Credit Building Tips

How to Buy a Mobile Home With Bad Credit [Tips and Tricks]

Shaun Connell
May 12, 2023

It's easy to not think about your credit score until your gearing up to apply for a loan.

If you're considering buying a mobile home using financing, you might be wondering what your credit score means for your chances of being approved for a loan. Even if you are able to qualify, you're likely curious what your less than ideal score means for the rates and terms you'll be offered.
Solution iconThere are a number of loan options for mobile homes for people that have bad credit-- for example, people with a credit score of 500 can qualify for an FHA loan if they are able to put 10% down. Beyond that, there are some alternative methods you can explore, including finding a seller that is willing to finance, lease-to-own opportunities, finding a co-signer, and more.
Are you ready to explore every potential avenue when it comes to purchasing a mobile home with bad credit? You've come to the right place. Let's dive in and take a look at what you need to know.

What Credit Score Do You Need to Buy a Mobile Home?

In most cases, you will find that lenders typically require a minimum credit score of at least 580-620 in order to receive a mobile home loan.

bad credit loan for mobile home with concrete pad

That being said, it is possible to receive financing with a lower credit score. There are a number of loans you can apply for when buying a mobile home, many of which will require that you make a larger-than-usual down payment if your credit score is less than ideal.

A minimum credit score of 580-620 is often required in order to receive a loan for a mobile home.

What this means is that you might find that you qualify for a mobile home loan even if you do have bad credit, depending on which credit scoring model is being used and depending on what you mean by bad credit.

The lowest category of FICO credit scores is "poor," with scores ranging from 300-579. The lowest category of VantageScore credit scores is "very poor," ranging from 300-499.

For FICO scores, a "bad" score is typically considered below 670. Under this number, a credit score falls into the ranges of "fair" or "poor."

For VantageScore models, a score of less than 661 means that your credit score is "fair," "poor," or "very poor."

What Types of Loans are Available For Mobile Homes?

When you are at the point where you know what type of mobile home you're looking for, and you know where you want to put it, the next step is to determine how you will finance the purchase.

There are a number of different loan types available for buying mobile homes. It is worth taking a look at each one, as they have different requirements for qualifications, including different minimum credit scores.

FHA Loans

Individuals can receive mobile home loans offered by the Department of Housing and Urban Development through the Federal Housing Administration loan program.

This includes:

  • Title I loans
  • Title II loans

The primary difference between these two loan types is that your mobile or manufactured home does not need to be attached to the land when you apply and receive an FHA Title I loan. On the other hand, the home needs to be attached permanently to land owned by the borrower.

FHA loan programs work with borrowers that have credit scores that are as low as 500.

Title I Loans

If you have less-than-ideal credit, a Title I FHA loan might be a good place to start looking for a mortgage.

mobile home bought with loan by lake

With a 10% down payment, they accept credit scores as low as 500 to 579. If you have a credit score above 580, you can make a down payment as low as 3.5%.

There are a number of ways that a Title I loan can be used when it comes to mobile homes, including:

  • Buying a new or used mobile home
  • Buying the developed lot where the mobile home will be located
  • Refinancing a mobile home purchase
  • Buying both the mobile home and the lot the home will be located on

Even if the buyer isn't planning on purchasing the land where the mobile home will go or doesn't already own this land, lenders can offer Title I loans for mobile homes.

Borrowers that don't own the land and aren't planning on buying the land where the mobile home is going to stand will need to submit a signed lease with an initial term of three years or more for the mobile home plot.

It's common for mobile homes to be placed in mobile home parks or manufactured home communities, where residents can lease rather than own the land their home is on.

FHA Title I Requirements

There are a number of requirements you'll want to be aware of when applying for this loan program.

When it comes to the maximum loan amount, the following requirements must be met to qualify:

  • Maximum loan for manufactured/mobile home only: $69,678
  • Maximum loan for manufactured/mobile home lot: $23,226
  • Maximum loan for manufactured/mobile home and lot: $92,904

The maximum loan term required for one of these mobile home loans are:

  • Manufactured/mobile home: 20 years + 32 days
  • Manufactured/mobile home lot: 15 years + 32 days
  • Single-wide manufactured/mobile home and lot: 20 years + 32 days
  • Multi-unit manufactured/mobile home and lot: 25 years + 32 days

Title II Loans

Title II loans can be used to purchase a manufactured or mobile home along with the land that the home will stand on. This is the case as long as you meet all of the requirements of the loan.

