How To Get A Home Equity Loan On A Manufactured Home

Manufactured homes, also known as mobile homes, are a popular affordable housing option If you own the land your manufactured home sits on, you may be able to tap into your property’s equity with a home equity loan or line of credit

However, there are some unique requirements and challenges when using a manufactured home as collateral for a home equity loan. In this guide, we’ll explain everything you need to know, including:

• What criteria your manufactured home must meet
• How the de-titling process works
• Where to find lenders willing to approve loans
• Tips for getting the best home equity loan rates
• Alternatives if you don’t qualify for a traditional home equity loan

Follow along to learn what it takes to unlock equity in your manufactured home.

Can You Get a Home Equity Loan on a Manufactured Home?

You can get a home equity loan on a manufactured home, but only if it meets strict criteria. According to U.S. Bank, the leading requirements are:

• The home must be affixed to a permanent foundation – It can’t be a mobile home still on wheels,

• You must own the land – The home can’t be located in a trailer park or rented lot where you don’t have the land title.

• The home must be “de-titled” – This combines the home and land titles into one real estate title, rather than separate vehicle and land titles.

Additionally, the manufactured home must meet any size, age, quality and zoning requirements set by the lender. Provided you meet all the criteria, there are lenders willing to finance manufactured homes.

How Does Manufactured Home De-Titling Work?

The de-titling process legally joins your manufactured home and land into one property asset. Completing this process is key to unlocking your property’s equity.

Here are some important things to know about de-titling:

• The process varies by state – Each state has its own manufactured home de-titling procedures you must follow.

• It removes the vehicle title – This converts the home from a vehicle title to a standard real estate title.

• It may require inspections or appraisal – You may need to have the home inspected to ensure it meets local building codes. An appraisal helps determine the combined home/land value.

• Legal filings are required – You’ll complete paperwork to apply for a new unified property title with your county recorder’s office.

• There are costs involved – Expect to pay recording fees, title fees, appraisal costs and other expenses during the process.

Completing these steps makes your manufactured home much more like a regular site-built house in the eyes of lenders.

Where Can I Get a Home Equity Loan for a Manufactured Home?

Very few lenders are willing to finance manufactured homes. Large national banks like Chase, Wells Fargo and Bank of America generally won’t approve these loans.

According to members of the r/personalfinance subreddit, some lenders to consider include:

• Local credit unions, especially those familiar with manufactured homes already
• Small community banks rather than big banks
• Specialty lenders like Share of America and Cascade Loans
• Mortgage brokers who work with niche lenders
• State housing finance agencies – They may offer specialized loan programs

Working with a mortgage broker is often key. They have relationships with many lenders and can help find ones that fit your unique situation.

Expect the de-titling process to take 1-2 months. So give yourself plenty of time to explore options and apply.

What Credit Score is Needed?

As with traditional home equity loans, excellent credit opens up the most options and lowest rates. To qualify with most lenders, you’ll likely need:

• Minimum credit score of 660-680
• Low debt-to-income ratio (36% or less)
• Good payment history and credit mix

Bringing in a co-borrower with better credit can help you qualify if your score falls short. Offering a down payment or home equity can also offset credit weaknesses.

How Much Cash Can I Unlock from My Manufactured Home?

A general rule of thumb is you can borrow up to 85% of your home’s value minus what you owe on any existing mortgages.

For example:

• Appraised Home Value: $150,000
• Existing Mortgage Debt: $80,000
• 85% of $150,000 = $127,500
• $127,500 – $80,000 mortgage = $47,500 maximum home equity loan

Of course, each lender will determine your maximum loan amount based on your specific financial qualifications. Home equity loans typically range from $10,000 up to $200,000.

What Are Interest Rates on Manufactured Home Equity Loans?

Due to the higher lending risk, interest rates are often higher compared to traditional houses. According to Share of America, rates typically range from 5% to 9% for manufactured homes. This assumes you have good credit.

By shopping around and getting multiple quotes, you can find the most competitive rate for your situation. Online lenders sometimes offer lower rates than local banks.

Getting prequalified lets you check rates without a hard credit check. This helps you identify affordable loan offers before completing full applications.

What Are the Alternatives if I Don’t Qualify?

If you don’t qualify for a home equity loan on your manufactured home, you still have options:

Personal loan – An unsecured personal loan doesn’t use your home as collateral. While rates are higher, it’s easier to qualify if your credit is limited.

Home improvement loan – Some credit unions offer loans to upgrade manufactured homes but don’t tap home equity.

Purchase financing – If buying a manufactured home, explore seller-tied financing where the seller helps finance the purchase to make it affordable.

Credit cards – As a last resort, you can charge expenses on 0% intro APR credit cards if you have good enough credit.

Be sure to also check if you qualify for any special affordable housing programs offered in your state. For example, some states have funds to help homeowners make manufactured home repairs and improvements with low-rate financing.

5 Tips for Getting the Best Manufactured Home Equity Loan

Follow these tips to increase your chances of getting approved and snagging the lowest interest rate:

• Shop multiple lenders – Compare loan estimates from online lenders, banks, credit unions and brokers.

• Focus on local options – Nearby lenders are more likely to be familiar with manufactured home loans.

• Ask about down payments – Even 10-20% down can help offset risk factors.

• Highlight home upgrades – Recent upgrades like a new roof or renovations can increase appraisal value.

• Bring a co-borrower – Adding someone with better credit can help you qualify and get better loan terms.

Is a Home Equity Loan or Line of Credit Better?

You may be limited to a closed-end home equity loan rather than a home equity line of credit (HELOC) for a manufactured home. Most lenders don’t offer HELOCs on manufactured homes because they are riskier lines of credit.

With a home equity loan, you receive the full loan amount upfront as a lump sum. Your monthly principal and interest payments are fixed. This works well if you need money for a one-time cost like a home remodel or major purchase.

A HELOC gives you revolving access to your equity more like a credit card. You only pay interest on what you use. Lines of credit are riskier for lenders because you can keep using the credit up to your limit.

Overall, home equity loans tend to be easier to get approved for on a manufactured home. But some credit unions may offer both options.

Is a Manufactured Home Equity Loan Right for Me?

A manufactured home equity loan can provide affordable financing if you’ve built up equity. But make sure you understand the unique requirements and limitations when using a manufactured home as collateral.

Thoroughly researching different lenders, having good credit, and completing the de-titling process are key to success. With some persistence, you can likely find an equitable loan offer that fits your financial situation.