Decoding Interest Rates on Mobile Home Loans in 2023

Mortgage rates on mobile homes are dependent on various factors, such as which mortgage option you get. Here is everything you need to know

For many prospective home buyers, breaking into the housing market remains out of reach. This is where mobile homes—also referred to as manufactured homes—can provide a more affordable and flexible alternative. After all, the average cost of a mobile home in the US was just under $88,000 at the end of 2022.

Mortgage rates on mobile homes depend on how much you put down as collateral, your home loan terms, and your FICO score. Mortgage rates can be anywhere from 4% and 24%.

To help you determine your mortgage rate, it is important to understand the definition of a mobile home and which home loans are available to you.

The definition for mobile home is determined by when it was constructed. Homes built in factories before June 15, 1976, are known as mobile homes. That was when the US Department of Housing and Urban Development (HUD) enacted the National Manufactured Housing Construction and Safety Standards Act.

The average cost of a mobile home is between $10,000 and $50,000. Key features of mobile homes include the following:

Purchasing a mobile home can be an affordable way to become a homeowner With lower price points than traditional site-built houses, mobile homes offer a path to homeownership for buyers on tighter budgets. However, financing a mobile home purchase comes with its own nuances One key factor to understand is interest rates on mobile home loans.

As you navigate options to finance your mobile home, interest rates should be a top priority. The rate not only impacts your monthly payments but also the total interest costs over the loan term. By evaluating current rate trends and strategies to find the best deal, you can make informed decisions when buying your mobile home.

How Interest Rates on Mobile Home Loans Work

Interest rates on loans for mobile homes can differ from traditional mortgages on site-built homes. Here are some key aspects to understand:

Risk-based pricing – Since mobile homes typically depreciate in value over time rather than appreciating, they are seen as riskier collateral by lenders. This leads many lenders to charge higher interest rates to offset the increased risk.
Shorter terms – Mobile home loans often have shorter repayment terms of 10, 15, or 20 years. Shorter terms mean less time to pay down principal, leading to higher monthly payments and overall interest costs.
Credit score impact – Having an excellent credit score in the 720+ range can help you qualify for the lowest rates But with scores below 660, you’ll likely pay a premium with rates 1% or more higher.
Down payment and LTV – Putting down a lower down payment results in a higher loan-to-value (LTV) ratio, which lenders perceive as more risky. That risk gets priced into your interest rate.
Loan type – Government-backed loans like FHA and VA programs tend to offer the most competitive interest rates. Conventional loans can have higher rates, while chattel loans and personal loans come with much higher rates.

Current Interest Rate Trends for Mobile Home Loans

In 2023, interest rates for mobile home loans range widely, from around 5% up to 15% or more depending on your exact loan program and credit profile.

Here’s a look at current rate ranges for common mobile home loan types:

Conventional loans – 6% to 9%
FHA loans – 5% to 7%
VA loans – 4.5% to 6%
USDA loans – 4.5% to 6.5%
Chattel loans – 8% to 15%
Personal loans – 10% to 18%

Government-backed mortgages like FHA, VA, and USDA loans have helped drive rates lower through their guarantees and lower fees. However, for borrowers with poor credit, these rates can still be much higher.

Meanwhile, chattel loans and personal loans should be seen as options of last resort given their double-digit rates in many cases.

Strategies for Getting the Lowest Interest Rate

When getting a mobile home loan, you want to pay as little interest as possible. Here are some tips to get the best rate:

Have excellent credit – Lenders offer prime rates only to borrowers with FICO credit scores above 720. Any scores below 700 will get higher rates.
Make a large down payment – Putting down 20% or more if you can will score the lowest rates. Even 10% down can make a difference versus 3% or 5% down.
Lower your DTI – Keeping your debt-to-income (DTI) ratio below 43% shows lenders you can manage monthly payments.
Choose government loans – Opt for FHA, VA or USDA loans if possible, before considering conventional loans.
Buy new – Financing a brand new mobile home versus a used one poses less risk to lenders.
Shop multiple lenders – Comparing loan offers from several lenders ensures you get the most competitive deal.

Following these tips sets you up for success in securing the most favorable interest rate possible.

Loan Programs and Interest Rates

Now let’s take a detailed look at some of the most common mobile home loan programs and their typical interest rates:

FHA Loans

FHA loans are popular for mobile homes because they require just 3.5% down and have flexible credit standards. Rates range from:

5% to 6% for scores above 680
6% to 7% for scores between 620 and 679
Over 7% for scores below 620

FHA also limits upfront mortgage insurance premiums to 1.75% of the loan amount. Overall, FHA loans offer competitive rates to borrowers who may not qualify for prime conventional loans.

