do va loans cover manufactured homes

Do VA Loans Cover Manufactured Homes? Everything You Need To Know

Manufactured homes have become an increasingly popular option for homebuyers looking for an affordable way to achieve homeownership. If you’re a veteran or military member considering a manufactured home purchase, you may be wondering if you can use your VA home loan benefit to finance this type of property.

The short answer is yes VA loans can be used to purchase certain manufactured homes. However there are some specific requirements and guidelines to be aware of. In this comprehensive guide, we’ll cover everything you need to know about using a VA loan to buy a manufactured home.

What is a Manufactured Home?

First, let’s clarify exactly what constitutes a manufactured home. Manufactured homes are built entirely in a factory in sections, then transported to the home site where they are joined together.

They used to be known as “mobile homes” but are now referred to as manufactured homes after 1976 when the Department of Housing and Urban Development (HUD) established a new set of construction and safety standards for this type of housing.

Manufactured homes meeting HUD standards after 1976 can qualify for VA loan financing, while mobile homes built before 1976 typically cannot be financed with a mortgage. Modular homes are slightly different in that they are also factory built in sections but must meet local building codes rather than federal HUD standards.

Key Benefits of Using a VA Loan for a Manufactured Home

There are several advantages to financing a manufactured home with a VA loan rather than other types of mortgages:

• Requires no downpayment in most cases
• Typically offers lower interest rates compared to conventional loans
• No monthly mortgage insurance premiums
• Ability to roll closing costs into the loan amount
• More flexible credit guidelines than conventional loans

These benefits make VA loans one of the best financing options for eligible borrowers looking to buy a manufactured home.

VA Requirements for Manufactured Housing

While VA loans can be used for manufactured housing, there are certain requirements the property must meet to be eligible:

• Home was built in 1976 or later and has a HUD tag/label certifying it meets codes
• Home must be classified as real estate (not personal property)
• Home must be attached permanently to a foundation
• Minimum of 700 square feet of living space
• Must meet VA minimum property standards for safety/soundness

The home cannot have been previously installed or occupied at any other site. VA loans can also be used to purchase and install a new manufactured home on land you already own.

VA Loans for Mobile Homes

VA loans cannot be used to purchase mobile homes, which are those built prior to 1976 when HUD manufacturing standards were established. Mobile homes are considered too high risk for mortgage lenders and do not qualify for financing.

If you’re interested in buying a mobile home rather than a HUD code manufactured house, you’ll need to explore other options like chattel loans, personal loans or paying cash.

What Do VA Lenders Look For?

When underwriting a VA loan for a manufactured home, lenders will evaluate the following:

• The age of the home – needs to be 1976 or newer
• Evidence of a HUD tag/compliance with codes
• Permanent foundation and proper installation
• Home is classified as real estate, not personal property
• Appraisal determines the home meets VA minimum property requirements
• Borrower meets VA eligibility and credit standards

Lenders will also require a foundation certification from an engineer or architect along with photos documenting proper foundation and installation.

VA Loan Terms for Manufactured Housing

VA loans for manufactured housing come with the same terms and conditions as loans for traditional site-built homes:

• Loan terms up to 30 years
• No limit on loan amount (based on home value)
• Requires a VA funding fee (can be rolled into loan)
• No monthly mortgage insurance premiums
• No prepayment penalties

Maximum loan amounts are based on the home’s appraised value, the same as site-built housing. VA does not impose any cap on the dollar amount you can borrow.

Using a VA Cash-Out Refi to Purchase Land

One strategy for financing the purchase of land to install a manufactured home is using a VA cash-out refinance if you have an existing home to tap equity from.

The cash-out proceeds can be used to buy the land, then you obtain a separate construction loan to handle the actual manufactured home purchase and installation on the newly acquired lot.

Once the home is installed, you can do a second VA refinance to pay off the construction loan and end up with just the permanent VA mortgage on the manufactured property.

How to Find a Lender That Offers VA Loans on Manufactured Homes

Not every mortgage lender offers VA loans on manufactured housing. Some banks, credit unions and lenders have more restrictive policies when it comes to manufactured homes. Veterans United, however, is one of the top VA lenders in the nation and does provide financing for HUD code manufactured housing that meets VA guidelines.

To initiate the process, you can get pre-qualified online or by phone with one of their VA loan specialists. They can guide you through VA’s manufactured home requirements and answer any questions you have about the process.

Alternatives to VA Loans for Manufactured Housing

If for some reason you do not qualify for a VA loan, there are alternative financing options for manufactured home buyers including:

• FHA loans – Require a 3.5% downpayment and allow older manufactured homes.
• Conventional loans – Typically require a higher credit score/downpayment than VA loans.
• USDA loans – For low income borrowers in rural locations, offers 100% financing.
• Personal loans – Higher rates but can be easier to qualify for than mortgages.

Chattel loans are simpler, shorter-term loans for purchasers of mobile homes rather than newer manufactured houses.

Manufactured housing can be an affordable way for veterans and military members to break into homeownership. VA loans can provide 100% financing for manufactured homes built after 1976 that meet HUD standards and VA guidelines.

Veterans United is a top VA lender that helps eligible borrowers use their VA loan benefit to buy manufactured housing. By understanding the requirements and lending process, you can successfully tap into your VA entitlement to purchase a quality manufactured home.

Frequency of Entities:
manufactured homes – 31
VA loans – 18
VA loan – 12
manufactured home – 11
HUD – 7
Veterans United – 5
VA – 5
mobile homes – 4
Department of Housing and Urban Development – 2
VA guidelines – 2
manufactured housing – 2