Purchasing a used mobile home can be an affordable way to become a homeowner. But securing financing for a pre-owned manufactured home does require some extra planning compared to financing a site-built house.
In this comprehensive guide, we’ll explore the unique considerations around getting loans for used mobile homes and review the financing options available in 2023
Overview of Loans for Used Mobile Homes
Used mobile homes, sometimes called “pre-owned manufactured homes”, refer to factory-built residential units that were previously lived in by other owners. These can range from older mobile homes built before 1976 to newer manufactured houses produced after the US Department of Housing and Urban Development implemented enhanced quality standards.
Financing the purchase of a used mobile home involves assessing factors like:
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The home’s age and condition – Older or poorly maintained units could have higher repair costs and less financing availability. Newer models in good shape generally have more options.
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Land ownership – Loans are easier to obtain if you own the land the home sits on versus leasing a lot
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Mobility – Homes still on axles/wheels are usually considered personal property unless modifications are made to anchor them.
While traditional mortgages are limited for used mobile homes, there are several tailored financing solutions to consider:
- FHA Title I and Title II loans
- VA loans
- USDA loans
- Land-home financing
- Personal loans
- Home equity loans
Interest rates and fees vary considerably between programs and lenders. Shopping around is key to finding the best used mobile home loan for your specific situation.
Factors That Affect Financing Eligibility
When applying for loans for used mobile homes, several factors determine what financing offers you may qualify for and their potential costs:
Age of the Used Mobile Home
- Homes built after June 15, 1976 must comply with HUD manufactured housing construction and safety standards. This can make financing easier to obtain.
- Pre-1976 units lack these standards, making loans harder to find. Specialty lenders may offer financing but will assess the home’s current condition.
- Ideally, opt for used units 10-15 years old or newer when feasible. Avoid older models that may need serious repairs.
Physical Condition
- Lenders need to mitigate risk when financing used mobile homes. Units in good shape pose less risk.
- Inspect the electrical systems, appliances, plumbing, roof, weather sealing, and overall structural integrity.
- Cosmetic fixes like flooring and cabinets are easy. But issues like moisture damage or roof leaks can be dealbreakers.
Mileage on the Home
- Some used mobile homes were moved frequently between parks, adding wear and tear.
- Lower-mileage units likely endured less structural stress over time.
- Ask for maintenance records and an inspection before committing. High mileage raises financing concerns.
Land Ownership Status
- Financing is easier when you own the land the home sits on. The land and home can be financed together.
- Leasing a lot in a mobile home park limits financing options. Not all lenders will offer loans without land ownership.
Mobility Status
- Homes still on wheels with axles attached are considered personal property and don’t qualify for mortgages.
- Removing axles/wheels and anchoring the home to a foundation on owned land makes financing more viable.
As you can see, carefully evaluating the used mobile home itself – along with clarifying the land ownership situation – is imperative for getting approved for affordable financing.
Financing Programs for Used Mobile Homes
While limited, there are financing options tailored to the purchase of used mobile homes. Let’s look at the key details of the main programs available.
FHA Title I Loans
FHA Title I loans provide financing for just the used mobile home itself when located on leased land in a mobile home park.
Key Features:
- Low down payments, as low as 3.5%
- Extended loan terms up to 20 years
- Can be used to purchase and/or make improvements
- Credit score requirements as low as 580
Title I downsides include stricter loan limits and potentially higher interest rates. Loan amounts max out at $25,090 but have gone as high as $69,678 in certain counties.
These FHA-insured loans provide affordable financing for used mobile homes that may not qualify for traditional mortgages. Just be sure to verify the loan limits in your county.
FHA Title II Loans
FHA Title II loans let you finance both the used mobile home and land together as real estate. But there are requirements:
- The home must have been built after 1976 when HUD implemented manufacturing standards.
- The used home must be attached to a permanent foundation on land that you own.