VA Loans

For qualifying veterans and service members, VA loans can be a great option with no down payment requirement and no monthly mortgage insurance. Interest rates are:

Around 5% for borrowers with scores above 720
5.25% to 5.75% for scores between 660 and 719
Above 6% for scores under 660

VA loans charge a one-time funding fee instead of mortgage insurance. With approval, buyers can lock in very low rates.

USDA Loans

In eligible rural areas, buyers with low to moderate incomes can get a USDA home loan with no down payment required. USDA loans offer:

Rates as low as 4.5% for excellent credit
5% to 6% for good credit
Above 6.5% for scores below 640

The big advantage is becoming a homeowner with 100% financing. But availability is limited based on location and income caps.

Conventional Loans

Programs like Freddie Mac’s CHOICEHome mortgage allow borrowers to qualify for a conventional loan with just 3% down. However, you’ll need good credit to get favorable rates:

6% to 7% for scores above 740
7% to 8% for scores between 720 and 739
Above 8% for scores below 720

Conventional loans charge private mortgage insurance (PMI) instead of FHA mortgage insurance. Overall, conventional loans offer lower rates for buyers with prime credit profiles.

Chattel Loans

With chattel loans, the mobile home itself serves as collateral for the loan, instead of the land it sits on. Rates are often much higher than mortgages:

Around 10% for excellent credit
12% to 14% for good credit
Above 14% for scores below 640

Chattel loans get approved easily but are expensive. Buyers should exhaust mortgage options first before resorting to this type of financing.

Personal Loans

Unsecured personal loans represent the most expensive way to finance a mobile home purchase. Typical rates look like:

10% to 12% for great credit
14% to 16% for good credit
Over 18% for poor credit

While personal loan lenders don’t look at the value of the home, they charge higher rates due to the increased default risk of unsecured financing.

Should You Choose a Fixed or Adjustable Interest Rate?

When shopping for a mobile home loan, you’ll also decide between a fixed or adjustable interest rate. Here are key factors to weigh:

Fixed-rate loans keep your interest rate locked in for the full loan repayment term. Your principal and interest payment stay the same each month.

Adjustable-rate mortgages (ARMs) start with an initial fixed period, usually 5 or 7 years. After that, your rate can fluctuate up or down based on market indexes.

Fixed rates provide stability and predictable payments but may have higher initial rates.
ARMs offer lower starting rates but eventually expose you to the risk of rising rates and payments.

If you plan on staying in your mobile home more than 5 to 7 years, a fixed rate often makes sense for peace of mind. Just be sure to compare initial fixed rates and ARM rates across multiple lenders.

Finding the Best Interest Rate on Your Mobile Home Loan

The key to getting the lowest rate is a combination of factors – having a strong credit profile, putting down an ample down payment if possible, minimizing your DTI, and shopping different loan programs and lenders to compare offers.

Be sure to get multiple quotes, as rates and fees can vary greatly from one mortgage company to another. Meeting with a broker who has access to multiple lenders is a smart way to cast a wider net during your rate search.

While financing a mobile home purchase presents its own challenges, understanding current rate trends and being a savvy borrower can put you in position to secure the most favorable interest rate possible. This helps maximize savings over your loan repayment period.

Mortgage rates on mobile homes: Current interest rates

As with any home loan, mobile home mortgage rates vary based on several factors. Some of these factors depend on the wider economy. Others are based on factors under your control such as your credit score, downpayment amount, and type of home. Whether you are buying the land will also affect the amount you pay.

After deciding on your mobile home’s features and where you want to place it, you will have to determine how to pay for it. When financing a mobile home, there are some options to consider.

You can, for instance, get a home loan from the same sources as traditional mortgage, like FHA loans and VA loans. You can also seek out specialized manufactured home loans through Fannie Mae and Freddie Mac.

Some of these mobile home financing options give you longer repayment terms. If you take a less traditional path—chattel or personal loans—you may get a shorter term, depending on your situation. Let’s look at the different mortgage options for mobile homes:

FHA loans
Fannie Mae
Freddie Mac
VA loans
Chattel loans
Personal loans

Here is a closer look at each:

HUD offers mobile home loans through the FHA, or the Federal Housing Administration, loan program. This program includes Title I and Title II loans.

This home loan can be used to finance the purchase of a new or used manufactured home and refinance a manufactured home purchase, among others. It can also be used for a combination purchase of both the home itself and the lot. You can use these funds to repair, alter, or improve a manufactured home.

This loan program insures loans that you can use to finance a qualifying manufactured home and the land, if you meet certain requirements. For instance, a Title II loan can be used if you live in the manufactured home as your primary residence. Title II loans cannot be used for manufactured homes on leased land in mobile home parks or manufactured home communities.

