You can refinance a mobile home to save money but need to be prepared to jump through some hoops before you close. Follow the five steps below to navigate the path to the best mobile home refinance whether you own a mobile home, manufactured home or a modular home.
Owning a mobile home can be an affordable way to achieve the dream of homeownership. However, mobile home loans come with their own unique requirements and processes. If you currently have a mortgage on your mobile home you may be considering refinancing to improve your financial situation. Refinancing a mobile home loan allows you to adjust the terms of your existing loan to potentially secure a lower interest rate, reduce your monthly payments or access your home equity.
Refinancing a mobile home loan shares some similarities with refinancing a traditional mortgage, but also has some key differences you need to be aware of. This guide will walk you through everything you need to know about refinancing a mobile home loan, including
Can You Refinance A Mobile Home Loan?
Yes, it is possible to refinance a mobile home loan under certain conditions. Borrowers who own a mobile home or manufactured home have the ability to refinance their mobile home loan. You may choose a rate-and-term refinance to get a better interest rate or do a cash-out refinance to pull money out of your home equity.
One of the factors that makes mobile homes an appealing option is their affordability. This can also make them good candidates for refinancing. Work with your lender to determine if a mobile or manufactured home loan refinance is a viable option for you.
How To Refinance Your Mobile Home Loan
There are several steps homeowners may need to take when pursuing a mobile home loan refinance Here’s a basic outline of what you can expect from the process
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Consult with your mortgage lender: Discuss a potential refinance with your current lender first since financing mobile and manufactured homes is unique. Many lenders will require your home be affixed to land you own, turning it into real property.
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Choose a loan program: You’ll have more options if your home is attached to owned land. Conventional mortgages, FHA, VA, and USDA streamline refinances are possibilities.
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Apply for the refinance: Submit proof of income, assets, ID, and tax forms. Meet credit score, debt-to-income, and home equity requirements.
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Pay closing costs: Estimate 3-6% of your loan amount. Costs cover appraisal, title search, legal fees, and more. You can pay upfront or roll into your new loan.
Refinancing Requirements For Mobile Home Loans
There are a few key requirements to qualify for a mobile home loan refinance:
- The manufactured home must be on a permanent foundation on land you own, not leased land
- Minimum credit scores between 580-620 depending on loan type
- Total monthly debt less than 43% of gross monthly income
- Sufficient home equity
Meeting these requirements qualifies your mobile home as real property and makes financing possible.
The Pros And Cons Of Refinancing A Mobile Home Loan
Before applying, weigh the potential benefits and drawbacks:
Pros
- Lower monthly payments
- Access cash from equity
- Possibly get a lower interest rate
Cons
- Paying closing costs
- Potentially higher monthly payment if cashing out equity
- Interest rates may be higher than original loan
Alternative Mobile Home Loan Refinancing Options
If your mobile home is personal property, alternative options include:
- Chattel loans with shorter terms and higher rates
- Personal loans with faster approval, lower closing costs, and shorter terms
How To Get The Best Mobile Home Loan Refinance
Follow these tips to find the right loan for your needs:
- Shop and compare quotes from multiple lenders
- Ask about loan types and programs specifically for manufactured homes
- Lock in rates for enough time to affix home to permanent foundation, if needed
- Opt for shorter loan terms for the greatest interest savings
- Minimize closing costs by rolling them into your new loan
The Bottom Line
Refinancing a mobile home loan can provide real financial benefits if your home meets eligibility requirements. By researching your options, comparing lenders, and understanding the process, you can determine if refinancing your mobile home loan is the right move for your situation.
Step 4: Choose the right loan program for your mobile home refinance
You’ll need to document your income, assets and credit and in most cases you’ll need an appraisal to verify your home’s value. If your home is considered real property, you can choose from the following program to refinance a manufactured home:
Conventional loansFannie Mae and Freddie Mac set the guidelines for conventional loans, which are popular for borrowers with good credit scores and low debt-to-income (DTI) ratios. Closing costs are usually less than government-backed programs and if you have 20% or more equity in your home, conventional refinance loans don’t require mortgage insurance, which repays the lender if you default on your loan.
Regular FHA loansInsured by the Federal Housing Administration (FHA), FHA loans provide flexibility for borrowers with low credit scores and high debt ratios. FHA-approved lenders offset that risk by charging FHA mortgage insurance regardless of how much equity you have.
FHA Title I loansIf you’re happy with your current mortgage, but need extra money for home improvement projects, you can borrow up to $25,090 if your home is real property. If your manufactured home sits on leased land, you can get up to $7,500.
FHA streamline refinanceManufactured homeowners with a current FHA loan may qualify to refinance without income documents or a home appraisal. However, you’ll need to budget for closing costs or consider a no-closing-cost refinance option — you can’t roll lender and title fees into the loan amount on this program.
VA loansThe U.S. Department of Veterans Affairs (VA) backs VA loans to active-duty and veteran military borrowers and eligible surviving spouses. One drawback to VA loans for manufactured homes: The maximum term is 25 years and 32 days if you’re refinancing a mobile home and land package.
