Manufactured Home Loans Rates: A Complete Guide to Financing Your Factory-Built Home

With the rising costs of traditional site-built homes, manufactured housing has become an increasingly popular and affordable homeownership option. Also known as factory-built homes, manufactured homes offer the benefits of owning your own home at a lower price point. However, financing a manufactured home purchase can be more complicated than getting a traditional mortgage. Manufactured homes have unique requirements when it comes to lending. This comprehensive guide will walk you through everything you need to know about getting a manufactured home loan, including current interest rates and fees.

Overview of Manufactured Housing Loans

Manufactured homes sometimes called mobile homes are prefabricated houses that are largely built offsite in a factory before being transported to your property. They differ from modular homes in that they must follow a federal building code from the U.S. Department of Housing and Urban Development (HUD) rather than local codes.

There are two main types of loans used to finance the purchase of a manufactured home

• Chattel Loans – Finances the home only, not the land. The home is considered personal property.

• Real Property Loans – Finances both the home and land it sits on. Home is considered real estate.

Loan terms, rates, and eligibility requirements can vary significantly between these two main categories.

Current Interest Rates for Manufactured Home Loans

Interest rates on manufactured housing loans can cover a wide range but are often higher than site-built purchase loans Here are some average rate ranges

• Chattel Loans – 8% to 15% interest

• Real Property Loans – 4% to 8%

• FHA Loans – Around 5% to 6%

Actual rates you are quoted will depend on your credit score, loan amount, loan term, and other qualifications. Getting pre-approved can give you a personalized rate estimate for your specific financial situation.

In addition to the interest rate, most manufactured home loans charge an origination fee of around 1% to 3% of the loan amount. Closing costs are typically between 3% to 5%.

Shopping around and comparing loan estimates from multiple lenders is key to finding the best rates and fees.

Factors That Influence Your Manufactured Housing Loan Rate

Several factors determine the interest rate and loan terms you will qualify for when financing a manufactured home purchase. Key factors include:

Credit score – In general, better credit means better rates. Scores below 620 may have trouble getting approved.

Down payment – A larger down payment reduces your rate. Often at least 5% down is required.

Loan type – Chattel loans have higher rates than real property loans.

Loan term – Shorter terms often have lower rates but higher monthly payments.

Land ownership – Owning the land typically allows better rates than if you lease a lot.

Home age and quality – Newer manufactured homes in good condition get better terms.

Debt-to-income ratio – Lenders look at your total monthly debts versus income. Below 43% is good.

Having an experienced loan officer assess your specific situation is the best way to determine what rates you can qualify for.

Overview of Chattel Loan Rates and Terms

Chattel loans only finance the home itself, with the land leased from a community owner. With the home as collateral rather than real estate, chattel loans are considered higher risk. Typical terms for chattel loans include:

• Interest rates from 8% to 15%

• Loan terms of 5, 10, or 15 years

• Down payments of 10% to 20% required

• Max loan amounts of $100K to $150K

Pros of chattel loans are easier approvals, faster closings, and ability to take the home with you. But the higher rates, shorter terms, and moving challenges are key cons to consider.

Real Property Manufactured Home Loan Rates and Options

To qualify for real property loan financing, your manufactured home must be attached to a permanent foundation on land that you own. This allows the home to be classified as real estate versus personal property.

Typical real property loans include:

Conventional Loans

• Interest rates from 4% to 6%

• 10% minimum down payment

• Terms up to 30 years

FHA Loans

• Rates around 5%

• 3.5% down payments

• Up to 30 year terms

VA and USDA Loans

• No down payment options

• Rates from 2% to 4%

• Eligibility restrictions apply

Real property loans provide better rates and terms but limit future mobility. Make sure you fully understand the differences before choosing a loan type.

Tips for Qualifying for the Best Manufactured Home Loan Rate

Follow these tips to help you qualify for the most favorable interest rate when seeking financing for your manufactured home:

• Have a down payment – Putting at least 10% down shows lenders you’re financially prepared.

• Check your credit – Good credit scores in the 670+ range can save you thousands.

• Lower your debt – Total debt payments under 43% of income help approval odds.

• Shop multiple lenders – Compare loan estimates to find the best rates.

• Get pre-approved – Know your rate and price cap before shopping for homes.

• Consider land ownership – Owning land allows better loan programs and rates.

• Pick a newer home – New manufactured homes in good shape are ideal.

Taking the time to get your finances in order and research lenders thoroughly can help you secure the lowest manufactured housing loan rates possible.

Detailed Overview of Real Property Loan Rates

Financing a manufactured home as real property allows lower interest rates closer to a traditional mortgage. Here’s an in-depth look at rates for key real property loan programs:

Conventional Loans

Rate Range: 4% to 6%

Terms: 15 or 30 years

Down Payment: 10% to 20%

Conventional loans from Fannie Mae and Freddie Mac are available for manufactured housing that meets certain requirements. Good credit and down payment needed.

FHA Loans

Rates: Around 5% to 6%

Terms: 15 or 30 years

Down Payment: Just 3.5%

FHA loans only finance manufactured homes built after 1976 and installed properly on owned land. Easier to qualify for than conventional loans.

VA Loans

Rates: From 2% to 4%

Terms: Up to 30 years

Down Payment: None required

No down payment and very low rates make VA loans a top choice for qualifying veterans and military members purchasing manufactured housing.

USDA Loans

Rates: Typically 2% to 3%

Terms: 30 years

Down Payment: None required

USDA home loans are zero down payment options for low-income buyers in eligible rural areas. Can finance manufactured housing.

As you can see, real property loans offer great rates and terms in exchange for less future mobility. Carefully weigh the pros and cons for your situation.

Next Steps to Getting the Best Manufactured Home Loan Rate

If you’re ready to move forward, here are some key next steps to take to get the lowest rate on a manufactured housing loan:

• Get pre-approved – Lock in a competitive rate and gain negotiating power when making an offer.

• Check your credit – Work on improving your credit score to boost your rate.

• Save for a down payment – Putting at least 10% down gets the best terms.

• Research loan programs – Learn the differences between chattel and real property financing options.

• Shop multiple lenders – Compare customized loan estimates. Local lenders often have great deals.

• Read disclosures carefully – Make sure you understand the rates, fees, and loan rules before committing.

With proper preparation and research, you can find affordable financing that fits your budget and goals for purchasing a quality manufactured home. Comparing personalized loan quotes is the best way to find competitive market rates from reputable lenders.