How to Finance Manufactured Home Improvements

As a manufactured homeowner, improving your property helps increase its value and livability. However, financing major renovations can be challenging due to the unique nature of manufactured housing loans. Thankfully, with the right approach, you can access affordable financing options to make your manufactured home renovation dreams a reality.

Why Improve Your Manufactured Home?

Investing in home improvements provides many benefits

• Increased home value – Remodeling and renovations can significantly increase your home’s resale value. This gives you more equity when selling.

• Improved livability – Upgrades like adding extra rooms, remodeling kitchens and bathrooms, replacing floors and fixtures, and upgrading HVAC systems make the home more comfortable and functional.

• Lower utility bills – Energy efficient upgrades like new windows, added insulation, and high-efficiency appliances save on monthly energy costs

• Customization – Remodeling lets you put your unique stamp on the home and make it your own.

• Pride of ownership – Fixing up your manufactured home can instill pride and allow you to enjoy the process and results.

Unique Financing Challenges for Manufactured Homes

When it comes to financing home improvements, manufactured homeowners face some unique challenges:

• Loan limits – Personal property manufactured homes have lower lending limits, usually capping out at around $20,000.

• Lack of equity – Newer manufactured homes typically depreciate in value rather than appreciate like site-built homes. This can limit equity to leverage for cash-out refinancing.

• Perception of lenders – Some lenders still cling to outdated perceptions of manufactured housing and hesitate to provide financing.

• Zoning issues – If the home is on leased land, some lenders may shy away from providing loans.

Manufactured Home Improvement Loan Options

While financing major renovations on a manufactured home can be tricky, you still have several solid options if you know where to look. Here are some top choices:

FHA Title I Loans

The Federal Housing Administration’s Title I program provides property improvement loans for manufactured homes. These government-backed loans offer favorable terms.

Loan details:

• Up to $25,090 for manufactured homes on owned land
• Up to $7,500 for manufactured homes on leased land
• Low down payments, usually just a few hundred dollars
• Competitive interest rates
• Loan terms up to 20 years

FHA Title I loans can be used for renovations like adding rooms, remodeling, upgrades, repairs, and more. Energy efficiency improvements are also eligible.

Personal Loans

Online lenders like Lightstream, Upstart, and others provide home improvement installment loans with fixed monthly payments.

Loan details:

• Up to $100,000
• Fixed interest rates from 5.99% to 35.99%
• Terms up to 7 years

While interest rates are higher than mortgages, personal loans are easier to qualify for and fund quicker than refinancing.

Cash-Out Refinancing

If your manufactured home is titled as real estate, you may be able to tap equity through cash-out refinancing. This converts existing home equity into cash to fund renovations.

A manufactured home land-home loan or mortgage refinance can provide project financing while wrapping the new loan amount into a new first lien mortgage. Closing costs are high, so only makes sense if taking out a sizable amount.

Home Equity Loans/Lines of Credit (HELOCs)

For titled manufactured homes, home equity loans and HELOCs allow you to borrow against existing home equity. Interest rates are comparable to cash-out refinancing but you avoid high closing costs. HELOCs offer flexibility to draw in stages only as needed.

Chattel Loans

Also referred to as personal property loans, chattel loans are secured by the home only. While interest rates are higher, they provide renovation financing for manufactured homeowners without land ownership.

FHA 203(k) Rehab Mortgage

This FHA-insured mortgage covers purchase plus renovations for site-built homes. Some lenders may approve this for manufactured homes on owned land, allowing major rehabs folded into a low down payment mortgage.

VA Renovation Loans

Veterans can sometimes qualify for VA loans to buy and remodel a manufactured home in one loan. Lending criteria is strict, including requiring full land ownership.

USDA Rural Development Loans

For manufactured homes in designated rural areas, USDA RD loans offer subsidized low interest rates and can cover purchase plus repairs in one loan.

Manufactured Home Retailer In-House Financing

Many manufactured home dealers offer in-house financing programs that allow them to loan you money directly for a new manufactured home or renovations. This avoids financing challenges but interest rates are usually higher.

Credit Cards

For smaller home improvement projects, financing with a credit card is an option. Compare interest rates across cards and take advantage of low introductory rate offers. Pay off balances quickly to avoid accruing interest.

Tips for Success with Manufactured Home Improvement Loans

Follow these tips when seeking financing for renovations on your manufactured dwelling:

• Shop multiple lenders to compare loan options and rates
• Prioritize lenders familiar with manufactured home lending
• Get cost estimates from contractors to determine loan amount needed
• Consider using a mortgage broker familiar with manufactured housing
• Look into statewide manufactured home loan programs
• Highlight energy efficiency upgrades to attract favorable rates
• Ask retailers/contractors about potential in-house financing
• Only borrow what you can comfortably afford to repay
• Carefully weigh closing costs if refinancing or taking equity loans
• Always read the fine print and understand any conditions or restrictions

With the right lender and loan program, you can make those manufactured home improvements happen. Do your homework to find the most affordable financing option for your situation.