Can You Buy a Manufactured Home With a USDA Loan?

Buying a manufactured or mobile home can be an affordable way to become a homeowner. With factory construction keeping costs low, mobile homes often sell for a fraction of what site-built houses cost.

But finding financing for a mobile home purchase can be tricky. Most lenders shy away from manufactured housing loans. They consider these properties less valuable than traditional site-built homes.

However, one little-known mortgage program bucks that trend. You can get a no-down-payment loan for a manufactured home through the USDA.

In this post we will cover:

• What is a USDA loan and who is eligible
• Using USDA financing for a new manufactured home
• Buying an existing manufactured home with a USDA mortgage
• Tips for getting approved for a USDA manufactured housing loan

USDA stands for the United States Department of Agriculture. This government agency doesn’t just support farmers It also boosts homeownership opportunities for rural residents.

The USDA’s Single Family Housing Guaranteed Loan Program helps low-to-moderate income homebuyers in small towns and remote areas get affordable financing. These government-backed mortgages require no down payment and have competitive interest rates.

Borrowers can purchase existing site-built homes or newly constructed manufactured housing with a USDA home loan.

USDA Loan Eligibility

To qualify for USDA financing, you must meet certain criteria:

• Your income must be below the limit for your area. These vary by county and family size. For example, a family of four in Dallas County, TX can earn up to $81,200.
• The home you want to buy must be located in an eligible rural location. The USDA has an address lookup tool to check.
• You must be a U.S. citizen or permanent legal resident.
• You must have sufficient income and credit to support the mortgage payment. Minimum scores start around 640.

In addition to single family homes, you may use a USDA loan to buy:

• A manufactured or mobile home
• A duplex, triplex, or fourplex
• A condominium or townhome
• A property with an existing home and detached rental unit

USDA Loan Features

Some key benefits of USDA home loans include:

• No Down Payment Required – 100% financing means you can buy a home with no money down.

• Low Mortgage Insurance – an upfront guarantee fee of 1% of the loan amount and ongoing annual fee of 0.35% replaces PMI.

• Fixed Interest Rates – USDA loans come with predictable, fixed rates for the full loan term.

• Low Minimum Credit Scores – Credit scores as low as 640 may qualify.

• No Income Limits for Existing Homes – Only new construction has income caps.

• 30 Year Terms – Get favorable rates and payments spread out over 30 years.

• Assumable financing – future buyers can take over your loan.

Now let’s look at using USDA loans to buy manufactured housing.

Buying a New Manufactured Home With a USDA Loan

The USDA mortgage program allows you to finance the purchase of a factory-built home along with land acquisition and setup costs in one loan.

You can buy a brand new manufactured home to be delivered and installed on a site you purchase or already own. Or you can work with manufactured home dealers who handle everything – home, land, and setup – as a package deal.

Here are the USDA’s ground rules for new manufactured housing loans:

• The home must be built to Federal Manufactured Home Construction and Safety Standards and have a HUD Certification label.

• The home type should be a single, double, expandable, or triple wide unit.

• It must be classified and taxed as real estate once installed.

• The home must be placed on a permanent foundation built to HUD regulations.

• The site must have access to utilities and other infrastructure.

• The property location must be USDA eligible.

You can include all of the following in your USDA mortgage:

• Manufactured home purchase price
• Delivery and setup costs
• Foundation construction
• Site development work
• Land purchase (if you don’t already own the site)

This allows you to buy a brand new factory built home with one convenient loan, even if you have to buy land and install utilities.

Buying an Existing Manufactured Home With USDA

In addition to new units, USDA loans work for purchasing existing manufactured homes. However, these properties must meet agency criteria.

The home must:

• Have been built after June 1976 when HUD standards went into effect
• Be attached to a permanent foundation
• Be taxed as real property, not personal
• Have the towing apparatus and wheels removed
• Have the exterior resemble a site-built single family home

The property must also:

• Be located in a USDA eligible rural area
• Have sufficient utilities and access

And as with site-built homes, an appraiser will assess the value to ensure its worth at least the purchase price.

Provided the home meets guidelines, buyers can use a USDA loan to:

• Purchase an existing manufactured or mobile home and the land it sits on
• Buy just the manufactured home to place on land they already own
• Move a manufactured home to a new site and purchase that land

One catch is that the USDA will not finance moving costs for existing manufactured homes. Their loans only cover transportation for new factory-built units.

Tips for Getting Approved for a USDA Manufactured Home Loan

If you want to buy a manufactured home with USDA financing, here are some tips for getting approved:

• Shop with lenders who offer USDA manufactured housing loans – not all lenders do, so search specifically for those serving mobile home buyers through USDA programs.

• Make sure the home meets requirements – double check that the home is HUD certified and on a permanent foundation on an eligible site.

• Consider adding co-borrowers – adding another borrower with better credit or income can boost your chances.

• Improve your credit – the better your score, the easier to get approved. Pay down debts and dispute errors to boost your profile.

• Save up for closing costs – you’ll need funds to cover origination fees, inspections, and other closing expenses that USDA loans do not cover.

• Document your income – have paystubs, W2s, and bank statements handy to verify your stable income.

• Explain past credit issues – be ready to provide documented explanations for any past foreclosures, bankruptcy, collections, or late payments.

• Consider loan terms carefully – shorter terms come with lower rates but higher monthly payments. Make sure you pick terms you can manage long-term.

With an eligible property, stable income, and good credit, you can become a homeowner with $0 down through the USDA’s unique manufactured housing loan program.

Finding a USDA-Approved Lender

The key to successfully financing a manufactured home with a USDA loan is finding an approved lender familiar with their specialized program guidelines.

Here are some options to consider:

Local Banks and Credit Unions

Many small community banks and credit unions offer USDA loans to serve rural residents in their areas. These local lenders are familiar with rural properties and manufactured housing market nuances.

Ask your local bank if they are an approved USDA lender. Building a relationship locally can also boost your chances of approval.

Online Mortgage Lenders

Several large online lenders offer USDA mortgages and specialize in manufactured home financing. Online lenders lend in many markets so have broad expertise.

Work with an online lender approved to underwrite USDA manufactured housing loans. They will understand the unique guidelines.

Mortgage Brokers

Mortgage brokers submit loan applications to various wholesale lenders on your behalf. A knowledgeable broker experienced with USDA loans can match you with the right lender.

Find brokers in your state through the National Association of Mortgage Brokers.

USDA Direct

In areas lacking options, the USDA provides direct loans through local Rural Development offices. These are only offered in limited cases when applicants cannot secure reasonable rates and terms elsewhere.

Check with your local USDA office to see if they offer direct loans. Funding is very limited so most buyers use traditional USDA lenders.

With an eligible property and the right lender, you can buy the affordable manufactured home of your dreams with no down payment through the USDA loan program.