USDA Home Loan for Manufactured Homes

The USDA home loan program offers 100% financing to purchase a manufactured home in eligible rural areas. With a USDA manufactured home loan you can buy a new factory-built home with zero down payment.

Overview of USDA Home Loans

The USDA home loan, also known as the Section 502 Direct Loan program, helps low-income buyers in rural communities purchase a home. Here are some key features:

• 100% Financing – USDA loans offer 100% financing requiring no down payment. Borrowers may finance the purchase price, closing costs, repairs and prepaids.

• Low Income Limits – Income limits to qualify are set based on the area median income. Limits can be as high as 115% of AMI in some markets.

• Flexible Credit Guidelines – Credit scores as low as 640 may qualify Non-traditional credit is also accepted

• No Mortgage Insurance – USDA loans do not require monthly mortgage insurance payments like FHA loans.

• Low Rates – Interest rates on USDA loans are very competitive, often beating conventional loan rates.

• No House Price Limits – USDA does not cap the maximum home value, so you can choose any home within your budget.

Using USDA Financing on Manufactured Homes

The USDA Direct home loan program allows borrowers to finance the purchase of manufactured homes under certain conditions:

• The home must be new and not previously lived in. Used manufactured homes do not qualify.

• Single-wide and double-wide homes are permitted, but the home must be at least 400 square feet.

• The manufactured home must be built to federal construction and safety standards after June 1976.

• The home must be classified and titled as real estate, not personal property.

In addition to financing the home purchase, USDA loans cover other costs:

• Site preparation, delivery, and installation fees
• Purchase of the land or property site
• Hookups for electricity, water, septic system, etc.

Manufactured housing provides an affordable way to become a homeowner with a USDA loan in rural locales.

Manufactured Home Requirements

For a manufactured home to be eligible for USDA financing, it must meet the following criteria:

• New unit from an approved manufacturer, not previously inhabited
• At least 400 square feet with minimum width of 12 feet
• Transported directly from factory to site
• Permanent chassis with attached axles removed
• Constructed after June 15, 1976 and built to HUD standards
• Placed on permanent foundation approved by agency
• Classified as real estate, not personal property

The home must be permanently affixed to the ground according to federal guidelines and local codes. This helps ensure the home will hold long-term value like traditional site-built housing.

How to Qualify for USDA Manufactured Home Loans

To qualify for a USDA loan to purchase a manufactured home, borrowers must meet income, credit, and home location requirements:

• Income Limits – Vary by county but up to 115% of area median income
• Credit Scores – Minimum 640 FICO score in most cases
• Debt-to-Income – Maximum ratio of 29%/41%
• Home Location – Must be in an eligible rural area
• Home Site – Can be on private land or in a community
• First-Time Homebuyer – No prior home ownership last 3 years

Meeting these criteria allows buyers to purchase a new manufactured home with 100% financing from the USDA home loan program.

Finding a USDA Manufactured Home Lender

The first step is connecting with a lender approved by USDA to offer manufactured home loans. Here are a few tips:

• Get quotes from multiple lenders to shop for the best rates and fees.

• Look for lenders on USDA’s approved list that actively promote manufactured housing loans.

• Ask if they handle the home ordering and delivery logistics for a turnkey experience.

• Inquire about manufactured home communities they work with that qualify for USDA.

Finding the right lender ensures an easy process from home selection through closing with your USDA manufactured home loan.

Benefits of USDA Manufactured Home Loans

Purchasing a factory-built home with USDA financing offers many advantages:

Affordability – With no down payment required, manufactured homes allow low-income borrowers to achieve homeownership.

Customization – Manufactured homes offer flexibility to personalize floor plans and finishes.

Efficiency – The construction process is streamlined compared to site-built homes, keeping costs low.

Quality – Today’s manufactured homes are constructed with quality materials and to high standards.

Value – Ownership builds equity over time as the debt is paid down each month.

A manufactured home is an affordable pathway to homeownership for credit-worthy buyers in rural communities using innovative USDA financing.

Alternatives to USDA Manufactured Home Loans

If you don’t qualify for a USDA loan, here are some alternative financing options:

• FHA loans allow manufactured home financing with 3.5% down payment.
• VA loans finance manufactured homes but require full entitlement.
• Conventional loans have stricter requirements but may be possible.
• Personal loans from banks or credit unions offer faster approvals.
• Retailer financing directly through manufactured home dealers.

While the USDA program offers the most flexible terms, shop around to see if another loan program may work for purchasing your manufactured home.

The Factory-Direct Advantage

Purchasing your manufactured home directly from the factory has several advantages:

• Cost – The manufacturer can offer wholesale pricing unavailable through retailers.

• Efficiency – Streamlined ordering, production and delivery saves time.

• Customization – Choose home layout, features, appliances, finishes and more.

• Quality – Direct from the source ensures quality materials and construction.

• Convenience – One-stop shopping for design, financing, delivery and setup.

Going direct to the factory is the best way to maximize value and get the manufactured home you want.

Steps to Buying a Manufactured Home with USDA

Follow these steps when purchasing a manufactured home with a USDA loan:

1. Research manufactured home companies and select the style you want. Get wholesale pricing by ordering directly from the factory.

2. Find a lender approved by USDA for manufactured home lending. Get pre-qualified for financing.

3. Choose a home site either in a community, on private land you own, or on a new parcel of land purchased with the home.

4. Submit plans and specifications to USDA for approval.

5. Once approved, the home goes into production at the factory. A timeline is provided for completion.

6. The home is transported to your site once complete. Coordination with the lender and USDA ensures the foundation is prepared.

7. The home is installed and connected to utilities. After inspection, you can close and move into your new home!

Following these steps results in a smooth USDA home loan process for purchasing a quality manufactured home.

Closing Thoughts

In closing, USDA home loans allow qualifying buyers to finance manufactured homes with no down payment in rural areas. Manufactured housing provides a lower-cost option that meets agency guidelines. Working with an approved lender streamlines the construction process from factory to foundation. With innovative financing and today’s quality construction, manufactured homes are an appealing option for affordable homeownership. The USDA manufacturered home loan program helps more families realize the dream of owning their own home.