The minimum required credit score for Title II loans are the same as those for Title I: scores of 500-579 must put 10% down and scores of 580 or higher can put 3.5% down.

Real estate investors aren't allowed to get this type of loan-- it's only for people that are using the mobile home as a primary residence.

The other requirements for qualification include the following:

  • The home was constructed after June 15, 1976
  • The floor area of the home must be 400 square feet or greater
  • The loan must be used for both the home and the land
  • The home must be built (and remain located on) a permanent chassis

All of this means that this type of loan can't be used for mobile homes in mobile home parks or manufactured home communities.

Freddie Mac

Before you start looking down obscure paths for your mobile home financing, the easiest answer might be right under your nose.

You will need to have a minimum credit score of 620 to qualify for a loan through the Freddie Mac Home Possible mortgage program. There are a variety of options to choose from if you are able to go this route:

  • Fixed-rate mortgage (15, 20, or 30 years)
  • Adjustable rate mortgages (7/6 or 10/6)

Depending on your credit score, it's possible to put as little as 3% down for one of these loans. It's also possible in some instances to use grant money or gifted money toward your down payment.

Are you thinking about opening a new credit card but you aren't sure whether you should wait until after you buy your house? Check out our article about how opening a new account will impact your ability to buy a house.

Fannie Mae

There are some lenders that offer Fannie Mae mortgages to individuals that want to purchase a mobile home. This occurs through what is known as the MH Advantage program.

A minimum credit score of 620 is required to qualify for the MH Advantage program.

You will need to satisfy a variety of criteria, including:

  • Installing the home with a driveway
  • Installing the home with a sidewalk that connects to the driveway
  • Installing a detached garage or carport

Certain architectural design, construction, and energy efficiency standards also need to be met to qualify for the MH Advantage program.

  • One of the benefits of MH Advantage home loans is that their interest rates are often lower than other traditional mortgage options for mobile or manufactured homes.

Here are a few other key points about these loans you'll want to know:

  • The loan term is 30 years
  • You might be able to put as little as 3% down

VA Loans

It's possible that you could qualify for a loan that is insured by the Department of Veteran Affairs if you belong to the military community.

There are no minimum credit score requirements for VA loans.

When it comes to mobile homes, you can use a VA loan to:

  • Purchase both the home and the land
  • Purchase a home to put on land you already own
  • Refinance a home you plan to move to land you already own

If you qualify for a VA loan, you might be able to receive 100% financing for your mobile home.

Are you trying to improve your credit? Take a look out our guides to credit repair hacks, removing derogatory marks from your credit report, and deleting collections in exchange for payment.

Personal Loans

If you are worried that you aren't going to be able to qualify for a traditional home loan to purchase your mobile home, or you don't want to deal with the often arduous mortgaging process, you could also consider a personal loan.

  • Since mobile homes are significantly less expensive than standard homes, you might find that a personal loan will offer you the funds to complete the purchase.

There are a number of pros and cons to using personal loans rather than traditional mortgages to purchase a mobile home.

Some of the advantages include:

  • Personal loans are usually cheap or free to set up, while mortgages involve costly appraisal, title, and escrow fees
  • Personal loans are not secured, meaning that your mobile home is not serving as collateral for the loan as it would with a traditional mortgage (this means you won't lose your home if you default)
  • It is possible to get personal loans with bad credit, but your rates and terms will be increasingly less favorable the worse your credit score is

On the other hand, the major drawback of using a personal loan for purchasing a mobile home is that the interest rates will likely be higher than those of a traditional mortgage. This is precisely because the home isn't used as collateral for a personal loan the way it is for a home loan.

Are you on a mission to learn more about improving your credit? Take a look at our guides to how long tradelines stay on your credit report, using installment loans to rebuild bad credit, and writing hardship letters to credit card companies.

Chattel Loans

Finally, you might also choose to apply for a chattel loan, which is a special kind of personal property loan that could be a good choice for a person with bad credit.

