Purchasing a manufactured home can be an affordable way to become a homeowner. However, many buyers with bad credit worry they won’t qualify for financing. The good news is that there are home loan options available even if your credit score isn’t perfect.
What is Considered Bad Credit?
Your credit score plays an important role when applying for any type of mortgage. Here’s a quick rundown of credit score tiers:
- Excellent credit: 750-850
- Good credit: 700-749
- Fair credit: 650-699
- Poor credit: 600-649
- Bad credit: 599 or lower
Lenders consider credit scores below 600 as bad credit The lower your score, the harder it can be to get approved for financing.
Loan Options for Bad Credit Borrowers
Don’t let bad credit deter you from your homeownership dreams. Here are some of the most common loans available to buyers with less-than-perfect credit:
FHA Loans
An FHA loan will probably be the most generous if you have a bad credit score. With an FHA loan you can qualify for manufactured home financing with a FICO score of 500 You can even lock in a pretty competitive interest rate, even with a bad credit score
VA Loans
If you are a veteran or active military, a VA loan is a great option VA loans are available to borrowers with credit scores as low as 580. You can purchase a manufactured home and land in one VA loan.
USDA Loans
USDA home loans don’t have a minimum credit score requirement. They look at your entire financial profile. USDA loans are for low-income borrowers in rural areas. Eligible properties must be in an approved rural location.
Subprime Loans
Subprime lenders specialize in lending to borrowers with poor credit. They offer loans tailored to buyers with credit scores below 640. Interest rates are higher to offset the risk.
Buy Here Pay Here
Some manufactured home dealers offer in-house financing called Buy Here Pay Here. You make loan payments directly to the dealership. Rates are high but you can get approved with bad credit.
Tips for Getting Approved
Here are some tips to boost your chances of getting approved for a manufactured home loan with bad credit:
- Make a large down payment. Putting down 20% or more lowers lender risk.
- Offer a co-signer. A co-signer with good credit can help you qualify and get better rates.
- Pay down debts. Reducing credit card balances can give your score an immediate boost.
- Check for errors on your credit report. Fixing mistakes can bump up your credit overnight.
- Avoid new credit inquiries. Don’t apply for loans, credit cards or financing until after closing.
Requirements for Manufactured Home Loans
In addition to your credit score, lenders look at these factors to approve a manufactured home loan:
- Home location. Land must be owned or leased long-term. No RV parks or mobile home parks.
- Home condition. Home must be habitable and meet building code requirements.
- Home size. Minimum 400 square feet of living space. Multi-width preferred.
- Foundation. Home must be permanently affixed on a foundation or piers.
Shop multiple lenders to find the most competitive rates and terms based on your unique financial situation. With bad credit, financing a manufactured home is possible with the right loan program.
Pros and Cons of Manufactured Home Loans
| Pros | Cons |
|---|---|
| Lower down payments available | Higher interest rates than site built homes |
| Quicker to close than site built homes | Shorter loan terms, often 15 or 20 years |
| Can be customized to your needs | May be difficult to sell or retain value |
| More affordable than site built homes | Limited inventory available |
| Energy efficient, modern designs | Require land ownership or long term lease |
Manufactured Home Financing Process
Follow these steps when seeking financing:
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Check your credit score and report. Get copies of your credit reports from Equifax, Experian and TransUnion. Dispute any errors.
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Determine your budget. Factor in the home purchase price, land costs, utility connections, moving expenses and any planned renovations.
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Get pre-approved. Compare loan options from multiple lenders. Apply with a lender that offers home-only or land/home financing.
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Find your home. Look at both new and pre-owned manufactured homes that fit your needs and budget.
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Make an offer. Make an offer once you find the perfect home. Hire a home inspector to evaluate the property.
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Secure financing. Finalize loan details and paperwork. Submit any additional documents required by the lender.
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Close on your home. Schedule a closing date once financing is secured. Review documents carefully before signing.
Alternatives to Manufactured Home Loans
If you don’t qualify for a manufactured home mortgage, here are some alternative financing options:
- FHA Title I Loan – Can be used to purchase just a manufactured home, not land.