VA IRRRLYou can replace an existing VA loan with a new VA loan without income paperwork or an appraisal if you’re eligible for a VA IRRRL. However, unlike the FHA streamline, you can roll your closing costs into the loan.
USDA loansMeant for low-income borrowers to buy homes in rural areas, the U.S. Department of Agriculture (USDA) guarantees loans made by USDA-approved lenders. You can’t cash out any extra equity with a USDA manufactured home loan.
USDA streamlineEligible borrowers with a current USDA loan may be able to refinance with the USDA streamline assist program. Like the other government streamline programs, there is no income or value verification requirement.
| Loan program | Maximum LTV ratio | Minimum credit score | Maximum DTI ratio | Special requirements |
|---|---|---|---|---|
| Fannie Mae limited cash-out refinance | 97% | 620 | 45% with exceptions to 50% | MH Advantage® sticker |
| Fannie Mae cash-out | 65% | 620 | 45% with exceptions to 50% | Maximum term of 20 years |
| Freddie Mac limited cash-out refinance | 95% (20-year loan) 90% (30-year loan) | 620 | 45% with exceptions to 50% | Terms of up to 30 years |
| Freddie Mac cash-out | 65% | 620 | 45% with exceptions to 50% | Maximum term of 20 years |
| FHA limited cash-out refinance | 97.75% | 580 | 43% with exceptions possible | Maximum term of 25 years and 32 days for home and land |
| FHA cash-out refinance | 80% | 500 | 50% | Maximum term of 25 years and 32 days for home and land |
| FHA Title I | No appraisal required | No minimum | 45% | The home can sit on leased land. Can’t be delinquent on federal debt |
| FHA streamline | N/A | N/A | N/A | Can’t roll closing cost into loan amount |
| VA limited cash-out refinance | 95% | 620 standard | 41% with exceptions possible | Maximum term of 25 years and 32 days for home and land |
| VA cash-out refinance | 90% | 620 standard | 41% with exceptions possible | Maximum term of 25 years and 32 days for home and land |
| VA IRRRL | N/A | N/A but must prove benefit of refinance | N/A | Can roll costs in as long as they are recouped within 36 months |
| USDA limited cash-out refinance | 100% | 640 standard | 41% with exceptions possible | Loan term must be fixed for 30 years |
| USDA streamline refinance | N/A | N/A but must prove benefit of refinance | N/A | Loan term must be fixed for 30 years |
Step 3: Choose the type of refinance for your manufactured home
If you own a manufactured home on a permanent foundation, or you’re refinancing to convert your home to real property, you have three options:
- Limited cash-out refinances. A limited cash-out refinance allows you to pay off your current mortgage, roll in your closing costs and add the construction fees charged to attach your home to your land. Another perk: You can pocket an extra $2,000 or 2% of the balance of the new mortgage, whichever is less.
- Cash-out refinances. If you’ve owned your current home and land for at least 12 months, you can borrow more than you currently owe with a new mortgage and pocket, or “cash out,” the difference. In most cases, you can’t borrow as much of your home’s value (also known as your “loan-to-value (LTV) ratio”) with a cash-out refinance on a manufactured home as you can with a non-manufactured home.
- Streamline refinances. Manufactured homeowners with a loan backed by the Federal Housing Administration (FHA), U.S. Department of Veterans Affairs (VA) or the U.S. Department of Agriculture (USDA) may qualify for a streamline refinance. These programs usually don’t require income documentation or an appraisal. Some popular streamline programs include the FHA streamline and the VA interest rate reduction refinance loan (IRRRL).
Manufactured Home Cash Out Refinance
FAQ
Is it hard to refinance a mobile home?
Why are mortgage rates higher for mobile homes?
Can you do a conventional cash-out refi on a manufactured home?
What is considered a permanent foundation for a mobile home?
Is refinancing a mobile home mortgage worth it?
Yes, refinancing a mobile home mortgage can be worth it if you qualify for a lower interest rate or better loan terms. Homeowners can potentially save on monthly mortgage payments, reduce overall loan costs, or tap into their home equity for financial needs.
Can you refinance a manufactured home?
However, as the owner of a manufactured home, you might wonder if you can refinance a manufactured home – formerly known as a mobile home – and if this involves any unique qualifications. You can refinance a loan used to purchase a manufactured home as long as you meet the property and financial requirements for a refinance.
How do I qualify for a mobile home refinance loan?
Here’s a little more information about each mobile home refinance loan program and how to qualify. Conventional loans are best for borrowers with a credit score of 620 or higher and at least 5% equity in their manufactured home. Both fixed-rate mortgages and adjustable-rate mortgages are available.
How can I get a mobile or manufactured home loan?
To get a mobile or manufactured home loan, you can go through a standard mortgage lender that offers the loan you’re looking for. There are also mortgage lenders that specialize in mobile and manufactured home financing. (Question: What Is The Minimum Credit Score Needed For A Mobile Or Manufactured Home Loan?)