These loans are designed for the specific purpose of purchasing expensive vehicles, including:

  • Mobile homes
  • Boats
  • Planes
  • Farm equipment

Chattel mortgage lenders will often only require a minimum credit score of around 575, which is quite a bit lower than the minimum credit score for many other loan types.

With chattel loans, the property being financed serves as collateral for the loan. You can typically get a chattel loan even if you don't own (and don't plan to purchase) the land where the mobile home will stand. For this reason, chattel loans are popular choices for individuals that are expecting to lease a lot in a mobile home park.

There are some lenders that offer mobile home chattel loans that are government insured by:

  • The U.S. Department of Veterans Affairs (VA)
  • The Federal Housing Administration (FHA)
  • The U.S. Department of Agriculture
  • The Rural Housing Service

There are a few important differences between chattel loans and traditional mortgages:

  • Traditional mortgages tend to have lower interest rates than chattel loans
  • Traditional mortgages tend to have longer terms, meaning that chattel loans can have higher payments each month
  • The closing process is typically less restrictive and faster with chattel loans than with traditional home loans

Chattel loans will commonly come with higher interest rates than traditional mortgages-- typically they are 0.5 to 5 percentage points higher.

Additional Tips and Tricks For Buying a Mobile Home With Bad Credit

When you have bad credit, and you're motivated to buy a mobile home, it's a good idea to have some tips and tricks up your sleeve. This can help you save money during the process and make the financing process easier.

It's important to remember the old adage-- when there's a will, there's a way. The worse your credit is, the more creative you might have to get. That doesn't mean you are completely out of luck when it comes to buying a mobile home.

In addition to our extensive list of loan options that you can apply for even when your credit is subpar, here are some alternative methods you can try:

  1. Asking a relative or close friend to borrow some or all of the funds to purchase the mobile home with a clear contract stating the terms of the loan (borrowing money from family and friends can get messy, so try to weigh out the pros and cons before going this route)
  2. Search for a mobile home that is being sold by an individual that is willing to offer seller-financing
  3. Work to save up money for a down payment of at least 20% in order to qualify for a loan more easily and receive more favorable rates.
  4. Apply for financing through a credit union, which is well-known for being more willing to lend out money for manufactured and mobile homes.
  5. Take a look at your credit report before you apply for financing, as there might be errors or inaccuracies you can dispute that will boost your credit score and creditworthiness.
  6. Take the time to research all of your lender and loan options, as some are more flexible than others when it comes to having less-than-ideal credit.
  7. Consider finding a co-signer that has a stellar credit history to help you qualify for a loan with better rates and terms.
  8. Get pre-approved before you start shopping around to help you understand your realistic budget.
  9. Watch out for predatory lenders when applying for loans with bad credit and run the numbers on what higher interest rates will mean over the life of the loan-- the cost of your mobile home could be realistically much higher than you want to pay if you aren't careful.
  10. Look for lease-to-own options when shopping for a mobile home-- these arrangements can be more flexible when it comes to credit requirements.

Is it time to clean up your credit report? Check out these guides to removing charge offs, collections, and hard inquiries from your credit file.

Is It Time to Improve Your Credit?

If you are interested in buying a mobile home with bad credit, you are not entirely out of luck. However, the options available to you are going to depend on just how bad your credit is, how much money you are planning on spending on a mobile home, the amount you can put down for a down payment, and more.

Sometimes, time is of the essence when you are trying to get a loan. On the other hand, if you aren't in a rush to buy a mobile home, it might be worth taking the time to improve your credit before you start shopping around and filling out applications.

  • The better your credit is, the easier it will be to get a loan with favorable rates and terms.

Even though mobile homes are quite a bit cheaper than traditional homes, you will still be able to save a significant amount of money over the life of the loan if you are able to lock in the best interest rates.

Are you ready to start improving your credit so you can purchase a mobile home easily and with the best loan rates and terms? If so, make sure you check out the rest of our Credit Building Tips blog for tons more information about boosting your credit, cleaning up your credit report, and improving your financial health.

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Written By:
Shaun Connell
Shaun Connell is a personal finance and credit expert with a passion for helping individuals eliminate debt and improve their credit. He's enjoyed writing investing and financial content for over 15 years, with expertise in real estate, debt, banking, credit, and wealth building. His work has been seen by millions on the web.

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