How to finance a mobile or manufactured home

With the median price of homes exceeding $412,000, mobile homes, also called manufactured homes, can be more cost effective while offering more flexibility. The average manufactured home sells for about $127,250, according to the Manufacturing Housing Institute.

That said, financing the purchase of a mobile or manufactured home may require more digging than purchasing a traditional home. That’s because most mortgage lenders don’t offer financing for these types of properties due to the lower costs and depreciating value. Still, there are some options available.

Mobile home financing options

Because traditional mortgages may not be a viable mobile home financing solution, you may need to seek out other types of loans. Consider these options for financing a mobile home.

FHA loans

The Department of Housing and Urban Development (HUD) offers mobile home loans through the Federal Housing Administration (FHA) loan program. This includes Title I and Title II loans.

Title I loans

A Title I manufactured home loan can be used in several ways, including to finance the purchase of a new or used manufactured home, refinance a manufactured home purchase, to buy the developed lot where you will locate this type of home and for a combination purchase of both the lot and the home itself. These funds can also be used to alter, repair or improve a manufactured home.

Lenders can offer Title I mobile home loans even if the buyer doesn’t own or isn’t planning to purchase the land on which the manufactured home will stand. These homes will typically be placed in a manufactured home community or mobile home park. If the borrower doesn’t own — or isn’t buying — the land, they must provide a signed lease for a mobile home plot with an initial term of at least three years.

The loan program has other requirements relating to the terms of the loan.

Maximum loan amount:

• Manufactured home only: $105,532 for single section, $193,719 for multisection.
• Manufactured home lot: $43,377.
• Manufactured home and lot: $148,909 for single section, $237,096 for multisection.

Maximum loan term:

• Manufactured home: 20 years, plus 32 days.
• Single-wide manufactured home and lot: 20 years, plus 32 days.
• Manufactured home lot: 15 years, plus 32 days.
• Multiunit manufactured home and lot: 25 years, plus 32 days.

Title II loans

This loan program insures loans that borrowers can use to finance a qualifying manufactured home, along with land, as long as it meets the requirements. For example, you can only use a Title II loan if you plan to live in the manufactured home as your primary residence.

Other requirements for the home include:

• Have a minimum floor area of 400 square feet.
• Be constructed after June 15, 1976.
• Be classified as real estate but not necessarily for state tax purposes.
• Be built and remain on a permanent chassis.
• The loan must cover the home and the land on which it stands.

Title II loans cannot be used for manufactured homes on leased land in manufactured home communities or mobile home parks. Down payments on a Title II loan can go as low as 3.5 percent, and terms can last as long as 30 years.

Fannie Mae

Some lenders offer Fannie Mae mortgages to borrowers who wish to finance a manufactured home through the MH Advantage program. The loans come with 30-year financing and down payments as low as 3 percent. As an added benefit, interest rates on MH Advantage mortgages tend to be lower than those of most traditional loans for manufactured homes.

To qualify, you need to satisfy a number of eligibility criteria, including installing the home with a driveway and a sidewalk that connects the driveway, carport or detached garage. The home must also meet certain construction, architectural design and energy efficiency standards similar to site-built homes.

Freddie Mac

You may be able to obtain conventional financing for a manufactured home through the Freddie Mac Home Possible mortgage program. You may be able to secure a loan with as little as 3 percent down and, in some cases, use gifted or grant money to help cover your down payment.

Freddie Mac also offers manufactured home financing through their CHOICEHome Mortgage program. To qualify, homes must meet the same requirements as site-built homes and meet certain eligibility factors.

VA loans

If you belong to the military community, you may qualify for a loan insured by the U.S. Department of Veterans Affairs (VA). You can get a VA loan to buy a manufactured or modular home and put it on land you already own, buy both the home and land simultaneously or refinance a home you plan to transport to land you own.

Lenders can offer up to 100 percent financing on manufactured home loans. You’ll need an affidavit of affixture, which proves the property is attached to land you own and meets certain local and VA requirements.

Loan terms can range from:

• Lot for a manufactured home you already own: 15 years plus 32 days.
• Single-wide manufactured home: 20 years plus 32 days.
• Single-wide manufactured home and lot: 20 years plus 32 days.
• Double-wide manufactured home: 23 years plus 32 days.
• Double-wide manufactured home and lot: 25 years plus 32 days.

