Manufactured homes have quickly become the cornerstone of affordable housing in the United States. In fact, more than 22 million Americans currently reside in these dwellings, accounting for approximately 7 percent of U.S. households. This popular type of housing appeals to a wide range of buyers, from young families to retirees, due to its improvements in quality, energy efficiency, elevated design standards, and significant cost savings compared to traditional site-built homes. Today, homebuyers have more options than ever before when it comes to financing a manufactured house.
With manufactured home communities in Pennsylvania, Florida, Georgia, Arkansas, and Texas, Regal Communities is your premier source for affordable homes across the U.S. Our high-quality housing options give people from all walks of life the opportunity to become homeowners. Our team also makes it easy to get the financing you need to acquire your new manufactured home. Let’s take a closer look at these financing options and other things that you should know before purchasing a manufactured home.
Manufactured Housing – Is It Right for You?
A manufactured home is a factory-built dwelling constructed according to federal building standards established in 1976 by the U.S. Department of Housing and Urban Development (HUD). Based on these standards, modern manufactured homes must be at least 320 square feet, built on a permanent steel chassis for transportability, and display a HUD certification label that indicates compliance with HUD Code.
Manufactured homes are fully constructed in controlled factory environments and transported to their installation sites on steel frames. Due to the way these houses are built, there are some distinctions in how manufactured homes are classified, whether as personal property or real property. If the home remains titled like a vehicle and sits on leased land or does not have a permanent foundation, it’s considered personal property. However, manufactured homes affixed to land and that meet HUD guidelines may be classified as real property.
While sometimes used interchangeably with one another, manufactured homes should not be confused with modular homes. Although both are factory-built, modular homes are classified as real property from the onset and qualify for standard mortgage financing, such as FHA, VA, and conventional mortgages. In contrast, manufactured homes follow the HUD Code and may remain personal property.
Financing Options for Manufactured Homes
The process of financing a manufactured home can differ slightly compared to buying a single-family home. However, you can feel confident every step of the way with help from Regal Communities. Our team is dedicated to providing exceptional service that makes residents feel valued and supported. Our reputation in the industry reflects our high standards of excellence in all aspects of business.
Some of the most common types of financing to consider when making your decision:
FHA Loans
A Federal Housing Administration (FHA) loan is often recommended to buyers with poor credit. This type of loan requires applicants to have a minimum credit score of 580, as well as at least 3.5 percent for a down payment. While some lenders qualify buyers with credit scores as low as 500, a larger down payment may be required.
Other requirements are dependent on lender rules. For example, to qualify via Fannie Mae, the home must be at least 12 feet wide and 400 square feet, be titled as real property, and be installed on a permanent foundation. Freddie Mac requires housing to be single- or multi-wide dwellings, attached to permanent foundations. The home must also be considered real property rather than personal property.
VA Loans
Veterans, active-duty service members, and eligible surviving spouses may qualify for VA-guaranteed loans to purchase manufactured homes classified as real estate. With a VA loan, no down payment is generally required, and there is no private mortgage insurance. In addition, interest rates may be lower than conventional rates.
USDA Loans
The USDA Section 502 Guaranteed Loan Program provides 100 percent financing for low-to-moderate-income buyers in eligible rural areas, including manufactured homes that meet HUD standards and are set on permanent foundations. These loans require no down payment, offer fixed rates, and loan terms up to 33 years, with mortgage insurance premiums that are typically lower than FHA or conventional housing loans.
Conventional Loans
Conventional lenders require manufactured homes to be permanently affixed to land that you own, titled as real property, and meet program-specific requirements.
The Fannie Mae MH Advantage program offers up to 97 percent LTV on select homes with site-built characteristics, such as higher ceilings, attached garages, and upgraded exteriors. The program also allows cancellation of mortgage insurance once equity reaches 20 percent.
The Freddie Mac CHOICEHome program provides conventional financing for manufactured homes that meet specific design criteria with LTV up to 97 percent and comparable terms to site-built mortgages.
Chattel Loans
When a manufactured home loan remains titled as personal property, buyers often turn to chattel loans secured by the home itself. These loans typically feature higher interest rates, shorter terms, and fewer consumer protections than real estate loans. While the underwriting process may be more flexible with chattel loans, monthly payments are often higher, and the home can be repossessed more swiftly upon default.
Personal Loans
Personal loans offer a quick, unsured alternative when mortgage or chattel options are not available, allowing financing of older or lower-value homes. Loan amounts typically max out between $25,000 and $100,000, with interest rates starting at around 7.5 percent for excellent credit. Terms are often capped at between 5 and 7 years. However, rates can be significantly higher than mortgage products, and loan sizes may not cover the full cost of a newer or larger manufactured home.
Steps to Secure Financing
Securing financing for a manufactured home involves a clear, methodical process to maximize your chances of approval and favorable terms. First, you’ll need to assess your financial situation, including credit score, income stability, and debt-to-income ratio, to gauge what you can afford and which loan programs suit you best.
Next, determine the classification of your home. Whether the manufactured home is considered personal property or real estate is an essential determination that will help dictate what type of financing is best suited for your situation.
You’ll then gather all required documentation, such as proof of identity, tax returns, and property details, to help streamline the application process. Obtaining a pre-approval letter not only helps clarify your budget but can also signal to sellers that you’re a serious buyer.
Finally, you’ll need to finalize the loan by completing the lender’s application. This process may involve locking in a rate and closing the transaction with all the necessary legal and insurance paperwork in place.
Find Your Dream Home with Help from Regal
Financing a manufactured home may seem complex, but with the right knowledge and preparation, it can open the door to affordable, flexible homeownership. Each type of financing option comes with its own requirements, benefits, and limitations, making it essential to carefully assess which path best fits your financial situation, home type, and long-term goals.
If you’re interested in becoming a homeowner, Regal Communities can help. We have teamed up with Triad Financial Mortgages to offer home mortgages on manufactured homes. Complete an application today to see if you’re eligible and to review your loan options.