Buying a manufactured home is sometimes more complex than purchasing a regular home. A manufactured home is built in a factory and moved in sections to a permanent location. Whether you plan to place the house on land you own or lease a lot in a manufactured home community, you’ll need to make sure you’re taking the right steps.
How to get a manufactured home loan
6 steps to buy a manufactured home
Manufactured homes are built in a factory and then taken in one or more sections on a chassis — or permanent frame — to a dealer, plot of land or manufactured home community. Many people think a manufactured home is mobile, but they’re typically not moved after being installed at a site.
Manufactured homes are often referred to as mobile homes, however, the two are different. In 1976, the U.S. Department of Housing and Urban Development (HUD), implemented the Manufactured Home Construction and Safety Standards (HUD Code) that regulated mobile home construction. Manufactured homes built before June 15, 1976, are mobile homes, or trailers as they’re often called, and those made after that date are manufactured homes.
While “mobile home” is a dated term, it continues to be used in reference to manufactured homes.
Manufactured home vs. modular home
Another term closely associated with manufactured homes is modular homes, but they’re not the same. Like manufactured homes, modular homes are factory-built and then transported. However, modular homes follow state, local or regional building codes rather than federal requirements.
Modular homes are built in two ways: “on-frame” (on a permanent chassis) or “off-frame” (removed from the chassis and assembled on the site). In addition, modular homes are installed on private land.
The average cost of a new manufactured home in the United States is $84,100 as of August 2019, according to data from the U.S. Census Bureau. However, manufactured home costs vary by location and size of the home, so expect to find a broad range in prices.
A single-wide manufactured home in the Northeast costs $45,700 on average, while a single-wide in the West costs $48,200, Census reported. These prices are significantly less than the average cost of a site-built home without purchasing land — $297,747, according to 2018 Census data.
What’s included in the cost of a manufactured home
You’ll need to consider expenses beyond the home price when calculating the costs of owning a manufactured home. You can finance some of these costs along with the home, including:
Land purchase or lot lease
Manufactured home community fees (if applicable)
Manufactured home financing includes multiple options. Your choices will depend on how your manufactured home is titled.
Many private lenders offer manufactured home loans to meet a variety of needs, including financing a manufactured home with land. However, to qualify for a manufactured home mortgage, you must place the home on a permanent foundation and title it as real estate property. Here are some options for conventional loans on manufactured homes. Work with your retailer or directly with a lender to explore their offerings.
Fannie Mae MH Advantage – To finance a manufactured home, it must be certified as an MH Advantage home. Homes that qualify typically have construction, design and features similar to site-built homes and are placed in traditional communities. These manufactured homes are built on a permanent chassis. They’re also installed on a permanent foundation on land the borrower owns and are titled as real estate. Loans include fixed- and adjustable-rate mortgages with terms up to 30 years.
Fannie Mae Standard MH – This loan option is for homes that don’t meet the eligibility requirements of the MH Advantage program, including traditional single- and double-wide manufactured homes. However, the borrower must own the land the home is placed on. The manufactured home must be built on a permanent chassis, installed on a permanent foundation on land the borrower owns (with or without a mortgage) and titled as real estate. Loans may be fixed- or adjustable-rate, up to 30-year terms.
Freddie Mac Manufactured Home Mortgage – These manufactured home mortgages are available in most states (except New York and Connecticut). Loan terms include both fixed- and adjustable-rate mortgages. Homes must be on a permanent foundation and placed on private property owned by the borrower.
You can buy a manufactured home with a loan insured by the Federal Housing Administration (FHA). FHA manufactured home loans finance a manufactured home only, a developed lot for placement or a manufactured home with land. In addition, you can use an FHA manufactured home loan for a home installed on a leased lot. Terms range from 15 to 25 years.
Loans backed by the U.S. Department of Veterans Affairs (VA) provide financing options to military service members, veterans and surviving spouses. VA loans for manufactured homes require that the homes be attached to a permanent foundation on land owned by the borrower or a manufactured home and land together. The home must qualify as real property.
LOAN FEATURE FANNIE MAE
MH ADVANTAGE FANNIE MAE STANDARD MH FREDDIE MAC MANUFACTURED MORTGAGE FHA VA
Titling of property Must be titled as real property Must be titled as real property Must be titled as real property Must be titled as real property Must be titled as real property
Down payment minimum 3% 5% 5% 3.5% 5%
Loan type Fixed-rate and adjustable-rate Fixed-rate and adjustable-rate Fixed-rate and adjustable-rate Fixed-rate and adjustable-rate Fixed-rate and adjustable-rate
Maximum loan amount Based on lender requirements Based on lender requirements Varies by lender requirements Home only: $69,678
Lot only: $23,226
Both: $92,904 Varies by lender requirements
Minimum credit score 620 620 720 580 620
Personal loans for manufactured homes
Depending on the cost of the manufactured home you’re buying, a personal loan may be a great way to finance it. Personal loans generally go up to $50,000, however some lenders issue loans up to $100,000.
These loans come with fixed rates, and terms can extend as much as 144 months with some lenders. However, personal loans typically have higher interest rates than mortgages and auto loans. Exact qualifications vary by lender, but most will usually review your credit score, income and other financial details.
Another way to buy a manufactured home is with a chattel loan, which is like a mortgage for higher-priced personal property such as manufactured homes, boats and planes. Chattel loans for manufactured homes typically have higher interest rates than mortgages and don’t include land. You can use a chattel loan for a manufactured home on private property or in a manufactured home community.
Many dealers offer manufactured home loans through their in-house financing or lender networks. If you’re purchasing land, though, that’s a separate transaction.
Manufactured homes represented about 10% of new single-family home starts as of 2018, according to a report from the Manufactured Housing Institute. Industry experts believe the demand for manufactured homes will increase as the lack of affordable housing persists. Consider the pros and cons of owning a manufactured home.
Flexibility if you decide to move the home
Construction process not affected by weather or other factors that affect stick-built homes
In some cases, you may have to deal with a landlord even though you own your home
Home value depreciates over time
Manufactured homes are not easy to resell
Manufactured home loans typically come with higher interest rates than other loan types
Buying a manufactured home includes a different process than purchasing traditional real estate. The exact method will vary by state, so contact the Manufactured Housing Association for information on regulations, permits and the process of buying a manufactured home in your state.
Here are six steps to buy and finance a manufactured home.
1. Decide on the location for your manufactured home
Before buying a manufactured home, decide whether you’ll place it on private land or in a manufactured home community. If you’re purchasing land or placing the manufactured home on property you already own, study the zoning laws, and any other guidelines you’ll need to follow. If you plan to lease land in a manufactured home community, get information about what size home it can accommodate and other rules.
2. Search for a manufactured home
Work with your manufactured home retailer to customize your manufactured home, unless you’re purchasing a standard model or an existing manufactured home.
Work directly with a lender, mortgage broker or your manufactured home retailer to weigh your options for manufactured home loans. Similarly, compare lenders and loan terms if you’re considering a personal loan or chattel loan.
4. Prepare the home site
Your retailer will work closely with you to make sure the site is ready for the installation of your home. This includes securing necessary permits, addressing any issues that affect the installation of the home and preparing utility hook-ups.
5. Arrange delivery and installation of your home
Your home is delivered and installed after the land or lot is ready.
6. Sign up for insurance
Before you can move in, you’ll need to insure the home and fulfill any other occupancy and maintenance requirements to avoid potential problems or delays.