Can You Get a Mobile Home with a VA Loan? A Detailed Guide

Buying a home is one of the biggest financial decisions many people will make in their lifetime. With home prices continuing to rise across the country, affordable housing has become more difficult for some to obtain. This is especially true for veterans and military members who move frequently and may have unique home buying needs.

One potential affordable housing solution that is sometimes overlooked is buying a mobile or manufactured home These factory-built homes can provide quality housing at a fraction of the cost of site-built homes in some markets But can veterans and military members use their VA home loan benefit to buy a mobile or manufactured home?

In this detailed guide, we will cover:

• What are the differences between mobile, manufactured, and modular homes?
• Requirements to qualify for a VA loan on a manufactured home
• Maximum VA loan terms and amounts on manufactured homes
• The benefits of using a VA loan for a manufactured home
• Why VA loans don’t allow true mobile homes
• Other financing options for mobile and manufactured homes

Distinguishing Mobile, Manufactured, and Modular Homes

First, it’s important to understand the key differences between mobile homes, manufactured homes, and modular homes as they relate to financing options.

Mobile homes were built prior to June 15, 1976 when the federal Manufactured Home Construction and Safety Standards went into effect They are built on a chassis with axles and wheels underneath and are technically classified as personal property, not real estate

Manufactured homes are built to the federal construction and safety standards enacted on June 15, 1976 They are transported to the site and installed on permanent foundations. The homes are classified as real property like traditional site-built homes.

Modular homes are also built in a factory in sections but not on a permanent chassis. They are transported to the site and assembled on a permanent foundation. Modular homes must meet all local building codes and are classified as real estate.

The key point is that VA loans can only be used to purchase manufactured homes built after June 1976 that will be permanently affixed to a foundation and classified as real estate. Mobile homes built before the federal standards do not qualify.

Requirements to Qualify for a VA Manufactured Home Loan

While the VA guarantees loans for qualifying manufactured homes, lenders have additional requirements you must meet. Here are some common standards:

• The home must be classified as real property, not personal property. It must be affixed to a permanent foundation.
• The land where the home will be placed must be classified as a real estate entity under state law and meet local zoning requirements.
• The home must have an HUD tag certifying it meets the federal manufactured home construction and safety standards.
• The home must meet the VA’s minimum property requirements for safety, sanitation, and structural integrity. Repairs may be required.
• Single-wide homes must have a minimum of 400 sq ft of floor space. Double-wide homes must have at least 700 sq ft.
• You must have a VA eligibility certificate proving your service meets requirements.
• Your credit score meets the lender’s minimum, often around 620.
• Your debt-to-income ratio generally can’t exceed 41% under VA guidelines.
• You must pay the VA funding fee, typically 2-3% of the loan amount. Some exceptions apply.

As you can see, the property itself must meet certain standards related to its construction, foundation, and title classification. Borrowers must also prove their eligibility and creditworthiness like any mortgage loan.

Maximum Loan Terms and Amounts on VA Manufactured Home Loans

VA mortgages on manufactured homes generally follow the same terms and standards as loans on traditional site-built homes. Here are some key points on the terms:

• The maximum loan term is 30 years and 32 days. This is the same as other VA loans.
• VA loans do not have a maximum conforming loan limit like conventional loans. You can qualify for the full appraised value of the home.
• You can roll the VA funding fee into the loan amount instead of paying it upfront if you wish.
• Interest rates are very competitive, either equal to or lower than conventional loans in most cases. This makes it a very affordable option.

The maximum loan amount you can qualify for depends on several factors:

• If you already own the land where the home will be placed, the loan generally covers just the home purchase price and eligible loan costs.
• If you are purchasing the land as well, the loan amount can include both the home and land purchase prices plus loan costs.
• Cash-out refinancing is possible depending on lender policies. This can allow you to tap equity to purchase the land if needed.

Overall the terms are quite flexible. Be sure to discuss the maximum loan amount with your lender based on your specific situation.

The Benefits of Using a VA Loan for a Manufactured Home

VA loans provide several advantages if you’re eligible and buying a qualifying manufactured home:

• No down payment required – This helps greatly improve affordability and lower your upfront costs.

• No monthly mortgage insurance – Avoid this extra cost that adds to your payments on conventional loans.

• Competitive interest rates – VA loan rates are very competitive, helping keep your monthly payments low.

• Loans up to the full appraised value – Take advantage of your full available financing power.

• Can include land purchase – Buy just the home or home and land together in one loan.

Using your well-earned VA loan benefit can make buying a quality manufactured home much more affordable.

Why VA Loans Don’t Allow True Mobile Homes

Given the benefits, you may wonder why VA loans cannot be used to purchase mobile homes built before the June 15, 1976 federal standards took effect. There are a few reasons why this is the case:

• Mobile homes are technically classified as personal property, not real estate. They do not meet the VA’s permanent foundation and real property classification requirements.

• They were built before uniform federal construction standards were in place, so quality can be inconsistent. This makes them riskier collateral.

• Mobile homes depreciate rapidly compared to manufactured homes and site-built homes. This also increases lending risk.

• They can be difficult to accurately value since there are fewer quality comps available.

• Certain states have laws restricting mortgage loans on mobile homes.

For these reasons, the VA and most lenders consider mobile homes to be unsuitable collateral for traditional mortgage financing. But alternate options exist.

Other Financing Options for Mobile and Manufactured Homes

If you can’t use a VA loan, here are some other potential financing options to consider:

Conventional Loans – Some lenders like Rocket Mortgage may offer conventional loans on qualifying new manufactured homes. These typically require 5-20% down and have more limited terms.

FHA Loans – The FHA insures loans on certain manufactured homes and can be easier to qualify for than conventional loans. They require at least 3.5% down.

USDA Loans – For homes in designated rural areas, USDA-guaranteed loans are available with 100% financing. Income limits apply.

Chattel Loans – Also known as personal property loans, these loans used for mobile homes often have higher rates and shorter terms. The home itself secures the loan.

Personal Loans – An unsecured personal loan from a bank can provide funds for a mobile home purchase. Rates are usually higher with a shorter repayment term.

Don’t let the loan restrictions on true mobile homes deter you. With a bit of research, you can often find lending solutions to buy the affordable housing option that best fits your needs and budget.

The Bottom Line

The bottom line is that yes, veterans and military members can use their VA home loan benefit to buy a quality manufactured home that meets certain requirements. Taking advantage of VA financing can make your dream of affordable homeownership a reality.

Just be sure the home was built after the 1976 HUD standards took effect, will be permanently fixed on a foundation, and is legally classified as real estate. And know that true mobile homes are restricted when it comes to VA and conventional mortgage loans, but alternatives like chattel loans or personal loans may be available.