Manufactured Home Loan Interest Rates: A Helpful Guide for Prospective Buyers

Purchasing a manufactured home can be an affordable way to achieve the dream of homeownership. However financing a manufactured home is different than financing a traditional site-built home. As a prospective buyer it’s important to educate yourself on the loan options available and how interest rates for manufactured homes compare. In this comprehensive guide, I’ll provide key information to help you make the best financing decision for your manufactured home purchase.

Overview of Manufactured Home Loans

Manufactured homes once known as mobile homes, are factory-built residences that are transported to the home site in sections and joined together. They are an appealing option due to their affordability and quality construction. However, it can be more difficult to obtain financing for a manufactured home versus a site-built home.

There are a few main loan options for financing a manufactured home purchase

• Conventional loans – Offered by private lenders and conforming to standards set by Fannie Mae and Freddie Mac. Require the home to be permanently affixed on land owned by the buyer.

• FHA loans – Insured by the Federal Housing Administration. Two main programs are Title I for home-only financing and Title II for home and land financing.

• VA loans – Offered by private lenders but guaranteed by the U.S. Department of Veterans Affairs. For qualifying veterans.

• USDA loans – Guaranteed by the U.S. Department of Agriculture. For homes in eligible rural areas.

• Personal loans – Offered by banks and credit unions. Higher interest rates but fewer restrictions.

• Chattel loans – Specialty financing where the home itself acts as collateral. Higher rates and shorter terms.

Interest Rates on Manufactured Home Loans

Now let’s take a look at current interest rates for manufactured home loans and how they compare to site-built mortgage rates.

According to data compiled in January 2023, the average nationwide interest rate for a 30-year fixed-rate manufactured home loan was around 6.5%. This compared to an average rate of about 6.15% for a conventional 30-year fixed mortgage on a site-built home.

So on average, borrowers pay a slightly higher interest rate for a manufactured home loan versus a conventional mortgage. However, depending on your credit score, down payment, and other factors, it’s possible to find competitive manufactured home loan rates close to conventional mortgage rates.

Here’s a sampling of average manufactured home loan rates for common terms in January 2023:

• 30-year fixed: 6.5%
• 20-year fixed: 6.25%
• 15-year fixed: 5.75%
• 10-year fixed: 5.5%

What Impacts Your Manufactured Home Loan Interest Rate

As with any mortgage, several factors determine the interest rate you’ll pay on a manufactured home loan. Key factors include:

Credit score – Borrowers with higher credit scores qualify for lower rates. Aim for a score of at least 660.

Down payment – A larger down payment signals lower risk to the lender. At least 5-10% down is recommended.

Debt-to-income ratio – Your total monthly debt payments vs gross monthly income. Aim for 36% or lower.

Loan term – Shorter terms (10 or 15 years) have lower rates than longer terms (30 years).

Loan type – Government-backed loans often have lower rates than conventional loans.

Home location – Interest rates can vary by state based on local housing markets.

Ongoing home insurance and taxes – Required for manufactured home loans and factored into rates.

As a buyer, the best way to find the lowest rate is to shop around with multiple lenders and compare options. Getting pre-approved can also help you secure today’s rates.

Tips for Getting the Best Manufactured Home Loan Rate

If your goal is to secure the most favorable interest rate on a manufactured home loan, here are some helpful tips:

• Improve your credit – Review your credit reports and work to boost your score before applying.

• Save for a down payment – Putting 5-20% down can significantly lower your rate.

• Lower your DTI – Pay down debts and avoid taking on new credit before applying.

• Choose a shorter term – Opt for a 15 or 20-year fixed loan to get a lower rate.

• Consider government financing – FHA, VA, and USDA loans often have lower rates.

• Get multiple rate quotes – Shop with several lenders to find the best deal.

• Lock in your rate – After choosing a lender, lock in your rate so it doesn’t rise before closing.

The Bottom Line

While manufactured home loans may have slightly higher average interest rates compared to conventional mortgages, it’s still possible to get a competitive rate in today’s market. As a buyer, be sure to take steps to boost your credit, save for a down payment, and shop multiple lenders to find the best financing deal. Consider both conventional and government-backed loan programs. With proper preparation and research, you can successfully finance your manufactured home purchase and start building equity as a homeowner.