Financing Your Mobile Home and Land Purchase: A Complete Guide

Buying a mobile home along with the land to put it on can be an affordable way to become a homeowner. However, financing the purchase requires some special considerations compared to buying a traditional house and land. In this comprehensive guide, we’ll walk you through everything you need to know about getting a loan for a mobile home and land package.

Overview of Mobile Home and Land Loans

A mobile home and land loan, also called a manufactured home and land loan, allows you to finance both the home itself and the land it will sit on in a single loan. This is different from other types of mobile home loans that just cover the home itself if you plan to rent a lot in a mobile home park

With a mobile/manufactured home and land loan, the home and land are used together as collateral for the loan. Your lender will place a lien on both until the loan is fully paid off.

These loans come in a few main varieties

• FHA Title I loans – Insured by the Federal Housing Administration, these government-backed loans offer low down payments and flexible credit requirements.

• Conventional loans – Offered by private lenders, these loans typically require better credit and bigger down payments than FHA loans.

• USDA loans – For homes in rural areas, these zero-down payment loans are backed by the U.S. Department of Agriculture.

• VA loans – For veterans and military members, VA loans require no down payment and have lenient credit standards.

Benefits of Buying Home and Land Together

There are some key advantages to buying the land and having the home installed in one smooth process:

• One loan – You only need to go through the loan process once rather than getting separate loans for the land and then the home. This saves time and paperwork.

• Better loan terms – In most cases, mobile/manufactured home and land loans have better rates and terms than loans for just the home alone on leased land.

• Building equity – When you own the land too, your property will appreciate in value over time, allowing you to build home equity.

• Customization – Buying vacant land gives you more flexibility in choosing the location of your new home.

• No lot fees – You avoid paying rent on a mobile home lot when you own your land.

Tips for Financing Mobile Home and Land

If you’re thinking about purchasing a mobile or manufactured home along with a parcel of land, keep these tips in mind:

• Shop around – Compare multiple lenders to find the best rates and loan programs for your situation. Online lenders like [Lender 1] and credit unions are good options.

• Check your credit – Good credit in the mid-600s or higher will qualify you for better loan terms. Review your credit reports and score several months before applying.

• Save up – Most mobile home and land loans require a down payment of 5-10%. Save enough for down payment plus closing costs.

• Know the value – Get quotes for both the home and land purchase to determine the loan amount you’ll need.

• Prepare documentation – Gather pay stubs, tax returns, bank statements, and other paperwork lenders will need to verify your income and assets.

• Consider fees – Ask lenders about origination fees, application fees, and other charges so you can accurately compare costs.

How Much Does a Mobile Home and Land Loan Cost?

A mobile home and land purchase loan will have many of the same costs as a traditional mortgage:

• Down payment – Typically 5-10% of the combined home and land purchase price.

• Closing costs – Usually 2-5% of the total loan amount. Includes lender fees, title fees, recording fees and more.

• Interest rate – The rate will determine your monthly principal and interest payments. Rates range from 3-7% for mobile home and land loans.

• Property taxes and insurance – Lenders will require you to pay these costs for the home and land annually.

With a $100,000 purchase price, a 5% down payment would be $5,000. With 4% closing costs on a $95,000 loan, you’d pay $3,800 at closing. Your monthly mortgage payment would vary based on the interest rate.

Steps to Getting a Mobile Home and Land Loan

Follow these steps when getting financing:

1. Find the right lender – Look for lenders familiar with mobile/manufactured home and land loans in your state.

2. Check your credit and income – Make sure your credit, income, and debt levels meet the lender’s requirements.

3. Choose land and a home – Research properties and select a home model that fits your budget.

4. Apply for preapproval – Submit your application and documents to get preapproved for financing.

5. Make an offer – With preapproval letter in hand, you can make an offer to purchase the land and home.

6. Complete loan process – Provide requested documents and complete all inspections and appraisals needed.

7. Close on the loan – Finalize the loan, sign closing documents, and take ownership!

The entire process can take 45-60 days in most cases.

Questions to Ask Potential Lenders

When shopping for your mobile home and land loan, ask lenders these key questions:

• What loan programs do you offer for manufactured home and land purchases?

• What are your rates and down payment requirements for each program?

• What credit score is needed to qualify?

• Do you finance homes and land together in one loan?

• What fees and closing costs are charged?

• How long does the loan process take?

• What documents and inspections do you require?

• Do you have experience with manufactured home land loans in my state?

Mistakes to Avoid with Mobile Home and Land Loans

Some common mistakes to steer clear of when financing your mobile or manufactured home and land include:

• Not shopping around with multiple lenders
• Applying before your credit is in good shape
• Not reading loan documents carefully before signing
• Overestimating your budget and buying more home or land than you can afford
• Forgetting to budget for property taxes and insurance
• Neglecting inspections that help avoid buying land or a home with defects
• Paying fees for unnecessary add-ons or services you don’t need
• Working with a lender not familiar with mobile/manufactured home loan guidelines

Alternatives to Mobile Home and Land Loan

If you don’t qualify for a manufactured home and land loan, there are a couple alternatives:

• Personal loan – An unsecured personal loan is an option for purchasing just the home if you plan to rent the land. Rates are usually much higher.

• Owner financing – Some sellers may be willing to finance the sale themselves. This avoids bank qualifying but carries risk.

• Leasing land – You may be able to finance just the home through a chattel loan, then lease the land separately.

• Buying land outright – If you can pay cash for land, it’s easier to get a loan for just the manufactured home.

• USDA Direct Loan – This program offers home-only financing if you can’t buy the land too.

The Bottom Line

Financing a manufactured or mobile home along with the land it sits on has some unique considerations compared to a typical mortgage. But with the right loan program, lender, and preparation, you can make buying a home and land more affordable. Just be sure to shop around, check your credit, and consult a loan officer to pick the optimal loan program for your situation.