Mobile homes can be an affordable and accessible way to become a homeowner, but they are usually still costly enough that buyers want to finance the purchase.
In general, it can be a bit more difficult to find financing for a manufactured home than it is for a traditional home because they tend to depreciate over time. That being said, that doesn't mean there aren't plenty of loan options for people that want to buy a mobile or manufactured home.
Your credit score is going to have a big impact on whether you're approved for a loan as well as the rates and terms you're offered. The minimum credit score necessary to buy a mobile home is going to depend on the type of loan you apply for and the lender. While Fannie Mae and Freddie Mac have a 620 minimum, other options like FHA loans, personal loans, and chattel loans can help people with less-than-ideal credit purchase a home.Let's take a look at what you need to know about financing a mobile home or manufactured home and how your credit score will impact your chances for approval.
When you decide to start shopping for a mobile home, one of the first questions on your mind is likely how you're going to pay for it. Considering that even the most affordable used mobile homes usually cost at least $10,000 and new manufactured homes cost more than $125,000 on average, there's a good chance you're thinking about finding financing for the purchase.
Once you start talking about taking out a loan for a big purchase, the next question that crops up is usually:
"What credit score am I going to need?"
The truth is, there is no set credit score minimum for financing a mobile home because it's going to depend on the type of loan and the lender you choose. That being said, the better your credit score, the better chance you'll be approved and the more appealing rates and terms you'll be offered.
Here's a general sense of what you can expect as far as minimum credit scores go, depending on the loan type you apply for:
Do you have bad credit but you want to buy a mobile or manufactured home? Make sure you check out our guide to buying a mobile home with bad credit.
Mobile homes, modular homes, and manufactured homes are all built in a factory and then shipped to the location where they will be set up.
Mobile homes are built in a factory and then transported to a place where the house will be set up. In some cases, metal tie-downs will be used instead of a foundation.
Mobile homes:
- Were built before June 15, 1976
- Often don't have a basement or crawlspace and instead are usually built on a metal frame
- Were built in a factory and delivered fully constructed to a location
- Might have tie downs rather than a permanent foundation
- Cost, on average, between $10k and $50k
So far, this description also fits manufactured homes. The distinction between the two has to do with when the home was constructed.
Mobile homes can be single wide (500-1000 square feet) or double wide (1,000 to 2,200 square feet)
Technically, mobile homes were built in a factory before June 15, 1976. At this point, the National Manufactured Housing Construction and Safety Standards Act was put in place by the U.S. Department of Housing and Urban Development, which changed the name of this type of home going forward and put new safety standards in place.
If you're looking for a pre-existing home that will come at a lower price than newly manufactured homes, a mobile home can be a good option.
The simplest way to understand what manufactured homes are is to see them as mobile homes that were built after June 15, 1976. Just like mobile homes, they are built in a factory and then delivered fully constructed to the location where they will be set up.
One key distinction between manufactured and mobile homes, though, other than the date of construction, is that manufactured homes aren't built with the intention of being moved once they have been put in place.
Manufactured homes:
- Were built after June 15, 1976
- Often don't have a basement or crawlspace and instead are usually built on a metal frame
- Were built in a factory and delivered fully constructed to a location
- Might have tie downs rather than a permanent foundation
- Cost, on average, $87,600
The construction of manufactured homes is highly regulated under the HUD Code, known as the Manufactured Home Construction and Safety Standards. Manufactured homes also need to meet the local building standards for the place where they will be set up, and designs for these homes have to be approved by a HUD-approved Design Approval Primary Inspection Agency.
Manufactured homes can be single wide (500-1000 square feet) or double wide (1,000 to 2,200 square feet)
Manufactured homes can be a good option for people that are looking for a home that is new but isn't as expensive as a traditional home, while also requiring no building on site.
Modular homes are also built in a factory and delivered to their final location, much like mobile and manufactured homes. However, they are a lot more like a regular home, using a traditional foundation and including either basements or crawlspaces.
