Some potential home buyers who are on a limited budget may want to consider purchasing a manufactured or modular home with a unique mortgage. But what entities offer loans on manufactured and modular homes? Many consumers report running into walls when seeking manufactured, modular and mobile home financing when shopping online with many traditional lending companies. The reality is that manufactured and modular home financing can be complicated if you are looking for mortgages in the wrong place from the wrong companies. It's no secret that many mortgage companies simply do not offer home loans for modular and manufactured homes, but there are many that still do, so read on to learn more.
Government Insured Programs like the FHA
Generally, it is more difficult to obtain financing for manufactured and modular homes. However, one good option is the FHA manufactured home loans. With a federally-backed loan for manufactured home, the government insures the loan that is made to you by a private mortgage lender. So, if you fail to make your payments, the private lender knows that the government will reimburse them for their losses. This makes private lenders more likely to offer loans for manufactured homes. Keep reading and find out what FHA will do for mobile home loans.
However, because modular home loan programs have a higher risk for lenders, they will require you to pay for mortgage insurance which will cost you an extra $100 per month or so. FHA loan rates remain competitive so it may still be cost-effective even if you have to pay mortgage insurance monthly. For the home to qualify, it must have been constructed after June 15, 1976. So even if your home has been updated, if it is older than that, you cannot qualify for a manufactured or modular home loan insured by the FHA.
Currently, the maximum you can borrow for an FHA loan is $69,678 for the home and $23,226 for the lot. The maximum loan term is 15 years when you are financing a lot, and it is 20 years for a home and lot. Mortgages for a manufactured home with multiple sections can last up to 25 years.
USDA Mortgages for People in Rural Regions
The US Department of Agriculture also provides financing for properties located in certain rural areas of the United States. These USDA home loans are designed for borrowers with low and moderate income. While most of the loans are provided for traditional homes, manufactured homes can qualify as well. The USDA does have some requirements when it is financing a manufactured home:
VA Financing with Loans for Manufactured and Modular Homes
Are you looking for VA loans for mobile homes or manufactured housing? VA loans are offered to members of the US military and veterans. Loans are available to people with average or below average credit, and 100% financing is usually standard. The US Veterans Affairs Administration guarantees the loan, similar to the FHA program.
However, fewer VA lenders offer loans for manufactured homes and modular homes. That said, with some shopping around, you should be able to find a VA loan for your modular home or manufactured home. Anyone who uses a VA loan does not have to pay mortgage insurance, but you do have to pay the VA funding fee that is wrapped into the mortgage. If you have had a foreclosure or bankruptcy, you must wait two years from the date it was finalized to qualify for the loan. The seller may pay closing costs up to 4% of the home price.
More About Manufactured and Modular Home Financing
This type of financing is available but it differs from regular home financing in several ways. Mobile home loans usually are more expensive than traditional modular home loans, and carry a higher interest rate. They also are for limited terms. Some mobile homes also can qualify for some mortgages but often are financed via government subsidies and are not usually handled by private lenders. Mobile home financing can be obtained for both single wide and double wide homes. Single wide homes often are financed by mobile home companies. Some double wide homes can qualify for conventional loans from either private lenders or from government funding.
Loans for both types of housing may be obtained for up to a 20-year term. As mentioned earlier, these modular home loans are more expensive than regular home financing. However, keep in mind that mobile home loans may cost more even though the houses are less expensive than traditional homes. They also may have lower down payments. In some situations, the down payments on mobile homes can be less than 5%. Of course, these homes will carry higher interest rates because they are considered a higher risk by insurers.
Also, mobile home owners have to pay for the land on which their home is situated. Homeowners usually may lease or buy a lot for their home. Manufactured houses also may be eligible for a mortgage for the land the home sits on.
The Last Word
There are government-backed mortgages available for borrowers who want to purchase a mobile home and manufactured homes. Bad credit mobile home loans are not easy to find, but you will see more opportunities with manufactured home loans for bad credit from several government endorsed agencies. You may have to do more shopping to find a good lender, and your interest rate will be higher. However, the price of the home is lower and this type of home purchase can make sense for many moderate income Americans.
First Time Home Financing.com does not offer mortgages or direct financing. FirstTimeHomeFinancing.com is a website that offers information about house financing and does not guarantee 1st time home mortgage programs directly or indirectly through representatives or agents. FirstTimeHomeFinancing.com provides a news and information service by offering editorial content related to the housing and mortgage industry. This website has no official relationship with the USDA, VA, Federal Housing Administration or the Department of Housing and Urban Development.
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