Buying a manufactured home also known as a mobile home can be an affordable way to achieve the dream of homeownership. With manufactured homes costing around half as much per square foot compared to site-built homes, they provide an appealing option for budget-conscious homebuyers.
However financing a manufactured home does come with some unique considerations. Manufactured home loans work differently than loans for site-built homes. As a result, it’s important to understand manufactured home financing to make sure you find the best loan for your needs.
Using an online manufactured home loan calculator is a great way to get started in exploring your financing options. By inputting a few key details, a manufactured home mortgage calculator can provide an estimate of what your monthly payments might look like. This can help you determine how much home you can realistically afford.
In this comprehensive guide, we’ll walk through the step-by-step process of using a manufactured home loan calculator. We’ll also provide tips to help you understand what the calculator results mean and how to choose the right loan product.
Step 1: Determine Your Target Monthly Payment
Before starting to use a manufactured home loan calculator, it’s helpful to determine your target monthly payment amount. As a general rule, your total monthly housing payment including the mortgage, insurance, taxes and other costs should not exceed 28% of your gross monthly income.
So for example, if your total monthly gross income is $5,000, you would want to aim for a total housing payment of $1,400 or less ($5,000 x 0.28). Of course, you can choose to go higher or lower than 28% based on your individual budget and expenses. But having a target amount in mind will help guide your loan calculations.
Step 2: Gather Key Financial Information
In order to use a mobile home mortgage calculator, you’ll need to input some key financial details. Make sure you have the following information handy:
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Home purchase price: How much is the manufactured home you want to buy? Get a reasonable estimate if you haven’t selected a specific home yet.
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Down payment: How much can you afford to put down upfront on the purchase? Aim for at least 5-10% if possible.
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Interest rate: Research current interest rates for manufactured home loans. Rates average around 5-8% but can vary quite a bit.
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Loan term: Mobile home loans typically have maximum terms of 20 or 30 years. Consider which term length works for your budget.
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Credit score: Know your credit score, as that will impact the interest rate you can qualify for.
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Property taxes: Estimate 1-2% of the home’s value annually for property taxes. Your lender can help determine the exact amount.
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Homeowner’s insurance: Budget around $300-$1000 per year for mobile home insurance, based on your location and coverage.
Having these details handy will make the calculator much easier to use.
Step 3: Input the Data into the Calculator
Now you’re ready to crunch some numbers! Launch the manufactured home mortgage calculator and input the figures you gathered:
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Enter the home purchase price.
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Enter your estimated down payment amount.
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Input the current interest rate you expect to qualify for based on your credit score.
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Select the desired loan term of 20 or 30 years.
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Enter your property tax estimate.
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Enter your homeowner’s insurance estimate.
With these key inputs, the calculator will be able to estimate your monthly payment amount.
Step 4: Review the Estimated Payment Results
Once you input the data, the manufactured home loan calculator will provide an estimated monthly payment amount along with a full amortization schedule.
Review the total estimated monthly payment, including principal, interest, taxes and insurance. Is it within your target budget? If it’s too high, consider adjusting the inputs – for example, increasing the down payment, shortening the loan term, or lowering the purchase price.
Also look at the breakdown of how much goes towards principal vs interest each month, and how the payment changes over the life of the loan. This can help you understand how manufactured home loans work.
Don’t forget to also review the total interest paid over the loan term. Shopping around for the lowest interest rate can save you tens of thousands of dollars in interest costs.
Step 5: Understand the Loan Estimate
In addition to the estimated payment amount, manufactured home lenders are required to provide you with a document called the Loan Estimate when you apply for financing.
The Loan Estimate gives you important information like:
- Interest rate
- Closing costs
- Cash needed to close
- Projected payments over the term of the loan
Compare the Loan Estimate to the calculator estimates. Are they aligned, or is the Loan Estimate higher? Work with your lender to understand and minimize closing costs.
The Loan Estimate helps give you an accurate picture of the true costs of the loan.
Step 6: Shop Multiple Loan Options
One of the big benefits of using a manufactured home mortgage calculator early on is that it allows you to easily explore multiple loan scenarios.
You should shop around and get quotes from multiple lenders. Input each lender’s loan parameters into the calculator to identify the most affordable option. Compare factors like:
- Interest rates
- Allowable loan terms
- Down payment requirements
- Origination fees
- Acceptance of manufactured housing
Run the numbers on both chattel (or personal property) loans as well as conventional mortgages to understand the differences. Getting multiple quotes can potentially save you hundreds per month.
Step 7: Choose the Right Loan Product
When it comes to manufactured home loans, you’ll typically have a choice between:
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Chattel (personal property) loans – Lower rates and standards, but shorter terms and fewer protections. The home is treated as personal property.
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Conventional mortgages – Must meet stricter requirements, but treated as real estate with better rates/terms.
The calculator can illustrate the differences between loan products in monthly payment amounts.
For example, you may see that a chattel loan comes with a higher interest rate but lower upfront fees. Take those tradeoffs into consideration. Work with your lender to select the best loan type for your financial situation.
Step 8: Adjust the Key Variables As Needed
One of the great things about mobile home loan calculators is that they make it easy to play around with the key variables.
If the monthly payments are out of your price range with the initial inputs, try adjusting:
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The purchase price of the home
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The down payment amount
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The interest rate and fees
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The loan term length
Tweaking these numbers will demonstrate how each factor impacts the monthly cost. This allows you to explore your options and find a comfortable payment amount that works for your budget.