Chattel loans

A chattel loan is a special type of personal property loan you can use to purchase a mobile home. These mobile home loans are designed for financing expensive vehicles like planes, boats, mobile homes or farm equipment, where the property guarantees the loan.

Some lenders offer chattel loans for manufactured home purchases that are insured by the FHA, the VA and the Rural Housing Service (RHS) through the U.S. Department of Agriculture. Additionally, the closing process for chattel loans is usually faster and less restrictive than what you would experience with a traditional mortgage.

Chattel loans also have disadvantages to be aware of. They typically have higher interest rates than traditional mortgages. Chattel loans also have shorter terms which means their monthly payments will likely be higher than a traditional mortgage.

Personal loans

Mobile homes are far cheaper than traditional homes, so you may be able to finance your purchase through a personal loan. Because personal loans are flexible, you can use them for almost any purpose — including mobile home loans.

However, personal loan interest rates tend to be higher than those of other types of loans, such as mortgages or auto loans. The trade-off is you don’t have to provide any collateral — which means you won’t lose your home if you default on a personal loan — and the application process tends to be shorter and involves less paperwork.

Another important advantage of personal loans over mortgages is they’re typically inexpensive or free to set up, says Steve Sexton, CEO of Sexton Advisory Group. “There’s no costly title, escrow or appraisal fees. And the lender has zero interest in or control over your home because the loan is not secured.”

Personal loan lenders usually offer maximum loans of $25,000 to $50,000, though some lenders will let you borrow $100,000 or more. If you see a lender offering a personal loan large enough for financing a mobile home, it might be a good way to borrow the money that you need. Your credit will need to be in good shape to qualify, and excellent credit personal loan rates can start around 7.50 percent.

How to get mobile home financing

If you’re wondering how to buy a mobile home and get the best financing, there are a few steps you should follow first.

1. Check your credit reports

Whenever you apply for any financing, a lender will consider your credit as part of your loan application. Clean credit histories and solid credit scores make securing loans with better rates and terms easier.

If you find mistakes when you check your credit reports, you can dispute them with the appropriate credit bureau — Experian, TransUnion or Equifax. The bureau will have up to 30 days to respond to you.

Why it’s important: The better your credit score and history, the lower your interest rate will likely be. This can save you thousands of dollars over the course of the loan.

2. Decide whether you’re buying land in addition to the mobile home

When you’re financing a mobile home, the stability of the asset being financed is important, Sexton says. If you own the land and your mobile home has had the axle and wheels removed, it’s less likely that you’ll pick up and move. This may make more lending institutions open to financing a mobile home.

Why it’s important: If you plan to rent a plot for your home, you’ll be eligible for fewer loans than if you plan to purchase the land the home will be placed on.

3. Figure out the specifics of the home that you want to purchase

The type of home you’re looking for will affect the loans you may be eligible to receive. For example, if you want to buy a double-wide manufactured home that costs $200,000 or more, you won’t be eligible for an FHA loan. In addition, older mobile homes may not qualify for certain types of financing at all.

Why it’s important: All lenders have specific lending criteria based on the type and value of your home.

4. Compare financing options

Choose the type of loan you’ll use and compare different lenders’ offerings. Mobile home interest rates and manufactured home loan rates and fees can vary widely between lenders, so take the time to shop around. Try to find a loan that has low fees and interest rates so you can spend as little as possible over the life of the loan.

Why it’s important: Doing your research and shopping around can save you thousands of dollars over the life of the loan and help you secure more favorable loan terms. In addition, searching for financing options early will help ensure a loan is available to help you make the purchase.

5. Submit your loan application

You’ll want to ensure that your application is as complete and transparent as possible. In addition, many lenders require a down payment, so be prepared to make one when you complete your application.

Why it’s important: Being able to submit a complete application will improve your odds of qualifying and keep the process running smoothly.

Current interest rates

As with any loan, mobile home interest rates and manufactured home loan rates will vary based on several factors. Your credit score, down payment amount and type of home and whether you’re buying the land will affect the amount you pay.

