The short answer is yes. Financing manufactured homes (also sometimes called modular or mobile homes) is in fact allowed under VA mortgage guidelines. These are known colloquially as mobile home loans.
Below, we’ll detail just exactly what a mobile home loan is, along with how, why, when, and where to pursue one.
Purchasing a home is a major financial decision that requires careful consideration, especially when it comes to financing If you are a veteran or active military member, you may be wondering if you can use your VA home loan benefit to purchase a mobile or manufactured home. With some key information on VA loan requirements, you can determine if this type of home financing is right for you
What Is The Difference Between A Mobile Home And A Manufactured Home?
First, it’s important to understand the distinction between a mobile home and a manufactured home, as there are legal differences between the two:
-
A mobile home was constructed before June 15, 1976 when HUD manufacturing standards went into effect. Mobile homes are built on a metal chassis and designed to be transported to different locations.
-
A manufactured home was built after June 15, 1976 in accordance with HUD construction and safety standards. Manufactured homes are transported to a site and installed on a permanent foundation.
The year a home was built is key in determining if it can be financed with a VA loan which we’ll explore next.
Can You Get A VA Loan For A Mobile Home?
The short answer is no. VA loans cannot be used to purchase mobile homes built before 1976. The VA considers mobile homes to be personal property rather than real estate. Without a permanent foundation, mobile homes are seen as more difficult to finance and repossess in the case of default.
Since mobile homes don’t qualify, you’ll need to explore other financing options like chattel loans or personal loans which often have higher interest rates and require shorter loan terms.
Can You Get A VA Loan For A Manufactured Home?
The good news is that you can get a VA loan for a manufactured home in certain situations. The home must have been built after 1976 when HUD standards were implemented. Manufactured homes can qualify for VA loans if the following requirements are met:
-
Permanent foundation – The manufactured home must be permanently attached and anchored to a foundation. Detached manufactured homes may still qualify if the lender gets VA approval.
-
Real property – The manufactured home must be classified as real property, not personal property. This means it is taxed as real estate.
-
HUD certification – The home must have an HUD certification label indicating it meets federal manufactured housing standards.
-
VA minimum property standards – The property must meet VA requirements for safety, sanitation, and structural integrity. Any needed repairs must be completed before closing.
-
Minimum size – Single-wide units must be at least 400 square feet. Double-wide units at least 700 square feet.
As long as these conditions are satisfied, you should be able to use your VA loan for a manufactured home. Be sure to find a lender that offers VA loans for this type of property.
What Are The Benefits Of Using A VA Loan For A Manufactured Home?
The main benefits of financing a manufactured home with a VA loan include:
-
No down payment required – VA loans do not require any down payment, eliminating a major obstacle for buyers. The funding fee can be financed into the loan.
-
Lower interest rates – Interest rates on VA loans are capped, meaning they can be lower than conventional mortgage rates. This makes payments more affordable.
-
No loan limits – VA loans do not have conforming loan limits, so you can borrow up to 100% of the home’s appraised value.
-
Favorable refinancing – Veterans can refinance using the VA Interest Rate Reduction Refinancing Loan (IRRRL) and skip appraisals and credit checks.
Using a VA loan can make buying a manufactured home more accessible thanks to flexible guidelines and cost savings throughout the life of the loan.
What Are The VA Loan Term Limits On Manufactured Homes?
VA loans on manufactured homes have the same term length limits as loans for traditional homes:
-
Up to 30 years for a fixed-rate mortgage
-
Up to 5 years for an adjustable-rate mortgage
The VA does not impose maximum loan amounts on manufactured homes like FHA loans. You can qualify for the full appraised value of the home.
The VA also sets limits on how much cash you can take out on a VA cash-out refinance, based on your home’s loan-to-value ratio.
Can You Move A Manufactured Home After Buying With A VA Loan?
Generally, moving a manufactured home after using a VA loan to purchase it is problematic. VA loans require that the manufactured home be attached to a permanent foundation anchored to the ground.
If you want to move the home after purchasing, you would need to either pay off the VA loan or qualify for a traditional mortgage to finance the moved home. Work closely with your lender if you are considering relocating a manufactured property bought with VA financing.
What Should You Know When Buying Land For A Manufactured Home With A VA Loan?
VA loans allow you to purchase a manufactured home along with the land it sits on, which is optimal for building your own equity. Here are some tips for financing land:
-
If you already own land, the loan can cover the home and improvements like a well or septic system.
-
If buying land, the loan amount can include the home, land, improvements, and VA funding fee.