Step 9: Recalculate When Your Finances Change
Your financial situation can change over time leading up to the home purchase. It’s a good idea to re-run the manufactured home mortgage calculator periodically using updated numbers:
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If your credit score changes, the interest rate may be different
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You may be able to save more for a larger down payment
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Closing in a different month of the year can impact property taxes
Updating the key inputs with any financial changes allows you to get the most accurate payment estimates before closing.
Step 10: Use the Calculator for Refinancing Too
In the future, you can also use a mobile home loan calculator if you decide to refinance your manufactured home loan.
Going through the calculator with new refinance terms helps you determine if refinancing makes financial sense. Compare the new monthly payments and total interest costs to your existing loan to see if you’ll save money by refinancing.
Get the Most Out of a Manufactured Home Loan Calculator
Using a manufactured home mortgage calculator early on in the home buying process provides significant benefits. You can determine if the home you want is financially feasible for your budget. The calculator also lets you easily compare multiple loan options at a glance.
Follow the tips in this guide to get the most out of a mobile home loan calculator. And be sure to work closely with a lender experienced in manufactured home financing to turn your dream into reality.
Easily Calculate Your Monthly Mortgage Payment
For a detailed breakdown of what each of these terms and values means, take a look at our definition guide below!
* 30 year terms are only available for land and home financing
This refers to the appraised value of a home. This is used in part to determine if property mortgage insurance (PMI) is needed.
The loan amount is the amount a borrower is borrowing against the home. If the loan amount is above 80% of the appraisal then PMI is required until the loan is paid off enough to where the Loan-to-value (LTV) is below 80%.
The interest rate is the quoted APR a bank charges the borrower. In some cases a borrower may want to pay points to lower the effective interest rate. In general, discount points are a better value if the borrower intends to live in the home for an extended period of time and they expect interest rates to rise. If the buyer believes interest rates will fall or plans on moving in a few years, then points are a less compelling option.
The loan term is the number of years the loan is scheduled to be paid over. The 30-year-fixed-rate loan is the most common term in the United States, but as the economy has went through more frequent booms & busts this century, it can make sense to purchase a smaller home with a 15-year mortgage. If a home buyer opts for a 30-year loan, most of their early payments will go toward interest on the loan. Extra payments applied directly to the principal early in the loan term can save many years off the life of the loan.
Property tax is the local rate home owners are charged to pay for various municipal expenses. Those who rent ultimately pay this expense as part of their rent as it is reflected in their rental price. One can’t simply look at the old property tax payment on a home to determine what they will be on a forward basis, as the assessed value of the home and the effective rate may change over time. Real estate portals like Zillow, Trulia, Realtor.com, Redfin, Homes.com & Movoto list current and historical property tax payments on many properties. If property tax is 20 or below, the calculator treats it as an annual assessment percentage based on the home’s price. If property tax is set above 20, the calculator presumes the amount entered is the annual assessment amount.
Property Mortgage Insurance policies insure the lender gets paid if the borrower does not repay the loan. PMI is only required on conventional mortgages if they have a Loan-to-value (LTV) above 80%. Some home buyers take out a second mortgage to use as part of their down payment on the first loan to help bypass PMI requirements. FHA & VA loans have different down payment and loan insurance requirements which are reflected in their monthly payments.
Most homeowner policies cover things like loss of use, personal property within the home, dwelling and structural damage and liability. Typically, earthquakes and floods are excluded due to the geographic concentration of damage which would often bankrupt local insurance providers. Historically, flood insurance has been heavily subsidized by the United States federal government; however, in the recent home price recovery, some low lying areas in Florida have not recovered as quickly as the rest of the market due in part to dramatically increasing flood insurance premiums.
Home Owner’s Association dues are common in condos and other shared-property communities. They cover routine maintenance of the building along with structural issues. Be aware that depending on build quality, HOA fees can rise significantly 10-15 years after a structure has been build, as any issues with build quality begin to emerge.
Financing a Manufactured Home: What you need to know
FAQ
Why is it hard to get a mortgage on a manufactured home?
What is the maximum LTV for a conventional loan for a manufactured home?
How much down payment for a mobile home in California?
What are chattel loans?
What is manufactured home loan calculator?
Manufactured Home Loan Calculator is used to calculate the monthly mortgage payments and the total interest payments of your mobile home loan. Manufactured Home Loan Calculator is used to calculate the monthly mortgage payments and the total interest payments of your mobile home loan.
How do I finance a manufactured home?
When it comes to financing a manufactured home, the process shares similarities with traditional home loans but also has unique considerations. Chattel Loans: Chattel loans are the most common financing option for manufactured homes. They function similarly to auto loans, with the home itself serving as collateral.
What financing options are available for manufactured homes?
Chattel Loans: Chattel loans are the most common financing option for manufactured homes. They function similarly to auto loans, with the home itself serving as collateral. These loans often come with higher interest rates and shorter terms than traditional mortgages.
Does Triad Financial Services offer a mobile home loan calculator?
Triad Financial Services, Inc. assumes no responsibility for the content, outcomes, or the precision of the information provided. Use our Mobile Home Mortgage Calculator to easily estimate your monthly manufactured home loan payments. Discover affordable financing options for your manufactured home today.