- Personal Loan – Unsecured loan up to $100k based on income and credit score.
- Single-Wide Loan – Specialty loans for purchasing single-wide manufactured homes.
- Rent-to-Own – Rent a home for 12-24 months then purchase from owner.
- Lease-Option – Lease a home with option to buy it within a set timeframe.
- Owner Financing – Purchase directly from an owner instead of a bank.
- Hard Money Loans – Asset-based lending with higher rates and fees.
- USDA 502 Loan – Direct USDA home loans for low income borrowers.
Bad credit doesn’t have to stop you from buying the manufactured home of your dreams. Understanding your options and improving your financial profile can help you get approved for affordable home financing.
How to Qualify for a Manufactured Home Loan
Preapproval is the first and most important step towards acquiring your Manufactured Home Loan. Whether you’re a first-time home buyer or seeking to refinance your current home, getting preapproved helps narrow your focus to properties that fit your budget, establish credibility with sellers, and expedites both the loan funding and closing process.
Requirements for First-Time Home Buyers:
Manufactured home loans can be an excellent option for first-time homebuyers due to their affordability, flexibility, and government programs. These loans offer a less expensive and customizable housing option that requires a lower upfront cost, and some government programs like FHA loans offer lower down payments and credit score requirements. Additionally, manufactured homes are energy-efficient, which can lower utility bills and save money in the long run.
Lenders look for a credit score within the “good” range to approve a borrower for a manufactured home loan. A higher credit score may also result in a lower interest rate.
Borrowers must demonstrate a stable income to prove they can afford the monthly loan payments. Lenders usually require proof of employment and income through pay stubs, W-2 forms, and tax returns.
Manufactured home loans typically require a down payment of a percentage of the purchase price. A higher down payment may result in a lower interest rate and lower monthly payments.
Lenders look at the borrower’s debt-to-income ratio to determine their ability to repay the loan. Generally, a lower debt-to-income ratio is required to qualify for a manufactured home loan.
Manufactured homes must meet certain property requirements, including being located on a permanent foundation, having a minimum square footage, and being certified by the Department of Housing and Urban Development (HUD).
Some lenders may require first-time homebuyers to attend homeownership education classes to help them better understand the home buying process and their responsibilities as homeowners.
How To Buy A House in 2023 With A 500 Minimum Credit Score #credit #fha #badcredit #mortgage #howto
FAQ
What credit score do you need for a mobile home loan?
Who is the best lender for manufactured homes?
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Company
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Starting Interest Rate
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Loan Terms (range)
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Manufactured Nationwide Best Overall
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Varies
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15, 20, or 30 years
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ManufacturedHome.Loan Best for Good Credit
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Varies
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Varies
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21st Mortgage Corporation Best for Bad Credit
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Varies
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Varies
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eLend Best for Low Down Payment
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Varies
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Varies
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Why is it harder to get a loan for a manufactured home?
Can I buy a manufactured home with a 640 credit score?
Can I get a mobile home loan with bad credit?
Acorn Finance can help you secure a mobile home loan or financing solution even with bad or average credit, up to $100,000 for a brand new manufactured home. No matter what your reason is, let Acorn Finance assist you with zero hassle.
Can you get a loan for financing a mobile home?
If your mobile home is eligible for a mortgage, one option is a conventional mortgage. However, if your mobile home is classified as a vehicle or personal property, it may qualify for a personal loan. But personal loans may not provide as much financing and tend to have higher interest rates. Another option is a chattel mortgage.
How do I buy a mobile home with bad credit?
Explore Government Programs: Research government programs specifically designed to assist individuals with bad credit in obtaining financing for manufactured homes. These programs may offer more flexible terms and requirements. Showcase Your Mobile Home’s Value: Highlight the value, condition, and features of the mobile home you plan to purchase.
Can I buy a mobile home with a low credit score?
At Home Nation, customers with credit scores as low as 580 can apply for FHA loans to buy a mobile home. However, these loans are not easily approved by lenders.