Who Finances Mobile Homes

Financing a mobile home, also known as a manufactured home, can be a different process than financing a traditional site-built house. Several avenues exist, each with its own requirements and considerations.

Personal Loans: While less common, unsecured or secured personal loans can be used to finance a mobile home, especially if the amount needed is relatively small. Banks, credit unions, and online lenders offer these loans. Interest rates on personal loans tend to be higher than those for mortgages or chattel loans, and repayment terms are often shorter.

Chattel Loans: This is a common type of financing specifically for manufactured homes. A chattel loan is secured by the home itself, similar to an auto loan. These loans are generally used when the home is not permanently affixed to land that the borrower owns. Many lenders specialize in chattel loans for manufactured homes, including banks, credit unions, and finance companies that focus on the manufactured housing industry. Interest rates on chattel loans tend to be higher than those for traditional mortgages because manufactured homes often depreciate in value, unlike site-built homes that typically appreciate.

Mortgage Loans: If the mobile home is permanently affixed to land owned by the borrower, it may be eligible for a traditional mortgage loan. This often requires the home to meet certain criteria, such as being placed on a permanent foundation and meeting local building codes. Common mortgage options include:

• Conventional Mortgages: These are not backed by a government agency and typically require a good credit score and a larger down payment. Fannie Mae and Freddie Mac, government-sponsored enterprises, offer guidelines for conventional mortgages on manufactured homes that meet specific requirements.
• FHA Loans: The Federal Housing Administration (FHA) offers mortgage insurance on loans made by approved lenders. The FHA Title I loan program can be used to finance a manufactured home and the lot it sits on. The FHA also offers Title II loans for manufactured homes that meet certain requirements, including being permanently affixed to a foundation and meeting HUD's Manufactured Home Construction and Safety Standards. FHA loans often have lower down payment requirements and are more accessible to borrowers with less-than-perfect credit.
• VA Loans: The Department of Veterans Affairs (VA) offers loan guarantees to eligible veterans and active-duty service members. VA loans can be used to purchase a manufactured home and land, but the home must meet certain VA requirements, including being permanently affixed to a foundation.
• USDA Loans: The US Department of Agriculture (USDA) offers loan guarantees to eligible borrowers in rural areas. USDA loans can be used to finance a manufactured home and land in eligible areas, and they often have no down payment requirement.

Manufacturers and Dealers: Many manufactured home manufacturers and dealers offer financing options directly to buyers. These financing programs may be convenient, but it's important to compare the terms and interest rates with those offered by other lenders to ensure you're getting the best deal.

Credit Unions: Credit unions often offer competitive rates and terms on manufactured home loans, particularly for members. It's worthwhile to check with local and national credit unions to see what financing options they offer.

Before choosing a financing option, it's crucial to consider factors such as interest rates, loan terms, down payment requirements, credit score requirements, and any fees associated with the loan. Shopping around and comparing offers from multiple lenders can help you find the most suitable and affordable financing for your mobile home purchase.