So, you’re looking to purchase a manufactured home but are wondering, is it even possible to finance a manufactured home? In short, yes, it is possible. As 10-year veterans in the manufactured home industry with both dealerships and at Manufactured Home Hub, we have seen several impactful changes in the last 5 years regarding financing options available to new manufactured home buyers. By the end of this blog, you should have all the information you need to ensure that you pick the best financing option for your specific situation.
“Manufactured homes are enjoying rising popularity due to easy access to credit and historically low interest rates.“
Griffin Holcomb, IBIS World Reports
First, it is important to understand trends in the manufactured home industry and how these trends will impact manufactured homeowners over the next 5-10 years. According to Griffin Holcomb of IBIS World, rising popularity in manufactured home purchasing is due to easy access to credit and historically low interest rates. But interest rates are expected to rise in the coming years due to fear of inflation. Holcomb explains in his report a possible option to financing that will help keep interest rates down for manufactured home buyers. He says, “Manufactured homes are typically financed as personal property through personal loans. Rather than this option, home buyers can finance both their home and land together using conventional mortgage financing obtained through a traditional lender. This option typically results in lower interest payments, while personal loans typically require higher payments.”
In a lot of cases, a manufactured home is purchased and placed on a leased lot perhaps in a manufactured home community or mobile home park. On the U.S. Department of Housing and Urban Development website, they describe a financing option for this situation. They say, “Under the Title I Program, FHA approved lenders make loans from their own funds to eligible borrowers to finance the purchase or refinance of a manufactured home.” The maximum loan you could get approved for just the manufactured home is $69,678. The interest rate for the loan is negotiated between the lender and borrower and is a fixed rate for the entire term of the loan which is typically 20 years. If your plan is to buy a manufactured home on a leased lot this is a great option but consider seeking further council and information from a HUD-approved counseling agency. They can dive deep into your financial situation and determine the best options for you. Search for one near you here.
As mentioned earlier, manufactured homes are typically bought and placed on leased lands. New buyers however are not necessarily following this traditional way of purchasing a manufactured home. According to Gina Pogol, Contributing Writer, The Mortgage Reports, if you are able to place your manufactured home on a plot of land you own, you could be able to finance it with a mortgage such as a Fannie Mae, Freddie Mac or government-backed mortgage program.
These loans are similar to traditional housing loans and require putting down as little as 5% down. A government-backed FHA loan is a great option especially if you have good credit. Pogol explains, “the required down payment is 3.5 percent if your FICO score is 580 or higher, and 10 percent if it’s between 500 and 579.”
Now that you have some more knowledge on how to finance your future manufactured home, here are three things you need to do to get the ball rolling.
(1) Set specific goals
- It is important to have specific and realistic goals on what you want when considering buying a new manufactured house.
- Setting goals allows you to set a path to buying your future home and will help you determine what is the best financing option for you.
(2) Evaluate your situation
- Take a deep dive into your financial situation to see where you stand and do some research to determine if your goal is achievable.
- Contact a HUD agency for counselling; it is free, and they are only there to help you.
(3) Be patient and wait for the right opportunity
- Buying a new home is exciting but it’s important not to rush as you could find yourself regretting your purchase and possibly putting yourself in a poor financial situation.
- Take time to build up your credit if it is low in order to get a better interest rate.
All in all, financing a manufactured home is possible and there are plenty of options out there for you. Determining the best financing option may be difficult or confusing, but there are resources available to help you. Start with setting a specific goal on where you want to live, what kind of manufactured home you wish to purchase, and is it reasonable within your financial capability. Most importantly, do your research and be patient, financing a manufactured home fit for you takes time. Now get out there and go find your next dream home!
