Getting the Best Interest Rates on Mobile Home Loans

Mobile homes have become an increasingly popular housing option for many buyers. They provide an affordable way to own your own home without the high price tag of site-built houses. However, financing a mobile or manufactured home does come with some unique considerations, especially when it comes to interest rates. In this article, we’ll look at average mobile home loan rates, what goes into determining your rate, and tips for getting the lowest interest rate possible on your mobile home loan.

Current Interest Rates on Mobile Home Loans

Interest rates on mobile home loans can vary quite a bit depending on your credit the age of the home whether you own the land, and other factors. Here are some current average interest rates for common mobile home loan types

• New mobile home loans: 6% – 9%
• Used mobile home loans: 8% – 12%
• Mobile home refinancing: 6% – 10%
• Mobile home loan terms: 10-30 years

As you can see rates for new mobile homes tend to be lower than used mobile homes. Refinancing an existing mobile home loan can also open up opportunities for lower rates. Loan terms for mobile homes typically range from 10-30 years.

What Impacts Your Mobile Home Loan Interest Rate?

When a lender is determining your interest rate for a mobile home loan, there are several key factors they will consider:

Your credit score and history: As with any type of mortgage, your credit score plays a huge role in the interest rate you will qualify for. The higher your score, the better rate you can expect. Anything above 740 is considered excellent credit and will make you eligible for the lowest rates.

Down payment amount: The more money you can put as a down payment, the lower your interest rate will be. Most lenders require at least a 10-20% down payment. Putting 20% or more down shows the lender you are financially stable.

Debt-to-income ratio Lenders will look at your total monthly debt payments compared to your gross monthly income The lower your DTI, the better Below 36% is ideal.

Loan term: Shorter loan terms of 10-15 years will have lower interest rates than longer terms of 20-30 years. However, the tradeoff is higher monthly payments.

Age and condition of mobile home: Newer mobile homes in good condition can qualify for lower rates than older homes that may need repairs.

Land ownership: Loans for mobile homes on owned land tend to have lower rates than if you lease a lot in a mobile home park.

Loan type: Conforming loans that meet Freddie Mac and Fannie Mae guidelines qualify for the lowest rates. Non-conforming or FHA loans have slightly higher rates.

Interest rate trends: When overall mortgage rates rise or fall with inflation and the economy, mobile home loan rates follow suit.

Tips for Getting the Lowest Mobile Home Loan Rate

If your goal is to get the lowest interest rate possible on a mobile home loan, here are some tips that can help:

• Have a down payment of at least 20% – This signals to lenders you are “low risk” and will qualify you for the best rates. Save up if you need to reach 20%.

• Work to improve your credit score – Give yourself several months before applying to pay down debts and dispute any errors on your credit reports.

• Lower your DTI – Reduce other monthly debts and avoid taking on new credit before applying. Pay off cards and loans if possible.

• Consider a shorter loan term – 10 or 15-year loan terms open up the lowest rate options, just be sure the payments fit your budget.

• Purchase a new mobile home – New factory-built homes qualify for the lowest rates versus used mobile homes.

• Own the land your home sits on – Loans for mobile homes with owned land are viewed as lower risk than leased land.

• Get multiple rate quotes – Check rates from several lenders and compare offers to find the best rate.

• Improve the value of your home – Updates like new floors, appliances or siding can increase value and may improve loan terms.

• Refinance an existing loan – If your current loan rate is high, refinancing could potentially lower your rate significantly.

• Consider an adjustable rate – While they carry some risk, ARMs often offer lower introductory rates than fixed rate mobile home loans.

• Ask about loan discounts – Some lenders offer discounts for setting up automatic payments or taking a homebuyer education course.

Following the tips above takes some time and planning, but can pay off with huge interest savings over the life of your mobile home loan. Partnering with an experienced loan officer is also key to navigating the loan process and finding your best options.

Comparing Mobile Home Loan Rates From Lenders

Interest rates can vary quite a bit from one lender to another, so it pays to compare offers. When shopping lenders here are some things to keep in mind:

• Local banks and credit unions often offer the lowest mobile home loan rates.

• Online lenders sometimes have very low advertised rates but there may be hidden fees or requirements.

• Ask lenders for a Loan Estimate to see true costs and rate details side-by-side.

• Compare both purchase price and interest rate – sometimes a higher price is worth it for a lower rate.

• Get pre-approved from multiple lenders before shopping for a home.

• Review all the fees, points, and terms in loan offers to make an informed decision.

To give you a sense of rate differences among lenders, here is a sample of current mobile home loan rates:

Local Credit Union

• 30-year fixed rate mobile home loan
• Interest rate: 7.25%
• APR: 7.36%
• Loan amount: $50,000
• Monthly payment: $387

National Bank

• 30-year fixed rate mobile home loan
• Interest rate: 7.75%
• APR: 7.92%
• Loan amount: $50,000
• Monthly payment: $404

Online Lender

• 30-year fixed rate mobile home loan
• Interest rate: 8.25%
• APR: 9.15% (includes 2 discount points)
• Loan amount: $50,000
• Monthly payment: $417

As you can see, interest rates on the same loan amount and term can be quite different between lenders. While the Online Lender has a higher rate at first glance, they are also discounting points to buy the rate down.

Getting multiple rate quotes and looking closely at the details allows you to determine who truly has the lowest out-of-pocket and long term costs. Working with a mortgage broker is another option that gives you access to rates from many different lenders at once.

Common Mobile Home Loan Programs and Rates

Mobile home loans come in a variety of loan types and programs, each with their own eligibility requirements and rates. Here is an overview of some common mobile home loan programs:

FHA Loans

FHA loans are popular for mobile homes because they require just a 3.5% down payment. They do come with mortgage insurance and slightly higher interest rates.

• Interest rates: 7% – 9%
• Loan terms: 15-30 years
• Down payment: 3.5%
• Credit score: 580+

VA Loans

Veterans and military members can qualify for a VA home loan with no money down to purchase a mobile home. VA loans also come with favorable rates.

• Interest rates: 6% – 8%
• Loan terms: 15-30 years
• Down payment: 0%
• Credit score: 620+

USDA Loans

USDA loans help low to moderate income buyers in rural areas finance mobile homes with no down payment required.

• Interest rates: 6.5% – 8.5%
• Loan terms: 30 years
• Down payment: 0%
• Credit score: 640+

Conforming Loans

Conforming loans meet standards to be sold to Freddie Mac or Fannie Mae on the secondary market. They come with strict requirements but offer the lowest rates.

• Interest rates: 5% – 7%
• Loan terms: 20-30 years
• Down payment: 5%
• Credit score: 620+

Portfolio Loans

Some banks and credit unions offer portfolio loans they hold and service themselves. This provides more flexibility than conforming loans but rates are a bit higher.

• Interest rates: 6% – 8%
• Loan terms: 10-30 years
• Down payment: 10%
• Credit score: 700+

Hard Money Loans

Hard money loans are for those with poor credit and limited options. Rates are much higher but they can be a short term option before refinancing.

• Interest rates: 10% – 15%
• Loan terms: 1-5 years
• Down payment: 30%
• Credit score: 500+

As you can see, government