If you want to buy a mobile home, you may have a tougher time obtaining financing. Mobile homes have unique characteristics that make them risky. The fact that they are ‘mobile’ as the name suggests makes many lenders shy away from the mobile manufactured home mortgage because of the risk of default.
But, with the right qualifications, you may be able to get a mortgage for a mobile home. Check out the basic guidelines below.
What Type of Property is It?
First, you have to prove that the mobile home is ‘real’ property. Only homes permanently affixed to the ground are ‘real property.’ In other words, if you can drive the mobile home away from its current location, it’s not real property and won’t be eligible for a home loan. Instead, you’d need a personal loan.
If the mobile home is permanently affixed to the ground and you own the land that it’s on, you can get a mortgage. Depending on your qualifications, you may qualify for a conventional (Fannie Mae or Freddie Mac) or a government-backed loan (FHA, USDA, or VA loan).
Mobile Home Mortgage Loan Programs
If you’ve established that you have ‘real property,’ the following loan programs may be available to you:
- Fannie Mae or Freddie Mac Loans
Borrowers need between a 3% and 5% down payment, ‘good’ credit (usually around a 680), stable employment history, and a decent debt-to-income ratio. The home must be at least 600 square feet and 12 feet wide. Fannie Mae and Freddie Mac offer loans up to 30 years and require PMI on loans over 80% LTV.
- FHA Loans
FHA loans offer flexible guidelines for mobile homes, just as they do for site-built homes. Borrowers need a minimum 580 credit score with a 3.5% down payment. Some lenders may allow a credit score as low as 500, but with a 10% down payment. The FHA offers terms up to 20 years for single-module homes.
- VA Loans
VA loans offer flexible guidelines for veterans of the military. Unlike site-built homes, the VA requires a 5% down payment because of the risk of default on a mobile home. The VA also offers a term of 20 years and 32 days for a single-wide and 23 years and 32 days for double-wide manufactured homes. Many VA lenders have stricter credit and debt ratio guidelines than they do for site-built homes too.
- USDA Loans
The USDA offers 100% financing on USDA-approved mobile homes. The home must be brand-new and you must not make more than 115% of the average income for the area to qualify for it. The USDA charges mortgage insurance, but it’s less than what the FHA charges.
If you are looking to apply for a new or used mobile manufactured home whether on land or in a mobile home park. Try Fundwise Financial at this link: https://apply.fundwisecapital.com/mobile-homes1
In conclusion, a mobile home mortgage definitely has its challenges, but there are loan programs available today. Lenders look for borrowers with great credit, a decent down payment, minimal debts, and stable employment. They want to know that you aren’t a high risk of default on a property that already poses a risk of default.