To qualify for the Fannie Mae MH Advantage program, you must meet certain construction, architectural design, and energy efficiency standards, similar to site-built homes. These home loans come with 30-year financing. You might also be able to secure them with a down payment as low as 3%. And compared to most traditional loans for manufactured homes, interest rates on MH Advantage mortgages are usually lower.

Freddie Mac offers conventional financing for manufactured homes through its Home Possible mortgage program.

One option you have here is a fixed-rate mortgage of either 15, 20, or 30 years.

Another option is a 7/6 or 10/6 adjustable-rate mortgage.

You might also be able to secure a home loan with as little as a 3% down payment. In some cases, you may be able to use a gift or grant money to help you cover your down payment.

If you are part of a military community, you might qualify for a VA loan. This is a loan insured by the Department of Veterans Affairs.

You can get a VA loan to purchase a manufactured home and put it on land you already own.

Other options include buying the home and land at the same time or refinancing a home you plan to transport to land you own. Lenders typically offer up to 100% financing on manufactured home loans if you meet certain requirements.

This is a special type of personal property loan you can use to buy a mobile home. These loans are designed for financing costly vehicles such as boats, planes, farm equipment, and, yes, mobile homes, where the property guarantees the loan. You do not have to own the land that your home will be on. This is another reason why chattel loans are a popular option for home buyers who want to rent a lot in a manufactured home community.

Because mobile homes are considerably cheaper than traditional properties, you might be able to finance your mobile home purchase through a personal loan. They are also quite flexible.

But be careful: interest rates on personal loans tend to be considerably higher than other loan types like auto loans or mortgages. The upside is that you will not have to provide collateral, meaning you will not lose your home if you default. The application process also tends to be shorter.

While it depends on the terms you can secure, most mobile home loans have a maximum repayment term of 20 years (for single-wide home and lot).

The average credit score needed to buy a mobile home is between 620 and 680. In fact, most mortgage lenders require a minimum credit score of 580 to 620 to purchase a mobile home. Most of the time, 580 is the minimum credit score for manufactured home loans. However, you may still be able to get financing with a special program and lower score, although these often require a larger down payment.

Typically, mobile homes built after 1976 can be financed. To meet mortgage lending guidelines, manufactured homes must have HUD tags. These tags are certifications stating that the manufacturer has complied with safety standards created by the HUD.

The HUD tags came into law on June 15, 1976. While HUD is the only agency that has this requirement, most lenders also follow the HUD guideline.

Before the law in 1976, manufactured homes were prone to safety issues such as wiring and electrical problems that could cause home fires.

Financing a Manufactured Home: What you need to know

FAQ

Why are mortgage rates higher for mobile homes?

Larger mobile homes, while offering more space, often incur higher maintenance and utility costs, which could affect the borrower’s overall financial stability. Lenders take these operational costs into account when determining the risk and the corresponding mortgage rate.

How long are most mobile home loans for?

Type of loan	Average rates	Typical terms
Fannie Mae	Varies	Up to 30 years
Freddie Mac	Varies	Up to 30 years
Chattel	7.60%	Up to 20 years
Personal	11.53%	Up to 84 months

Who is the best lender for manufactured homes?

Company	Starting Interest Rate	Loan Terms (range)
Manufactured Nationwide Best Overall	Varies	15, 20, or 30 years
ManufacturedHome.Loan Best for Good Credit	Varies	Varies
21st Mortgage Corporation Best for Bad Credit	Varies	Varies
eLend Best for Low Down Payment	Varies	Varies

Is a mobile home loan the same as a mortgage?

A borrower can use a chattel loan to purchase different kinds of personal property, including cars, boats and mobile homes. These loans typically have a shorter term and lower loan limit than a traditional mortgage, but the application process for a chattel loan tends to be easier.

Can you get a mortgage on a mobile home?

Yes, many banks and credit unions finance mobile homes on land. These are usually considered real property loans. Some government-backed loan programs, like FHA Title II loans and certain VA loans, also allow for the financing of mobile homes along with the land they sit on. Can you get a mortgage on a manufactured home?

Can I get a loan for an older mobile home?

Yes, it is possible to get a loan for an older mobile home.However, it can be challenging to find a lender who is willing to finance a mobile home that was built before 1976.To qualify for a mortgage,

Can you finance a mobile home with a conventional mortgage?

If you want to finance a manufactured home, a conventional mortgage is one of many options, including a: Personal loan. If your mobile home is classified as a vehicle or personal property, then it qualifies for a personal loan. But personal loans may not provide as much financing and tend to have higher interest rates.

Which mortgage company is best for mobile homes?

21st Mortgage Corporation is best for mobile homes in a community or park, Amerisave is best for fast approval, and Caliber Home Loans is best for veterans. Mobile homes may be more affordable than traditional homes, but purchasing one still often requires a loan. However, the types of mobile home loans offered by each lender may vary.