The short answer is yes. Indeed, manufactured homes (also known as modular or mobile homes) may be financed in accordance with VA mortgage guidelines. These are known colloquially as mobile home loans.
We’ll explain what a mobile home loan is in detail below, along with how to apply for one and when, why, and where.
What Is A Mobile Home Loan?
A mobile home loan is, in essence, exactly what it sounds like: a financial loan made to be used to purchase a manufactured home. However, not all mobile home financing is the same. When it comes to these loans, there are various loan options. They include:
Buying a mobile home doesn’t always require buying the land it’s currently situated on because they can be moved from one place to another. Loans for chattel are given to buy the mobile home unit, not the land. So, rather than being a real estate loan (like other home loans), it is regarded as a personal property loan.
The Federal Housing Administration (FHA) insures mortgages that have low down payments, fixed interest rates, and borrower-friendly regulations. The FHA was established in the 1930s to promote homeownership nationwide. There are two Title I and II FHA programs available for financing mobile homes.
Veterans and service members can buy mobile homes with VA loans. They can be particularly useful for this purpose depending on the lender because many loans of this type don’t require a down payment or monthly mortgage insurance. However, there are some restrictions when using a VA loan to finance a mobile home. We discuss these in detail further along in the article.
How do I use a VA loan for a mobile home?
The VA doesn’t lend money. All it does is guarantee loans. So, your lender will be a private business that has the authority to impose any standards it sees fit. Although it must at the very least adhere to the VA’s rules, it is allowed to base its own rules on those.
Therefore, not all VA-approved lenders are prepared to make loans for manufactured or mobile homes. In fact, many won’t. So you’ll need to look for someone who can assist you. Don’t worry, there are some around. Indeed, we list a few, below.
Once you find a lender, get pre-approved for the loan. The lender will check your credit and verify your income and finances. It will then provide you with a letter stating the maximum amount it is essentially willing to lend you. That puts you in a position of strength when you are purchasing a property. And it ought to dissuade even the pushiest park salesperson.
You can use a VA purchase or refinance loan to:
Keeping in mind what we said earlier, each private lender establishes its own rules Not every lender will help you in all those situations. So be prepared to hunt around.
VA mobile home loans: 3 peculiarities
Bear in mind three things when considering mobile home financing:
There are benefits and drawbacks to having a short-term loan. Due to the fact that there will be fewer installments, your monthly payments will be higher. However, since you’ll be borrowing for a shorter time, your overall borrowing costs should be lower. After all, you’ll be paying interest for fewer years.
Chances are, you won’t need great credit to get a loan. The VA doesn’t set a formal floor on your FICO credit score, but many lenders look for a minimum of 620. That’s on a scale of 300-850 and FICO categorizes that as “fair”. You just might find a lender who’ll take you on with a slightly lower score, if you can show you’re a good borrower in other respects. But don’t expect miracles: the default rate on VA loans for manufactured homes has been high in the past and lenders generally have had their fingers burned.
That’s probably a contributing factor in why many lenders won’t consider these loans. They may gladly offer VA loans, but they consider doing so with mobile homes to be a toxic combination. Don’t lose hope; some companies are still eager to assist responsible borrowers with these products. Just keep looking and don’t give up until you find one. Read on for suggestions that may assist you in obtaining the loan you desire.
VA mobile home guidelines:
The VA updated its rules for how it categorizes manufactured/mobile homes in March 2019. Here are the latest ones. To be eligible for a VA loan, the mobile home must:
*If the house you want to purchase is currently classified as a chattel, don’t worry Redesignating it as real property is typically not too difficult (see below).
You must submit a variety of plans and specifications when applying for a loan for a house that hasn’t yet been built.
Must be classified as real property
Most manufactured homes use public roads to travel to their locations. So officially they start out as vehicles.
Smart owners undertake a “title elimination” when the home arrives. But many don’t. So, rather than being considered real property, the house you want to buy may currently be classified as a vehicle or chattel. You can pretty much be certain that it’s still a vehicle if the current owners still pay annual fees to the DMV rather than real estate taxes.
In most states, it’s not hard for you to reclassify the home yourself so that it becomes real property and is therefore eligible for a mortgage. You have to file some forms with the county records office and pay some modest fees.
However, you may have to jump some hurdles first. To remove any wheels and axles and frequently to install utilities, you must have:Rights to the land where the house is located.
Obviously, even if the home currently qualifies as a vehicle or chattel, these practical measures are frequently already in place.
Must be on its own lot/property
Many veterans are curious about their ability to purchase a mobile home in a park or neighborhood where they rent the land. But VA loans do not allow this. To qualify for a VA loan, the lot and the mobile home must both be owned by you or be part of the transaction.
Why get a mobile home loan?
So, why would you want to pursue mobile home financing in the first place? Chances are, affordability will be a big factor. In 2018, the Manufactured Housing Institute (MHI) reckoned the total cost of a mobile home was less than half that of more traditional housing options: an average price per square foot of $49 for a manufactured home, compared with $107 for a site-built one. Now add those numbers to the fact that modern mobile homes are increasingly being built to showcase comfort, advanced energy efficiency, and spaciousness, and there’s a simple yet strong case to be made for considering a mobile home loan. Small wonder the MHI says roughly one in 10 new homes in America are manufactured ones.