Modular homes:
- Usually require some construction on site
- Are typically delivered in multiple pieces to the property
- Are more similar in size and features to traditional homes
- Usually have a traditional foundation and a basement or crawl space
- Cost, on average, $270k
Rather than appearing on the site in one piece, modular homes will usually arrive in one or more pieces and then be constructed on location by a local contractor. These homes must meet the same building codes as any other home in the same area.
Modular homes are often between 900 square feet and 2,000 square feet
Pricier than mobile and manufactured homes but still more affordable than other new construction homes, modular homes can be a good choice for people that want a new home with customizable features for a lower total cost than a traditional home.
Let's take a quick look at some of the financing options you'll want to explore when considering buying a manufactured or mobile home.
Fannie Mae has a specific program for purchasing manufactured homes known as the MH Advantage program.
In order to qualify, there are a number of qualifications you'll need to meet, including:
You might be able to put as little down as 3% for these 30-year loans.
The Freddie Mac Home Possible mortgage program could help you buy a manufactured home so long as you qualify. You can choose between fixed-rate and adjustable-rate loans, and you might be able to put as little as 3% down.
Both Title I and Title II FHA loans can be used to purchase manufactured homes. Though there are a number of requirements one must meet to qualify. This can be a great option for people that have a lower credit score but the ability to put 10% down.
Members of the military community might qualify for a VA loan for a manufactured home. With these loans backed by the Department of Veterans Affairs, lenders can sometimes offer up to 100 percent financing.
This is a particular type of personal property loan that is designed to finance pricey vehicles like boats, planes, farm equipment, and mobile homes.
This is a secured loan where the vehicle serves as collateral. This means that you can get a lower interest rate with a chattel loan than a personal loan, but it also means you can lose your mobile home if you default on the loan.
Depending on the price of your mobile home, a personal loan might cover the cost. These tend to have higher interest rates because they are unsecured loans. At the same time, there aren't costly appraisal, escrow, and title fees that are often involved when getting a secured loan for a mobile home or traditional home.
Personal loans are a type of installment loan, meaning that you borrow money from a lender and pay it back over time at a fixed interest rate in equal monthly payments.
What are the steps you'll need to take to get financing for a mobile home? Let's take a look.
One of the first things you'll want to do when you decide that you want to buy a mobile or manufactured home using financing is to take a look at your credit report.
As a part of your loan application, the lender is going to consider your credit score and file. Having a strong credit score as well as a clean credit history will make it much more likely that you will have your application accepted. Beyond that, the better your credit is, the better rates and terms you will be offered.
When you look at your credit reports-- which you'll want to pull from all three major credit bureaus-- you should keep an eye out for any inaccuracies or errors. If you find mistakes, you'll want to start the dispute process to ensure that your credit report is all cleaned up before lenders take a look at it.
Has your credit report seen better days? Check out our guides to removing evictions, 30 day late payments, charge offs, collections, and hard inquiries to help you clean up your credit file.
Buying a mobile or manufactured home means that you're also going to need a piece of land to put it on. Some people might choose to buy their own land or use a piece of land they already own, while others might plan to rent the property.
The reality is that there will be fewer loan options if you are thinking about renting land rather than buying it or using a piece of land you already own. In general, lenders are going to be more open to offering financing if you will own the land it is on, particularly if there are no wheels and axles on the home.
The type of loan you will be eligible for will be impacted by the type of home you're thinking of buying. Purchasing a manufactured home that costs more than $100k, for example, will mean that you won't qualify for an FHA loan.
If you're looking for an actual mobile home that was built before 1976, you are likely going to struggle to find financing. These older, used homes do come at a cheaper price tag, though, meaning that you might be able to make it work using a personal loan or another type of loan.
Making decisions about the type of home you're going to buy can help you get a better sense of what your loan options are.