To qualify for low mobile home interest rates, make sure your credit score is at least 700. You’ll need a score of 750 or higher to qualify for the absolute best rates available. The average rates presented are accurate as of August 9, 2024

Mobile vs. modular vs. manufactured homes

You’ll often hear the terms mobile, manufactured and modular used interchangeably when discussing these similar types of homes. While they are related, there are some important differences between these homes.

A mobile home is built at a factory before it’s brought to a property for setup. It may or may not use metal tie-downs in place of a traditional foundation. However, this explanation can apply to manufactured homes as well.

Like mobile homes, manufactured homes are built in a factory. They can be set up at their permanent location on blocks, metal piers or a permanent foundation. Unlike mobile homes, manufactured homes are not intended to be moved once they’re set up. They are usually more expensive than mobile homes with an average sale price of $118,000 in March 2024, according to the U.S. Census Bureau.

Similarly to mobile and manufactured homes, modular homes are built in a factory and shipped to the land where they will be set up. However, modular homes are more similar to traditional homes. They often include crawlspaces and basements and use a traditional foundation. They can cost between $180,000 and $360,000, according to Angi.

Factors to consider when buying a mobile home

Now that you know how to buy a mobile home or manufactured home, you’ll want to consider a few factors to make sure you select the best option, including location, size and whether to buy a new or used property.

Location

Before you think about anything else, figure out where you will install your mobile home. The location you choose will have a big impact on the rest of the process.

“Purchasing a mobile home and finding the right location is just like buying a home,” Sexton says. “A good neighborhood is important.”

You can choose to install the home on a piece of land you already own, buy the land where your mobile home will be located or rent a plot of land in a mobile home community. If you choose to buy land, consider zoning regulations and necessary utility hookups.

Size

Mobile homes and manufactured homes come in various sizes, so you’ll need to decide in advance what size home you want. Larger homes are more expensive and require larger lots. As a result, you may need to borrow more if you want a larger home.

Mobile homes are usually classified by their width. Both classifications are usually about 70 feet long. The classifications you’ll typically see are:

• Single-wide homes or single units: Under 15 feet wide.
• Double-wide homes or double units: About 30 feet wide.

“Many towns don’t allow single-wide mobile homes in their town or city limits,” Sexton says. “Make sure you research the rules that might apply to your situation.”

New or used

Unlike traditional real estate, mobile and manufactured homes tend to lose value over time. That means you can get a discount if you buy a used mobile home. The trade-off is that used mobile homes will often have signs of age unless they’ve been maintained very well.

Some locations also won’t allow the placement of homes produced before a specific date, which limits your options. And purchasing an older mobile home may require some expert insight to check the condition of the home.

Long-term costs

When you purchase a mobile or manufactured home, one of the expenses to consider is the cost of mobile home insurance. Similar to standard homeowners insurance, this type of policy offers you protection if your home is damaged or requires repairs.

Often, mobile home policies will cover the dwelling itself as well as your personal belongings if items were damaged or stolen. You may also obtain policies that include liability coverage, which protects you if someone is injured on your property and you are held liable.

Standard mobile home insurance does not typically include or may require an add-on to cover hurricanes, earthquakes and flood events. And, like traditional homes, the cost of mobile home insurance policies varies based on your coverage level.

The bottom line

Mobile and manufactured homes can be much more affordable than a traditional site-built home. But if you plan to purchase one, research to find out what financing options are available and understand the eligibility requirements. You’ll also want to ensure the home is not too old to qualify for a loan or mortgage and that you have a suitable location.

Frequently asked questions

• What credit score is needed to finance a mobile home?

  The higher your credit score, the easier it will be to qualify for a mobile home loan with competitive interest rates.
  
  “FHA will finance with a 500 to 589 credit score and 10 percent down,” Sexton says. “Credit scores with 580 or above will only be required to have a deposit of 3.5 percent. The minimum credit score with Freddie Mac or Fannie Mae is 620. Various chattel loan providers will require a credit score of as little as 575 credit score or as high as a 660.”
  

• How long can I finance a mobile home?

  The length of mobile home financing depends on the lender. However, you can expect to find loans of anywhere from five to 30 years, depending on the loan type.
  

• Is it hard to finance a mobile home?

  Because mobile homes depreciate over time, it can be more difficult to find a lender that offers manufactured home financing. But there are still plenty of options available. Just be sure to do your due diligence to find the right one based on your creditworthiness, financial situation, needs and preferences.