Getting a Manufactured Home Loan With Land: A Complete 2024 Guide

Purchasing a manufactured home along with the land it sits on can be an affordable way to become a homeowner. But financing the home and land together requires an understanding of the different loan options available. In this comprehensive guide, we’ll walk through everything you need to know about getting a manufactured home loan with land in 2024 – from loan types and requirements to the step-by-step process of buying the home and land together.

Also sometimes called mobile home loans, manufactured home loans are mortgages specifically designed for financing factory-built homes These loans have unique requirements and regulations compared to loans for site-built homes

There are a few key things to understand about manufactured home loans:

• They generally require the home to be fixed to a permanent foundation on the land.

• You’ll usually need to purchase the land underneath the home.

• They tend to have stricter credit score and down payment requirements than conventional mortgages.

• Your options are a conventional loan, FHA loan, VA loan, USDA loan, or a chattel mortgage.

While buying a manufactured home and land requires extra legwork, it opens homeownership to those who can’t afford a site-built house. If you find the right lender, land, and manufactured home, the process can go smoothly and get you the affordable home you want.

Manufactured Home Loan Requirements

When applying for a manufactured home loan, you’ll need to meet certain credit, income, and down payment requirements. These vary by lender, but here are some general guidelines:

Credit score: At least 580-640, depending on the loan type. FHA loans allow scores as low as 500 with a 10% down payment.

Down payment: Around 3-5% for conventional, FHA, and VA loans. USDA loans require no down payment. Chattel loans typically need 5% down.

Debt-to-income ratio: Your total monthly debt payments, including the future mortgage payment, should be less than 43% of your gross monthly income.

Loan term: Up to 30 years for conventional, USDA, and VA loans. FHA has maximum terms of 15-25 years depending on home type. Chattel loans usually have shorter 15-20 year terms.

Occupancy and land requirements: Most lenders require you to personally occupy the home as your primary residence. The land and home also need to be purchased together in most cases.

Always check with lenders on their specific requirements before applying. Having a down payment saved up and a credit score of 640 or higher will open up the most options.

Manufactured Home Loan Types

You have five main options when it comes to financing a manufactured home with land:

Conventional loans: Offered by private lenders and not government-backed. Tend to have lower down payments but higher credit score requirements than government loans.

FHA loans: Insured by the Federal Housing Administration and feature low down payments and flexible credit requirements.

VA loans: Only for veterans and service members. Require a down payment but have flexible credit criteria.

USDA loans: For low-income buyers in rural areas. Do not require a down payment.

Chattel mortgages: Specifically for financing mobile homes. Tend to have higher rates and shorter repayment terms.

Many potential homeowners gravitate toward FHA loans because of the low down payment and flexible credit requirements. Conventional loans are also popular since they permit low down payments for borrowers with good credit scores.

Always compare multiple lenders and loan offers to find the most affordable option for your situation. The lowest interest rate and fees will save you the most money over the long run.

The Costs of Buying a Manufactured Home and Land

The purchase price of your manufactured home and land will vary drastically depending on location. However, here are some ballpark figures:

• Manufactured home: $87,000 – $160,000

• Land: $5,000 – $100,000+ per acre

• Manufactured home foundation: $4,000 – $15,000

• Utility setup: $6,500 – $35,000

• Delivery and installation: $5,000 – $15,000

You’ll also need to budget for closing costs, which average 3-5% of the total loan amount. Property taxes, homeowners insurance, and maintenance costs should be factored in as well.

Shop around and research prices thoroughly before deciding on a home and land. While manufactured housing is generally cheaper than site-built homes, costs can still add up quickly. Creating a complete budget helps avoid financial strain down the road.

Step-by-Step Guide to Buying the Home and Land

If you’ve chosen the manufactured home loan route, follow these steps for a streamlined process:

1. Get pre-approved

Having a pre-approval letter from a lender will make your offer more attractive to sellers. Shop and compare multiple lenders to find the best loan option.

2. Determine your must-haves

Make a list of your ideal location, home size, property features, etc. This will help narrow your search and identify listings that fit your needs and budget.

3. Search for land and manufactured homes

Search for land and manufactured home listings simultaneously to find options compatible with each other. You may be able to negotiate a better deal when purchasing both together.

4. Make an offer

Once you find a home and land you love, submit an offer contingent on securing financing. Having a pre-approval will strengthen your offer.

5. Complete the loan application

Work with your lender to complete the full loan application and provide all required documentation. Get inspections done on the home and land during this time.

6. Obtain homeowners insurance

Shop around and secure a homeowners insurance policy that covers both the manufactured home and land. Provide proof of insurance to your lender.

7. Close on both purchases

Coordinate with your lender to close on the land and manufactured home purchases at the same time. This saves you the hassle of owning one before the other.

8. Move in!

Once financing and ownership are finalized, you can move into your new manufactured home. Enjoy your affordable slice of the American dream!

Following these steps and working with a lender experienced in manufactured home loans ensures the process goes smoothly from start to finish.

Pros and Cons of Manufactured Home Loans

While manufactured home loans provide a more affordable route to homeownership, they have unique pros and cons to weigh:

Pros

• Lower home purchase price

• Smaller down payment requirements

• Faster closing timeline

• Potential for lower interest rates

Cons

• Fewer lenders offer these loans

• Stricter credit requirements

• Shorter loan repayment terms

• Higher interest rates with some loan types

• Limitations on land ownership

Consider both the advantages and drawbacks when deciding if this type of loan fits your home buying goals and financial situation.

Finding the Best Manufactured Home Lender

Not all mortgage lenders work with manufactured homes, so finding one experienced in this area is key. Here are tips for picking the right lender:

• Ask friends and family for referrals

• Search lender databases like LendingTree

• Look for an extensive manufactured home loan selection

• Choose a lender that keeps loans in-house

• Ask about their specific requirements and rates

• Read online reviews about their customer service

Take the time to shop around with multiple lenders before committing. Comparing loan offers helps you secure the most favorable interest rate and fees.

Alternatives to Traditional Loans

If you don’t qualify for a traditional manufactured home loan, here are a couple alternative financing options to consider:

Personal loans – Banks and online lenders offer personal installment loans that can be used as a down payment on a manufactured home. This allows you to buy even with poor credit or little savings.

Rent-to-own – Some manufactured home dealers offer rent-to-own terms. You pay monthly rent for 1-2 years with the option to purchase the home after establishing on-time rental payments.

Hard money loans – Private financiers provide short-term loans for down payments that can later be refinanced into a conventional mortgage. Requirements are flexible but interest rates are high.

Lease-option – Rent a home for 1-2 years while simultaneously establishing a future purchase price with the landlord. Credit score and down payment requirements are typically lower.

Depending on your financial circumstances, these alternative options can help you buy a manufactured home despite less-than-perfect credit or lack of savings.

Should You Buy a Manufactured Home with Land?

Purchasing a manufactured home along with land has unique pros and cons:

Pros

• Pay a single mortgage for both home and land

• Avoid personal property designation that comes with chattel loans

• Build equity like a conventional homeowner

Cons