Now that you know whether you're buying or renting land and what type of factory-built home you want to buy, it's time to take a closer look at what your financing options are.
When you're exploring your options, there's a good chance that you'll encounter a pretty big range of loan rates and fees. It's a good idea to shop around, as you might be able to save yourself a lot of money over the life of the loan.
It's generally a good idea to start looking into your financing options as soon as you know that you're planning on purchasing a mobile or manufactured loan down the road. This can give you the space to find the best rates and terms and also make an offer on the right home in a timely manner.
Finally, it's time to apply for the loans you've decided are worth pursuing. You'll want to make sure that your application is as complete as possible, as this will help boost the odds of qualifying.
Additionally, you'll want to be prepared to put down a down payment once you're accepted to help the process continue to move forward.
There are more factors than you might think that you'll want to consider when buying a mobile or manufactured home. Let's take a look at some of the most important questions you should ask yourself as you start exploring your options.
Mobile homes are, by definition, not going to be new as they were made in a factory before the summer of 1976. Beyond that, unless a home you've found has been stored in a warehouse somewhere since the day it was built, you're unlikely to come across a mobile home that's never been lived in.
When you shop around for used homes, you'll find that they are quite a bit more affordable than new homes. Unless they have been well-maintained, though, they will likely show signs of age and the wear and tear of being lived in.
You'll also want to take a close look at any rules and regulations for the location where you're planning on putting your home, as some of them won't allow manufactured homes that were built before a specific date. The last thing you want is to buy a home that you aren't allowed to set up on the land that you're renting.
Finally, it can be tempting to try and buy the cheapest mobile home that you can find when you're shopping around. However, it's important to think about the maintenance costs that you will need to cover over the life of living in the home. In some cases, paying a bit more upfront can ultimately save you more money in the long term.
Mobile and manufactured homes are typically classified based on their width. You'll usually see the following terms used to describe the size of these homes:
The size of the mobile home you choose will impact the size of the lot you need and also tend to be more expensive. This means that you will need a larger loan both for the home and for the land if you want to go with a double-wide.
Another important consideration is that some cities don't allow single-wide mobile homes. For this reason, it's essential to take a close look at the rules in your area before you start seeking financing or making a purchase.
One of the great things about mobile and manufactured homes is that you don't only get to choose the home you want, but you can also pick where you put it, too. With traditional homes, you have to find a house that you love in a location you love. When you buy a manufactured or mobile home, you can create the setting you want.
So, where will your mobile home go? Your options are:
One popular option is to rent land in a mobile home community. This means paying a monthly rental fee but also saving you money upfront since you don't have to buy raw land.
If you choose to put your home in one of these communities, make sure you check out any and all regulations and restrictions to make sure that the home you're buying will be allowed in terms of its size and features.
Though mobile and manufactured homes can be an affordable living solution, there are always going to be additional costs to ownership.
Some of the costs you'll want to consider when thinking about your budget overtime include:
In general, the better your credit score, the easier it will be to be approved for a loan with great rates and terms. Depending on the type of loan you're applying for and the lender you're working with, the minimum credit score is going to vary.
If you know that you're going to be buying a mobile or manufactured home in the future, it's a good idea to start working on boosting your credit score and cleaning up your credit report now. With some time and attention, you can improve the odds of approval and help yourself save tons of money over the life of the loan.
For more information about how to boost your credit to help you qualify for the home of your dreams or any other financial opportunities, make sure you check out our Credit Building Tips blog for more resources.
How to Buy a Mobile Home With Bad Credit [Tips and Tricks]
How to Get a Cell Phone With Bad Credit (And Low or No Deposit)
Does Financing Furniture Hurt Your Credit Score?
Credit Score Needed for Honda Financing [Requirements for Honda Loan]
FAQ: Does Financing a Cell Phone Build Your Credit Score?
Mercedes Benz Credit Score Requirements: How to Get a Mercedes Car Loan