Of course, you stand to receive a better deal than the typical mortgage borrower if you qualify for VA mobile home loans (and you probably do if you qualify for VA loans). Therefore, avoid being duped into using the park’s own (or recommended) chattel financing by salespeople. Instead of considering your best interests, they will be considering their lucrative financing commissions.
Other things to consider
Even though a manufactured home is significantly less expensive than a comparable stick-built one, it is still likely to be the single largest purchase you have ever made. So you need to think through your purchasing decision properly. In particular, bear in mind two points.
First, manufactured homes don’t typically “appreciate” (grow) in value, though there are rare exceptions. They don’t usually depreciate (lose value) as quickly as a car but the process is similar. One of the reasons for that is they have a shorter life expectancy than a stick-built home. Of course, you may be able to slow depreciation by maintaining your home better than most owners do.
And that brings us to the second point. One of the many costs associated with homeownership is investing in maintenance. Property taxes, homeowner’s insurance premiums, and perhaps park fees will also be required of you. When determining whether you can afford the loan you want, your lender will take into account all of those (as well as your current debt levels). Therefore, understand them before locating a lender to submit an application for VA mobile home financing.
VA mobile home mortgage lenders
Unfortunately, there aren’t many lenders that offer VA loans for manufactured homes. However, during our research, we discovered a few businesses that offer the program (see list below).
The fact that some of these are wholesale lenders should be noted They provide loans to other “retail” businesses that do business with the general public, as the name implies. So they don’t deal directly with consumers. As with asking a manufacturer for a list of stockists, you might ask them for a list of nearby retail lenders and brokers.
Mortgage brokers can be very useful when you’re looking for a hard-to-find specialist loan, including VA mobile home loans. Ask around among friends, families, and colleagues to find one with a good reputation. Make sure you know upfront who’s going to pay your broker’s fees. It may be the lender but sometimes it’s you.
Overall, conducting thorough research at an early stage can help you find a VA mobile home loan that matches your unique set of circumstances. Check out the list of potential lenders below to get started.
Potential VA mobile home lenders
Veterans United – VU says that it “does lend on manufactured homes in certain cases.” And you might want to start by talking to one of its loan officers. Because, if you qualify, you’ll be dealing with an excellent lender with a great reputation for customer service. Indeed, it lent more VA loans in 2018 than any other lender.
Land Home Financial Services – This lender offers loans up to 100% LTV (zero down payment) to buy a manufactured home and 90% to refinance for applicants with credit scores down to 620. The lender appears to be licensed in most U.S. states. However, it is a wholesale lender, meaning you have to find a bank or mortgage company that is signed up with Land Home as a broker. It’s possible that Land Home has a list of lenders in your area.
AFR Wholesale – Another wholesale lender, AFR states that it offers VA manufactured home loans. Since it’s a wholesale lender, you must do your own search for a local mortgage broker or lender who is signed up with AFR. The company does not share its manufactured home guidelines publicly, so ask your local lender if they partner with AFR and the terms of the loan.
OnQ Financial – OnQ Financial also states that they offer VA manufactured housing loans for properties at least 400 square feet, existing or new construction, for applicants with credit scores as low as 620. Purchase and refinance options are available. Fortunately, OnQ is a direct lender, meaning you don’t have to find a mortgage broker to work with them. The company is licensed in nearly every state and has branches nationwide.
CMG Financial – CMG Financial is licensed in most states and is a retail and wholesale lender. Its guidelines state that it can lend on manufactured homes aged 20 years or less, on a permanent foundation, no structural additions, enclosed crawl space, and meeting all other local codes as well as VA property requirements.
Hunt around a bit and you’ll likely find others.
Using a VA streamline loan
Some lenders permit you to finance mobile homes with a VA streamline loan (IRRRL), which can lower interest rates with little to no out-of-pocket costs on your part. The house must currently be under a VA loan, with terms that your preferred lender finds acceptable. Ask your lender if they accept this type of loan, and for information on general requirements, visit our VA streamline refinance page.
Is a manufactured home right for you?
The decision to purchase a manufactured home rests solely with you, the home buyer. For many people, it’s a fantastic way to get a high-quality house for a small portion of the cost of a typical house. A VA mobile home loan can be beneficial if you believe living in a mobile home is the best option for you.
FAQ
Can you do a VA cash out on a manufactured home?
The short answer is yes. Indeed, manufactured homes (also known as modular or mobile homes) may be financed in accordance with VA mortgage guidelines. These are known colloquially as mobile home loans.
What does the VA consider a permanent foundation?
This means that we need a structural engineer to complete a foundation certification because of the VA Loan Manufactured Home Permanent Foundation. Removed wheels, tongues, and axles are among the requirements for manufactured home foundations for VA loans. 8″ thick concrete footing (2′ x 2′).
Does VA lend on single wide manufactured homes?
The maximum loan term for single-wide manufactured homes (purchased with or without a plot of land) is 20 years and 32 days. For double-wides, the maximum loan term is 23 years and 32 days. The maximum loan term for a double-wide home and a lot is 25 years and 32 days.
What is the minimum credit score for a VA home loan?
There is no minimum credit score requirement. Instead, VA demands that a lender examine the full loan profile. Visit www. to view the complete VA credit requirements for more details. benefits. va. gov/warms/pam26_7. asp.