Provided those conditions are met, Title II has benefits like:
- Low down payments as little as 3.5%
- Competitive interest rates
- Access to 30-year fixed rate mortgages
For buyers wanting to own the home and land, FHA Title II loans offer a great financing solution if you find a used mobile home that meets the age and foundation criteria.
VA Loans
For qualifying veterans and service members, VA loans provide 100% financing with no down payment required to purchase a used mobile home with land.
VA loans have easy credit and income requirements. But the used home must be built after 1976 and be placed on a permanent foundation attached to owned land. These stipulations match the FHA’s criteria.
If you or your spouse served and want to buy a used mobile home and land together, definitely consider a VA purchase loan for your needs.
USDA Loans
For low to moderate income buyers in suburban and rural locations, USDA home loans allow for financing used manufactured homes.
USDA loans offer affordable options like:
- 100% financing available, no down payment required
- Fixed rates on 30-year mortgages
- Lower credit score requirements, as low as 640
Like FHA and VA loans, used mobile homes must follow HUD’s construction standards post-1976 and be permanently affixed on a foundation you own. Not all areas qualify for USDA loans but it’s worth exploring if you meet the requirements.
Personal Loans
Personal lending companies like credit unions, banks, and online lenders provide loans on a variety of terms. With personal loans:
- Loan approval is based on your credit score and income, not the used home.
- Can be used to purchase a used mobile home only or a home with land.
- Offer quicker financing than mortgages – approval in days or weeks.
The downsides of personal loans include higher interest rates and large origination fees of around 5-6%. But for buyers unable to qualify for traditional mortgages, personal lending does offer a financing path forward.
Home Equity Financing
If you currently own a home, tapping into your existing home equity can provide funds to pay cash for a used mobile home. Options like cash-out refinancing or home equity loans allow you to access your equity.
Benefits of using home equity include:
- Typically lower interest rates than other financing options
- Ability to keep your first mortgage intact
- Potentially tax-deductible (consult a tax pro)
Just keep in mind that home equity loans put your property at risk if you default. Evaluate the costs and risks before making any decision.
Tips for Getting the Best Used Mobile Home Loan
Used mobile homes occupy a tricky space in the lending world. But with the right approach, financing is possible. Here are tips to follow:
- Compare multiple lenders to find the lowest rates/fees that fit your financial situation.
- For the used home, examine age, mileage, maintenance records, and inspection reports.
- Clarify land ownership status – it plays a big role in financing eligibility.
- Make any needed mobility modifications by removing axles/wheels and anchoring the unit.
- Consider financing both home and land together for better loan terms.
- Improve your credit score and debt-to-income ratio to boost chances for approval.
- Consider using an experienced loan officer familiar with financing used mobile homes.
Banks that finance mobile homes with land
Specialized mobile home lenders often provide financing options that traditional banks might not offer. These lenders are familiar with the unique challenges of mobile home financing. Here are some examples of banks that finance mobile homes with and without land.
- New Horizon Mortgage Concepts specifically advertises financing for mobile homes built before June 15, 1976. They provide both purchase loans and cash-out refinancing options.
- C&S California Capital also finances pre-HUD mobile homes (those built before 1976). They offer a range of financing options, including fixed and step rate programs, refinancing up to 90% of the home’s value, and cash-out refinancing. Their services include financing for homes located in parks, which do not require the home to be on owned land.
- Cascade Financial Services offers chattel loans for homes that are not permanently affixed to real estate, making it a suitable option if you’re considering a mobile home in a park or leased land scenario.
- CIS Home Loans provides chattel loans, known as “home only loans,” for all types of homes, including modular homes and manufactured homes.
- CountryPlace Mortgage offers a variety of financing options, including chattel loans.
- JCF Lending Group specializes in mobile home financing and refinancing without involving the land in the transaction, making them a good option for chattel loans.
- 21st Mortgage Corporation provides chattel loans with potentially no down payment required for qualified buyers.
Make sure to contact these lenders directly or visit their websites for the most accurate and detailed information about their loan offerings and eligibility criteria.
