As the owner of a mobile home, you’re already well-aware that banks don’t value your property as highly as they would if it were a traditional home. This may be why you’re wondering about home equity: can I get a home equity loan on my mobile home?
It’s a great question. If you’ve kept up with maintenance on your mobile home and now you’re hoping to cash out (or you’re looking to snag a home equity product to remodel your double-wide), you might be exploring your different HELOC and home equity loan options.
Here are the top things you need to know about home equity and modular or manufactured homes.
Getting a home equity loan on a mobile home can be challenging, but it is possible if you meet certain requirements. As mobile homes are considered personal property instead of real estate, banks view these loans as riskier. However, some lenders specialize in mobile home loans and can provide financing if you qualify. Let’s discuss the key criteria for obtaining equity loans or lines of credit on a manufactured home.
What is a Mobile Home Equity Loan?
A home equity loan allows homeowners to borrow against the equity they have built up in their home It works like a second mortgage – you receive a lump sum of cash upfront and pay it back monthly at a fixed interest rate over a set repayment term
The loan amount is based on your available home equity, which is essentially the current market value of the home minus what you owe on your first mortgage. The more equity you have, the more you can potentially borrow with a home equity loan.
Challenges of Getting a Loan on a Mobile Home
Mobile or manufactured homes are built in factories and then transported to their site A key difference from traditional “stick built” homes is that mobile homes are technically classified as personal property rather than real estate.
This classification comes with some disadvantages when it comes to financing:
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Mobile homes tend to appreciate more slowly than site built homes, making it harder to build equity.
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They are viewed as more of a depreciating asset over time rather than an appreciating asset.
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Banks consider loans against mobile homes riskier due to their ability to be moved.
As a result, conventional mortgage lenders are usually reluctant to approve home equity loans for these properties. However, some specialized lenders are more flexible.
Requirements to Get Approved
While difficult, it is possible to get approved for a home equity loan on a mobile home if you meet certain requirements that lower the risk for lenders:
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The mobile home must be affixed to a permanent foundation. This makes the home less mobile and more of a permanent fixture, lowering risk.
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You must own the land the home sits on. The mobile home can’t be located in a rented mobile home park or community.
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The home should be a multi-section model at least 12 feet wide. Single-wide homes often don’t qualify.
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The mobile home should be newer construction, preferably within the last 20 years. Older homes are seen as more prone to depreciation.
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You need sufficient equity. Most lenders require at least 20% equity and will only lend up to 65-85% loan-to-value.
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Good credit is vital. Expect lenders to require a minimum credit score around 640 to 680. Higher is better.
Meeting these key criteria demonstrates to lenders that your mobile home is a stable asset that makes equity financing less risky.
Finding the Right Mobile Home Lender
Very few traditional banks and credit unions offer mobile home equity loans due to the risk and specialization required. Instead, you’ll have better luck with lenders that focus specifically on manufactured housing loans:
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Credit Human – Offers mobile home equity loans up to $25,000. Home must be multi-section and less than 20 years old.
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Cascade Loans – Provides home equity loans for triple, double, and single-wide mobile homes.
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White River Credit Union – Lends up to 80% loan-to-value on mobile homes. Home must meet their requirements.
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21st Mortgage – Has mobile home equity loan and refinance programs available.
Reputable direct lenders like these cater their loan products specifically to the unique needs of mobile homeowners. Be sure to confirm the lender’s eligibility criteria before applying.
Alternative Options to Get Financing
If you aren’t able to qualify for a home equity loan, here are a couple alternatives to consider:
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Personal loans – An unsecured personal loan up to $50,000 is easier to qualify for than a home equity loan. The money can be used for anything.
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Cash-out mortgage refinance – Refinancing your existing home loan could provide cash by rolling the equity into the new loan.
The Bottom Line
Getting approved for financing against a mobile or manufactured home can be more challenging than a conventional home. Make sure your property meets lenders’ requirements in terms of foundation, land ownership, home size, condition, and equity. Find a lender specializing in manufactured housing loans. While not easy, approval is possible in many cases with the right property and loan criteria.
You can’t be underwater on your mortgage.
The amount you owe on your mortgage can’t exceed the value of the home. In other words, you’ll need to have some equity in your home already. To figure out if you have equity in your home, you’ll need the following information:
- Your home’s market value. Note that this isn’t the amount you paid for your home, it’s the current value of your home — which is determined by the real estate market as a whole. To get a loose idea of the value of your home, type in your address and look at the estimates on Zillow or Trulia.
- The amount you still owe on your mortgage. Look at your amortization schedule to see how much, including fees like interest and PMI, you still owe on your mortgage.
Take the current value, subtract what you still owe, and this should give you a rough idea of your home equity. For example, if your property is valued at $60,000 and you owe $40,000, your home equity is around $20,000. This doesn’t mean you’ll be able to borrow a full $20,000, but it’s a starting point for estimating what you might be able to get.
You’ll need to own land.
If your rent a space at a mobile home park, you won’t be able to get a home equity product — even if you own your mobile home. Here’s why: Banks look at mobile homes as personal property (like a car) rather than real property (like a house). This means your mobile home will generally depreciate in value just like a new car does as soon as you drive it off the lot.
However, if you own the land where your mobile home is located, your land appreciates in value over time — meaning there should be enough value in your land and home combined to qualify for a home equity product.
About Home Equity Loans for Mobile Homes
FAQ
How does equity work on mobile homes?
Can you take a HELOC out on a mobile home?
Can a mobile home be used as collateral for a personal loan?
Can you do a cash out refinance on a manufactured home?
Can I get a home equity loan for a mobile home?
If you meet the home equity loan and HELOC requirements, specific lenders may be willing to work with you. If you obtained a mortgage for your mobile home, consider checking with your original lender to see whether it offers HELOCs or home equity loans for manufactured homes. We’ve researched three companies worth considering.
What are the requirements for a mobile home equity loan?
In most cases, the following requirements must be met before a mobile home equity loan or line of credit is approved: There must be equity in the home, meaning the first mortgage is no more than 80-90% of the home’s market value. The home must be double-wide or larger (in some cases, at least 600 square feet).
How do I get a manufactured home equity loan?
Here’s what you need to know about obtaining a manufactured home equity loan from traditional banks and credit unions: 1. Research and Contact: Start by researching local banks and credit unions that have experience with manufactured home loans.
Does M&T Bank offer home equity loans for mobile homes?
If you obtained a mortgage for your mobile home, consider checking with your original lender to see whether it offers HELOCs or home equity loans for manufactured homes. We’ve researched three companies worth considering. M&T Bank offers the M&T CHOICEquity line of credit.
How do I get equity financing for my mobile home?
In your search for equity financing for your manufactured or mobile home, start with an industry leader that is an expert in mobile home equity funding: Credit Human ( $25,000 maximum cash out; home must be multi-section, maximum age 20 years old; loan-to-value (LTV) of 65% ).
Can you get a home loan if you have a mobile home?
Lenders must comply with regulations stating that loans can’t be made for mobile homes built before 1976. So those with older homes won’t qualify for any type of lending. HELOCs and home equity loans rely on a critical factor for approval: your home’s equity.