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Top 5 Tips for Mobile Home Financing

Getting a home loan is a goal for many people, including those who want to buy a mobile home or manufactured home. These types of homes are desirable for many lower income Americans because they are very affordable and the rates on the mobile home loans are near record lows. If you think that you cannot get a home loan for a mobile home, you're wrong! There are some ways to get an affordable loan for these homes. The best options are usually working with the federal government; they want to encourage the housing market and have some very enticing programs. Let's break down how to do it:

#1 Qualify for an FHA Mobile or Manufactured Home Loan

The Federal Housing Authority or FHA is in the business of making home ownership in easier reach for millions of American families with past credit problems. FHA is part of the federal government that is dedicated to supporting the housing market in the US. Most FHA mortgage loans are made for site built homes, but FHA does have programs available for mobile homes. However, know that FHA itself is not a lender. Instead of lending money for you to buy a mobile home, it guarantees the loan that a private mortgage lender provides you. By guaranteeing the loan, FHA assures the lender that the federal government will repay the lender if you do not pay the mortgage. This guarantee from the federal government entices more mortgage lenders to provide regular home and mobile home loans to people with past credit problems.

#2 How to Qualify for an FHA Loan

FHA loans for mobile homes are fairly easy to qualify for. You generally only need a credit score of 620-640 to qualify, and you usually can put down as little as 3.5%. If your mobile home costs $50,000, that is less than a $2000 down payment. That is the type of down payment that most Americans can afford. However, remember that if your credit score is under 620, you may have to put down more money. You also have to prove to the lender that you have enough income to cover the mortgage payments, as well as enough for your other living expenses. The FHA-approved lender will be looking at your debt to income ratio as well as your past credit history, and your amount of cash reserves.

#3 Rules for FHA Mobile and Manufactured Home Loans

Manufactured home loans are insured or guaranteed by FHA, so there are several rules in place that the home must follow:

  • The house has to have been built after 6/15/76.
  • The red HUD label must be on each part of the home.
  • The smallest home that can be financed is 400 square feet.
  • The home must be permanently anchored to a foundation that meets the FHA's standards.
  • The home must be of sufficient quality to meet manufactured home installation standards as dictated by FHA.
  • The lot where the home is going to be located must be approved.
  • The home only can be used as a primary residence.

#4 Consider a USDA Loan

Another great option for people interested in a mobile home is to get a USDA loan. This program is backed by USDA, and as with FHA, the loans generally are offered by private lenders who will be reimbursed if the borrower defaults. This program is designed to help low to moderate income buyers who want to buy a home in a rural area. An eligible applicant can build, rehab, or improve a dwelling in a rural area, and this includes manufactured houses and mobile homes.

The program offers a 90% loan guarantee to approved private lenders. Because of this guarantee, private lenders are more willing to lend on single family and mobile home properties to buyers with past credit problems. A big advantage of the USDA program is that some buyers can obtain 100% financing if they find a home they want in an approved rural area.

As with FHA programs, you must be able to prove that you have the income to afford the payments and meet the lender's debt to income requirements. However, because the loan is guaranteed by the government, lenders are quite flexible on their terms.

#5 Direct USDA Loans Also Are Available

If you are not able to get a USDA loan for your mobile home from a private lender, the USDA also does offer some direct loans that are designed for lower income borrowers with credit problems. These loans also are often available with no down payment and very low interest rates. There are many low down payment options to finance a mobile home or manufactured home. You really should focus on US government programs however to get the best rate and the lowest down payment possible.

 

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