-
Closing costs related to the land purchase can be included in the loan amount.
Always get the land appraised along with the home to determine the combined market value. An appraisal considers factors like lot size, views, and community amenities.
Alternative Financing Options For Mobile And Manufactured Homes
If you don’t qualify for a VA loan, here are some other financing options for mobile and manufactured homes:
-
FHA loans – Allowed for manufactured homes on permanent foundations. Require 3.5% down payment.
-
USDA loans – Offer 100% financing for manufactured homes in rural areas. Have income limits.
-
Conventional loans – Available for manufactured homes but have stricter requirements like 5-20% down.
-
Chattel loans – Specifically cover mobile homes, travel trailers, or titled vehicles. Have higher rates and shorter terms.
-
Personal loans – Can be used as alternative financing though have high rates as they are unsecured.
Shop around to find the most affordable loan program that will work for purchasing your desired mobile or manufactured property.
Wrap Up
VA loans provide a great opportunity for eligible buyers to own a manufactured home with no down payment requirement. Just be sure to select a manufactured house built after 1976 on a permanent foundation. Consider the benefits of purchasing land along with the home for future equity. And explore specialized lending programs if you need financing for a mobile home. With the right VA guidance, you can determine how to optimally finance the manufactured dwelling that fits your lifestyle.
Must be classified as real property
To get to their sites, just about all manufactured homes travel on public roads. So officially they start out as vehicles.
Smart owners undertake a “title elimination” when the home arrives. But many don’t. So the home you want to buy may currently be classed as a vehicle or chattel rather than real property. If the current owners pay annual fees for it to the DMV rather than property taxes, you can be pretty sure it’s still a vehicle.
In most states, it’s not hard for you to reclassify the home yourself so that it becomes real property and is therefore eligible for a mortgage. You have to file some forms with the county records office and pay some modest fees.
However, you may have to jump some hurdles first. You need:Rights to the land where the home’s situatedTo remove any wheels and axlesOften to install utilities
Obviously, these practical steps have often already been taken, even if the home currently counts as a vehicle or chattel.
VA mobile home guidelines
The VA updated its rules for how it categorizes manufactured/mobile homes in March 2019. Here are the latest ones. To be eligible for a VA loan, the mobile home must:
- Meet the VA’s standard minimum property requirements (MPRs). These vary from state to state and you can check yours here.
- Count as real estate (as opposed to a chattel or vehicle) under state law and local zoning requirements*.
- Have a permanent foundation that complies with state law in respect of bearing the required load and withstanding strong winds.
- Be built to the manufactured home construction and safety standards defined by the U.S. Department of Housing and Urban Development (HUD). It should come with a HUD certificate and HUD tags attached to the home.
- Have a minimum floor area of 400 square feet if it’s a single-wide unit or 700 square feet if it’s double-wide.
- Comply with state and local regulations over manufactured homes, especially if the home’s been altered or is missing its HUD tags.
*Don’t worry if the home you want to buy is currently classed as a chattel. It’s usually fairly straightforward to have it redesignated as real property (see below).
If you’re applying for a loan on a home that’s yet to be sited, you’ll have to provide various plans and specifications.
Can I Buy a Manufactured Home With a VA Loan? (Step by Step Guide)
FAQ
Can VA loans be used for manufactured homes?
What can you not use a VA loan for?
Does VA require tie-downs for manufactured homes?
What is the oldest mobile home that can be financed?
Can a VA loan be used for a manufactured home?
Yes, VA loans can be used to purchase a manufactured home, also sometimes known as modular homes or mobile homes. So read on as we navigate through the world of VA manufactured home loans. In this article (Skip to) What is a mobile home loan? How do I use a VA loan for a manufactured home? What’s unique about VA manufactured home loans?
Can you refinance a mobile home with a VA loan?
VA loan rules also allow cash-out refinancing of a mobile home or manufactured home, but you will need to see if there is a participating VA lender willing to offer such an option for a mobile home. Get a free, no-obligation consultation regarding your VA Loan!
What are the VA requirements for a manufactured home loan?
The VA requirements for manufactured home loans aren’t the same as a loan for a traditional, site-built home. Here’s what to expect: The VA requires a minimum 5% down payment for a manufactured home, compared with 0% down for a site-built home.
How much does a VA manufactured home loan cost?
If this is your first time using the VA loan, your funding fee will be 2.15% of the loan amount. However, if you’re already using your entitlement, you’ll pay a funding fee of 3.3%. While the VA manufactured home loan is a viable option for financing your home, they’re not the only form of financing available.