There are plenty of options for financing a mobile home purchase; however, getting approved for a mobile home loan is a bit more complicated than it is for a traditional mortgage. The age of your mobile home can be a factor, and you can only get government loans if your mobile home meets certain standards.
Mobile and Manufactured Homes
A mobile home, also known as a manufactured home, is a transportable home that is built on a permanent chassis. Unlike modular homes, which are built to regional building codes, all mobile homes must be built to the Department of Housing and Urban Development's Manufactured Home Construction and Safety Standards, also known as the HUD Code.
Getting Approved for a Mobile Home Loan
Retail Installment Contract
HUD reports that the most common financing option for a mobile home is a retail installment contract. In this type of loan, the owner agrees to pay for the mobile home through a series of installment payments.
Retail installment contracts are usually loans issued from the mobile home seller itself rather than from a third-party lender. A retail installment contract can involve a down payment, and the number of installment payments will vary depending on what the buyer and seller agree to.
There's no special criteria that you need to meet to qualify for a retail installment contract. As with any credit arrangement, though, lenders will only work with you if they deem you to be credit-worthy.
Blackhawk Capital Group, a company that processes and underwrites installment contracts for mobile home purchases, explains that it uses traditional measures to evaluate applicants. The company considers the following criteria when approving the transaction:
- Credit score.
- Balance remaining on the sales contract.
- Debt-to-income ratio.
Government-backed mortgages are also an option for mobile home financing. The Federal Housing Administration offers Title I and Title II loans for manufactured homes just like it does for other homes. Mobile homes also qualify for loans from the Department of Veterans Affairs as well as Rural Housing Service Loans.
Not every mobile home meets the standards for a government-backed loan, though. Realtor.com notes that, to qualify for an FHA loan, the mobile home cannot have been moved -- that is, set up once and then set up again somewhere else. The mobile home might also have to be inspected by an engineer to ensure it meets HUD's specifications.
There are also specific limits on how much homeowners can borrow for a mobile home. As of 2015, the maximum FHA loan that an individual could take out was $69,678 for a mobile home, $23,226 for the lot or $92,904 for both the home and the lot.
The loan term is also capped. The maximum term for a home is 20 years, and it's 15 years if you're just buying the lot. It's 25 years if you're buying both the home and the lot.
You'll need sufficient income and good credit to secure an FHA loan. The Homebuying Institute notes that you'll need to make a down payment of at least 3.5 percent of the purchase price to qualify and most lenders want a credit score of 620 or higher. Your combined debts, including your new mortgage, can't exceed 41 percent of your income.
A growing number of financial institutions provide conventional loans for mobile homes. If you don't qualify for a government loan, talk to your bank or credit union about a conventional mortgage. You don't have to meet the same requirements as you do for a government loan, but there are still restrictions.
Realtor.com notes that many lenders won't issue a loan if a mobile home is over 15 years old. Many larger banks issue loans for double-wide homes but not for single-wide homes. Realtor.com suggests contacting a credit union if you're considering a single-wide home.
Exact requirements for these loans vary. However, the same basic rules of lending apply. A good credit score, a high and stable income, minimal debts and a substantial down payment will help you obtain the lowest possible interest rate.