Manufactured Home Financing Options
Obtaining a mortgage on a manufactured home or mobile home is the first step toward buying your new home, however, options for the manufactured homes can be confusing. The Home Boys team is experienced with options and resources for manufactured home financing. We can help guide you in the right direction, based off of your specific needs. We’ll help you find a loan that’s right for you and your family. Our lenders are extremely knowledgeable in the different types of loans available. Here are some of the different types of loans available to help your purchase your dream home.
HOME ONLY FINANCING
Manufactured homes can be financed in much the same way as a car or personal loan. This loan is designed for customers moving into manufactured home communities or onto land that they don’t own where they will lease their lot instead of purchasing land, family land, or where there is already another home on the property i.e. ADU, dependent care relative exemption or 2nd home on property. On this type of loan, the home is the only collateral however, you can sometime still finance your exterior improvements such as stairs, garage, decks, etc. can be combined into this loan. This loan is on personal property not on real estate, interest rates may be a little higher than a typical real estate loan. Typically, there are little or no closing costs and no prepayment penalty for early pay-off of loan. This also makes an excellent loan for customers who need only short-term financing. We have several lenders who fund these types of loans.
Land/Home Financing Options.
Most of the time when you are putting together a Land/Home Package you will need a construction loan. The construction loan pays for the land, the home, and the site improvements needed to complete the land/home package. There are 2 different types of land/home packages. A one-time close construction to permanent and a 2-step standalone construction loan and then you will need a “end fund” loan also. The advantages to a one-time close loan is that you only have to pay loan fees and closing once on this loan. We have many lenders that offer a one-time close and 2-step construction loans.
FHA Manufactured Home Loans
FHA manufactured home loans represent a popular option for home buyers who currently have the ability to repay a mortgage, but may have had some credit challenges in the past. FHA loan products also carry lower down payment requirements. These products are a great vehicle to help individuals who have a not-so-perfect financial history achieve the dream of home ownership.
Qualifying for a FHA Manufactured Home Loan
FHA manufactured home loans are made by private lenders but are insured by the FHA in the case of default. In many cases, these loans have lower credit score requirements than conventional loan products. So, don’t assume that past credit challenges, or no established credit, will automatically deter you from obtaining a home loan. We have lenders that might be able to help you.
To qualify for an FHA manufactured home loan, you must make a small down payment. Most FHA manufactured home loans require as little as 3.5% down or land equity in lieu of this amount.
As with any loan, you must prove you have enough income to afford the payments. The debt to income ratio required for approval can vary based on a number of factors including past credit history, how much of the total income is dedicated to housing, residual income calculations, and other factors. As part of the loan application process, one of our lenders can help you understand debt to income ratios and work with you to determine the appropriate loan amount for your unique circumstances.
Rules for FHA Manufactured Home Loans
Because FHA manufactured home loans are insured by the FHA, there are certain rules and requirements that must be met. These include but are not limited to:
The home must be built after June 15, 1976 and can’t be moved more than once (no used homes).
The HUD label must be affixed to each section.
Minimum size to be financed is 400 square feet.
The home must be permanently affixed to a foundation that meets FHA standards.
The home must meet the Model Manufactured Home Installation Standards.
The lot where the manufactured home will be set be included in the loan.
The home must be used as a primary residence.
VA Land/Home
Facts about VA Manufactured Home Loans
VA manufactured home loans are a special type of home loan, and they therefore have special rules and regulations.
VA manufactured home loans are funded by the private lender but are guaranteed by VA.
A VA manufactured home loan can cover 100% of the loan. This means you may be able to obtain your home with $0 down payment.
VA manufactured home loans do require a VA funding fee. The VA funding fee is used to help defray the costs of the VA Home Loan program. A disabled veteran may have their VA funding fee waived.
While most veteran borrowers do have to pay the VA funding fee, they are not required to pay a monthly mortgage insurance fee. On a comparable FHA loan of $150,000, this saves the borrower $68 per month.
Like other loans, the borrower must have satisfactory credit and the ability to repay (stable income, acceptable debt to income, etc.). Most lenders require borrowers have a 620 minimum credit score; however, if your score is below this threshold, however, you may still qualify for a FHA loan.
Veterans who have had a foreclosure or bankruptcy must wait two years from the finalization date to qualify for a VA manufactured home loan.
In some cases, the seller will pay the closing costs, as much as 4% of the contract sales price.
To qualify, the manufactured home must meet HUD and local codes.
The home appraiser is selected independently by the VA, meaning the lender has little or no control over the appraisal process.
The veteran must certify that he or she will be personally occupying the property as a primary residence.
Fannie Mae MH Advantage
MH Advantage™ is a manufactured housing loan product that offers flexible underwriting standards and
reduced pricing for manufactured homes that are built to meet specific construction, architectural
design, and energy efficiency standards. Properties that are eligible for MH Advantage™ financing are
designated as such by the manufacturer. MH Advantage™ offers higher loan-to-value ratios (up to 97
percent), and reduced pricing in the form of waived standard manufactured housing loan level price
adjustments (0.50 percent) and reduced mortgage insurance coverage requirements for fixed-rate
terms.
FreddieMac CHOICEHome®
CHOICEHome® is FreddieMac’s innovative, affordable mortgage initiative that offers conventional site-built financing for real-property factory-built homes, that are built to the HUD Code and have the
features of a site-built home. Factory-built houses, also referred to as “manufactured,” “prefab,”
“modular” or “accessory dwelling units (ADU),” have come a long way in recent years. As this category
continues to grow and evolve, Freddie Mac is committed to providing the education and resources for
borrowers who may find it a relevant option for sustainable homeownership.
How USDA loan programs work
There are two USDA home loan programs:
Loan guarantees: The USDA guarantees a mortgage issued by a participating local lender — similar to an FHA loan and VA-backed loans — allowing you to get low mortgage interest rates, even without a down payment. If you put little or no money down, you will have to pay a mortgage insurance premium, though.
Direct loans: Issued by the USDA, these mortgages are for low- and very low-income applicants. Income thresholds vary by region. With subsidies, interest rates can be as low as 1%.
For a list of lenders go to http://thehomeboys.com/financing/