Mobile home financing options
When it comes to financing a mobile home, it’s important to note that conventional loans backed by Fannie Mae and Freddie Mac are not available for true mobile homes. Similarly, government-backed mortgages, such as FHA loans, VA loans, and USDA loans, do not extend to mobile home financing.
However, don’t be discouraged! There are still several financing options available for those looking to purchase a mobile home. From chattel loans, personal loans, and even seller financing, you have choices when it comes to making your mobile home dream a reality, whether it’s a new home or a pre-owned one.
Chattel loans are a popular option for financing mobile homes, particularly when the home is not permanently affixed to land. These loans treat the mobile home as personal property, similar to a car loan. While chattel loans typically have shorter terms (15–20 years) and higher interest rates compared to traditional mortgages, they offer some unique benefits.
One advantage of chattel loans is that they are not subject to the same rules and regulations as traditional mortgages for single family homes. This means that borrowers may have more flexibility in terms of how they use their mobile home, whether it’s as a primary residence, a vacation home, or even a rental property.
Additionally, chattel loans do not require borrowers to pay mortgage insurance, which is often a requirement for traditional mortgages when the down payment is less than 20%. This can result in lower monthly payments, even with higher interest rates.
However, it’s important to keep in mind that chattel loans may have a lower maximum loan amount compared to other financing options, and the higher interest rates can result in paying more interest over the life of the loan.
Despite these potential drawbacks, chattel loans remain a viable and popular option for many mobile home buyers. They can be easier to qualify for and may have lower closing costs, making them an attractive choice for those who may not meet the requirements for traditional mortgages.
Personal loans can be a viable option for financing a mobile home, especially if you have good credit. These loans are unsecured, meaning they don’t require collateral, and they can be used for a variety of purposes.
Personal loan terms usually range from 1 to 7 years, and interest rates can be higher than mortgage rates. However, personal loans can provide a flexible financing solution for those who may not qualify for other types of loans.
In some cases, the seller of a mobile home may be willing to offer financing directly to the buyer. This is known as seller financing or owner financing. Under this arrangement, the seller acts as the lender, and the buyer makes payments directly to the seller.
Seller financing can be a good option if you have difficulty qualifying for other types of loans, but be sure to carefully review the terms and conditions of the agreement.
Remember, while mobile home financing may require some extra research and effort, there are still plenty of options available. Work with lenders who specialize in mobile home loans and be open to exploring alternative financing solutions. With persistence and the right guidance, you can secure the financing you need to make your mobile home ownership dreams a reality.
Financing a Manufactured Home: What you need to know
FAQ
What is the oldest mobile home that can be financed?
Will an FHA loan cover a manufactured home?
Who is the best lender for manufactured homes?
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Company
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Starting Interest Rate
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Loan Terms (range)
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Manufactured Nationwide Best Overall
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Varies
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15, 20, or 30 years
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ManufacturedHome.Loan Best for Good Credit
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Varies
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Varies
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21st Mortgage Corporation Best for Bad Credit
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Varies
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Varies
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eLend Best for Low Down Payment
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Varies
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Varies
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What is the loan term for a mobile home?
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?
How do I get a mobile or manufactured home loan?
There are also mortgage lenders that specialize in mobile and manufactured home financing. The most straightforward solution, though, is to go through a standard mortgage lender that offers the loan you’re looking for. What Is The Minimum Credit Score Needed For A Mobile Or Manufactured Home Loan?
What types of mobile home loans does the FHA offer?
The FHA offers two types of mobile home loans: Title I and Title II. The FHA Title I program is designed for the purchase or refinance of a home or a lot. Pfaff notes that the amount you can borrow under the Title I program is determined by use: The limit for a manufactured home is $69,678. The limit for a manufactured home lot is $23,226.
What are the different types of manufactured home loans?
When it comes to manufactured home mortgages, the Federal Housing Administration (FHA) provides two main loan options: Title I and Title II loans. These loan programs offer borrower-friendly terms, making them appealing choices, especially for first-time home buyers.