A Complete Guide to USDA Loans for Manufactured Homes

The U.S. Department of Agriculture (USDA) offers special mortgage programs to help make financing manufactured homes more affordable. USDA loans allow buyers to purchase new manufactured homes with little to no down payment. If you want to buy a manufactured or mobile home in a rural area, a USDA loan could be an excellent option.

In this comprehensive guide, we’ll explain everything you need to know about getting a USDA mortgage for a manufactured home including:

• USDA Loan Programs for Manufactured Homes
• Benefits of USDA Loans for Manufactured Homes
• Requirements and Eligibility
• The Application Process
• Tips for Getting Approved

Let’s get started!

USDA Loan Programs for Manufactured Homes

The USDA Single Family Housing Guaranteed Loan Program offers two main options for financing the purchase of a manufactured home

1 Section 502 Direct Loan

• Fixed low interest rate
• Subsidized interest rate for very low-income buyers
• 100% financing available
• No down payment required
• Loans originated directly through USDA

2 Section 502 Loan Guarantee

• Fixed competitive interest rate
• Private lenders originate loans, USDA guarantees
• No down payment required
• Can be used to purchase and/or place manufactured homes

Either loan allows buyers to finance the full appraised value of a new manufactured home with no down payment required. This includes the cost of the actual home as well as delivery, site preparation, and set-up costs.

Benefits of USDA Loans for Manufactured Homes

USDA loans offer homebuyers major advantages compared to conventional financing:

• Little to no downpayment: You can finance 100% of the home’s value.

• Lower interest rates: Below-market fixed rates make monthly payments more affordable.

• No mortgage insurance: Mortgage insurance is not required.

• Flexible credit guidelines: Credit scores are considered but not as restrictive as conventional loans.

• Lower income allowed: No minimum income requirements. All sources of stable income can be used.

• No origination fees: Loans directly through USDA have no upfront fees.

• Long repayment terms: Up to 33 year repayment terms keep payments manageable.

For buyers that may not qualify for traditional financing, these benefits make USDA loans an excellent option for purchasing a quality manufactured home.

Requirements and Eligibility for USDA Manufactured Home Loans

While USDA has flexible requirements, you must meet certain eligibility standards to qualify for a manufactured home loan including:

• Location: The home must be placed in an eligible rural area as defined by USDA property eligibility maps. Also, not all properties within eligible rural areas qualify.

• Home Condition and Standards: The manufactured home must be new and not previously lived-in. It must comply with HUD construction, safety and energy efficiency standards and be permanently affixed to a foundation.

• Use as Primary Residence: You must intend to use the home as your full-time residence and principal dwelling.

• Citizenship: At least one borrower must be a U.S. citizen, U.S. non-citizen national, or qualified alien.

• Repayment Ability: Your total monthly expenses and debts should not exceed a certain percentage of your gross monthly income as determined by USDA’s underwriting guidelines.

• Acceptable Credit History: Your credit history will be checked but can have some issues like late payments or collections. Major derogatory credit like foreclosures or bankruptcies must be older or sufficiently explained.

• Income Limits: Direct loans have income caps but guaranteed loans do not. However, your income must be sufficient to repay the loan.

As long as you meet these requirements and USDA’s underwriting criteria, you can qualify for a manufactured home loan!

The Application and Approval Process

Here are the typical steps to go through when applying for a USDA manufactured home loan:

• Get pre-qualified to determine if you meet preliminary eligibility requirements.

• Select a manufactured home that meets USDA requirements and costs within your affordable loan limits.

• Find suitable land within an eligible rural area to place the manufactured home.

• Sign a purchase agreement for the home and land.

• Complete a full loan application including credit check, income/asset verification, property appraisal etc.

• Provide all required documentation such as tax returns, pay stubs, land surveys, home certifications, etc.

• Obtain approval of the site plan and permanent foundation for placing the manufactured home.

• Receive final loan approval and then formally accept the mortgage offer.

• Coordinate delivery and set-up of the manufactured home on the land.

• Complete the closing process to take possession of the new home!

While it may seem complicated, USDA-approved lenders will guide you through every step of the process from application to close.

Tips for Getting Approved for a USDA Manufactured Home Loan

Here are some tips to help ensure your USDA manufactured home loan gets approved:

• Have a stable income history and employment. Any sources of income can be used to qualify.

• Make a larger down payment if possible. At least 5-10% down can increase chances of approval.

• Have other liquid assets like savings that can cover emergencies and home costs.

• Select a modestly priced manufactured home that fits your budget.

• Place at least 5-10% down when purchasing the underlying land.

• Check your credit and dispute any errors to maximize your score.

• Pay down existing debts and avoid new credit inquiries before applying.

• Choose land in low cost rural areas to keep valuations reasonable.

• Work with USDA-approved lenders experienced with these loans.

With proper preparation, buyers can overcome credit and income challenges and get approved for USDA manufactured home financing.

Are USDA Loans a Smart Choice for You?

A USDA loan can be a great way for buyers to finance a quality new manufactured home in rural locations. The benefits include flexible credit requirements, low and even no down payments, below market interest rates, subsidized options for very low-income buyers, and even options to roll land costs into the mortgage.

However, USDA loans are not for everyone or every situation. Consider your individual home buying goals and financial circumstances to determine if this type of loan fits your needs. Be sure you fully understand the costs, loan terms, eligibility rules, and the application process before committing.

If owning a home is your dream, be sure to explore whether USDA financing may be able to help make that a reality! Manufactured housing can provide an affordable option, and USDA mortgages create opportunities for buyers across rural America.

Finding a USDA Approved Lender

The first step in pursuing a USDA manufactured home loan is connecting with an approved lender. Here are some options to find a lender near you:

• Check USDA’s online Lender Locator tool and filter for lenders that offer manufactured housing loans.

• Look for local banks and lenders that advertise USDA or government-backed loan programs.

• Reach out to manufactured home dealers to ask which lenders they frequently work with on USDA deals.

• Contact your state USDA Rural Development office and ask for lender referrals.

• Search online for specialized USDA lenders that operate nationwide.

• Ask family, friends or your real estate agent if they have lender recommendations.

With a reputable USDA approved lending partner, you can get started on the path to purchasing your dream home. They will guide you through every step of the loan process.

Owning a quality and energy efficient manufactured home is possible with USDA home financing. If you think such a loan would meet your needs and