Do I Qualify for a Loan on a Manufactured Home?
September 1st, 2021
Manufactured homes have historically provided an opportunity to own a home without breaking your budget. Because of this, more people are considering manufactured homes among their home ownership options in California.
If you are wondering how to qualify for a manufactured home loan, we have put together a handy guide on financing a manufactured home – take a look to see if you’re able to take advantage of it.
Why do you need a Manufactured Home Loan?
It is just as common to finance the purchase of manufactured homes as it is for traditionally-built homes, but the process and qualifications are different. Manufactured homes are sometimes called mobile homes or modular homes, but there are technical differences that may affect your loan. The California Manufactured Housing Act of 1980 distinguished manufactured homes vs. mobile or modular homes in regard to home quality, mobility, and lending practices.
Specifically, manufactured homes are at least 540 square feet, have a permanent foundation, and can be considered ‘real’ estate vs. personal property or a vehicle for mobile homes. Manufactured homes are built in specialized factories and come in different sizes, including single, double, and triple wide. They are not made to be moved on attached wheels, and their loan types reflect this.
What are some of the Types of Manufactured Home Loans Available?
Depending on the classification of your manufactured home, you may qualify for a number of different types of loans, including:
FHA Title II Program: FHA Title II loans are utilized for manufactured homes that do not qualify for personal or vehicle loans. Additionally, FHA loans are ideal for purchasers who may not have excellent credit history. These loans typically have low down payments and debt-to-income requirements, but make sure to ask your lender. FHA loans have no income limit or geographic restrictions, and are assumable – meaning that if you sell your home, the buyer may be able to take over payments. These terms make FHA loans popular options for manufactured home purchases.
Freddie Mac Loans: Freddie Mac Loans often incorporate a variety of fixed rate or adjustable rate mortgages, including terms of 15, 20 and 30 years. Freddie Mac loans also offer among the lowest down payments, and can use grant or gift money. This makes them attractive and affordable loan options for first-time manufactured home buyers.
Chattel Loans: A chattel loan is a mix between a real estate loan and a vehicle loan. The chattel loan uses vehicle loan terms with the manufactured home as collateral. With the manufactured home providing financial security to the lender, chattel loans may offer more competitive loan interest rates than personal loans. Another thing to consider with a chattel loan is the repayment period may be 15 or 20 years – quicker than a standard 30 year fixed rate home mortgage loan, leading to higher monthly loan payments.
USDA Rural Housing Loans: Don’t let the name fool you – these loans are designed to help purchase homes in California on the outskirts of cities. A manufactured home near you may be eligible for this type of loan, which may be useful for homebuyers looking to finance with little or no money down. These loans offer 30 year fixed rates that may include closing costs and legal fees, and may offer popular and economic ways to purchase a qualified manufactured home.
These are a few of the loan types which may be available to you when purchasing a manufactured home. We always stress having a conversation with your lender about your specific financial situation to see what will work best for you.
How do I Qualify for a Manufactured Home Loan?
When meeting with lenders, they are looking for the following:
Suitable credit scores for a loan.
Sufficient funds to make minimum down payment.
Adequate income to make regular payments and meet other expenses.
Express intent to occupy your manufactured home as a residence.
Have a suitable site to place the manufactured home on that meets loan guidelines.
These requirements may vary according to your lender, which is why it is so important to communicate early and often with qualified lenders about the best situation for you. Some banks have experienced lenders dedicated entirely to manufactured home lending – as is the case at Community West Bank – which means you’ll get the proper attention you deserve.
Finance Your Manufactured Home with Community West Bank
At Community West Bank, nothing makes us happier than helping homeowners achieve their goals. That’s why we have a team of manufactured home loan specialists who will work to provide a responsive lending situation for you and your family.
If you are looking for manufactured home financing, please contact us today. One conversation could start you on a path to make the home of your dreams a reality.