Manufactured home loans: What to know about financing

Written by: Anna Baluch
• •4 min read
A row of manufactured homes with beautiful sunset sky in the backgroundImage: A row of manufactured homes with beautiful sunset sky in the background

In a Nutshell

If you’re searching for a loan for a manufactured home, you’ll find fewer options than you’d find for a traditional home loan. But it’s certainly possible. Here’s a look at some of your options.
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If you’re thinking about buying a manufactured home, the loan process will likely look different than if you were buying a traditional single-family home, townhome or condo.

A manufactured home — sometimes referred to as a mobile home — is a single-family home that’s been built in a factory and follows certain standards of the U.S. Department of Housing and Urban Development. 

Since the structure isn’t always “attached” to the land they’re on, mobile or manufactured homes aren’t considered eligible by many lenders for most types of mortgages. 

We’ll take a closer look at why financing these types of properties can be a challenge and what types of financing options may be available to you. 

Is it harder to finance a mobile home?

If your home isn’t permanently attached to the land it’s located on, lenders will consider it “personal property” instead of “real estate.” When this is the case, you won’t be able to get a conventional loan. 

Instead, you may be offered a higher-interest “chattel loan.” 

If you’re looking for a lower-cost option, the Federal Housing Administration, or FHA, approves lenders through its Title 1 program to finance manufactured homes and lots.

The FHA does require interest rates for these loans to be fixed and says the loan term is typically 20 years. Here are some other details to keep in mind:

  • Title 1 loans can be used to purchase a manufactured home, a lot for the home or both, but it must be your principal residence.
  • Borrowers can lease the land for their manufactured home, but the lease term must be at least three years, and the contract must specify a termination notice of at least 180 days.
  • The maximum loan amount through this program is $69,678 for a manufactured home and $23,226 for the home lot.

How to get a loan for a manufactured home

There are several government-backed loan options for manufactured homes, each with its own criteria. Some may require that your home is attached with a foundation. Others require that the homes contain a certain amount of square feet. 

You should shop around and explore your options to find the right loan for your particular situation. You might also want to prequalify for a loan to get an idea of what you may be able to afford.

FHA Title II loans for manufactured homes

In addition to the FHA Title I program, the FHA offers a Title II program for manufactured homes.

If you qualify for the FHA Title II program, you may get better rates and terms. But your home will need to be attached to the land that you own. To qualify for these FHA programs, your mobile home must be used as your primary residence and have been built after June 15, 1976.

VA loans for manufactured homes

A loan from the U.S. Department of Veterans Affairs might be an option if you serve in the military, are a veteran or meet other eligibility requirements. 

A VA loan for a manufactured home must be attached to a permanent foundation with at least 400 square feet of interior space if it’s single-wide and 700 square feet if it’s double wide. 

Plus, it needs to be considered as real estate per the laws in your state and meet all local zoning requirements.

Benefits to financing a manufactured home with a VA loan include no requirements for a down payment if your home’s sales price isn’t more than its appraised value. Plus, you won’t have to buy private mortgage insurance, or PMI. But keep in mind that you’ll have to pay a VA funding fee and closing costs. 

USDA loans for manufactured homes

If you’d like to install a manufactured home on a plot of land in a rural area, a loan backed by the U.S. Department of Agriculture is worth considering, as long as it was built on or after Jan. 1, 2006. While a down payment isn’t required, you will need to meet USDA income limits for your area. 

The USDA will also request that your manufactured home be at least 400 square feet, placed on a permanent foundation and meet all state and local regulations. Also, it must be in its original condition since it was made in the factory.

What credit score do I need for a manufactured home?

The credit score you need to finance a manufactured home will depend on the lender and government program you choose. 

  • The FHA Title I loan program requires that if you don’t have credit scores of at least 500, you’ll need to make a 10% down payment to qualify. If your score is above 500, you’re only required to put down 5%. 
  • VA loans have no minimum credit score requirement to finance your manufactured home. 
  • USDA loans don’t have a required minimum score, but many lenders who offer USDA loans look for a minimum score of 640.

What’s next?

Even though financing a manufactured home can be more difficult, it’s definitely possible. Use these questions to guide your loan choice.

  • When was my manufactured home built?
  • Where will I place it?
  • Will it be attached to the land I own?
  • How many square feet will it be?

About the author: Anna Baluch is a freelance personal finance writer from Cleveland, Ohio. You can find her work on sites like The Balance, Freedom Debt Relief, LendingTree and RateGenius. Anna has an MBA in marketing from Roosevelt Un… Read more.