local standards for site suitability and has adequate water supply and sewage disposal facilities available.
The proceeds of a Title I manufactured home loan may not be used to finance furniture (for example, beds, chairs, sofas, lamps, rugs, etc.). However, built-in appliances and equipment and wall-to-wall carpeting are eligible for financing.
Buy a Home at Aspire Communities When You’re Ready!
Once you’ve built your credit enough and you’re ready to buy a home, consider Aspire Communities! Our manufactured homes give you the freedom and independence of homeownership at the price of an apartment.
When you choose to live with us, you choose to live in a community mindful of your needs, that’s eager to provide you with the companionship and respect you deserve.
Feel empowered to take control of your life in a home and community that supports you. Join the 2,000+ happy residents currently living in Aspire Communities’ welcoming neighborhoods.
Contact us today to learn more about available homes and see how we can help you find the right fit.
P.S. If you’re wondering if a manufactured home is a good option for you, make sure to read our blog post about how owning one can potentially be a great investment for you and your family.
Check out the most recent homes available at Aspire Communities: