Financing manufactured housing as real estate

If your manufactured house is classified as real property, you may be able to finance it with a mortgage. Typically, a mobile home has to be built after 1976 to qualify for a mortgage, as we’ll explain below. 

In this case your loan would work almost exactly the same as financing for traditional “stick-built” houses.

Most likely, you’d get a Fannie Mae, Freddie Mac, or government-backed mortgage. The VA, FHA and USDA all have manufactured home programs, but each loan option has different rules.

You may need slightly higher down payments, a slightly better credit history, and/or to pay higher fees. But these programs can still provide the most affordable financing for manufactured houses.

Rules for manufactured home loan programs

To buy a manufactured home with a traditional mortgage of any type, the home must be:

• At least 400 square feet
• Placed permanently on the property
• Built to HUD’s post-1976 specifications 

Also, the entire property (home and land) must be taxed as real estate and not as personal property such as a vehicle.

Along with those general rules, each loan type also has its own eligibility requirements:

Conventional loans for mobile home financing

Conventional loans are not insured by a federal agency so borrowers with stronger credit profiles tend to get the most competitive rates.

• Purpose: Primary residence or second home
• Down payment: 5% (3% for Fannie Mae’s MH Advantage program)
• Minimum credit score: 620
• Maximum loan term: Up to 30 years
• Other rules: Home must be at least 12 feet wide; to finance a mobile home as an investment property you’ll need a higher down payment

FHA loans for mobile home financing

FHA loans feature insurance from the Federal Housing Administration, allowing borrowers with lower credit scores to buy single-family homes.

• Purpose: Primary residence only
• Down payment: 3.5% minimum
• Minimum credit score: 580 (570-579 possible with 10% down)
• Maximum loan term: Up to 25 years
• Other rules: Loans require upfront and ongoing mortgage insurance, and the FHA’s maximum loan amount is $93,000 which may not be enough for a double-wide home with land

VA loans for mobile home financing

Insured by the Department of Veterans Affairs, VA loans help active duty military members and veterans buy single-family homes.

• Purpose: Primary residence only
• Down payment: 5% minimum
• Minimum credit score: Varies by lender; typically 580 to 620
• Maximum loan term: Up to 25 years for double-wide; up to 20 years for single-wide
• Other rules: Upfront VA funding fee required; VA rules also require an affidavit saying mobile home will remain affixed to property

USDA loans for mobile home financing

The U.S. Department of Agriculture has home financing options for borrowers in rural and some suburban areas. You’d need to fall within the USDA’s income limits to qualify.

Buying a movable (mobile) home

Homes you could hitch up and move to a different mobile home community don’t qualify as real estate, so you couldn’t finance one with a home mortgage. 

Instead, to finance a home without a permanent foundation, you’d need a personal property loan.

Mobile home loans for personal property — homes that are not classified as real estate — are available if you can put 5 percent down and if the home is reasonably new.

These loans resemble auto loans: Interest rates are higher than mortgage rates because loans for movable property are riskier for lenders.

The FHA backs loans for mobile home vehicles through its Title I loan program. You negotiate your rate with private lenders offering this type of loan. Note that these loans are offered by relatively few lenders and they prefer newer homes.

Using personal loans for mobile home financing

You could also get a personal loan to finance your mobile home purchase. Because a personal loan is based on you, not the property, the lender won’t need to appraise the property.

You might consider this option if your mobile home is too old or is missing its tags from the U.S. Department of Housing and Urban Development (HUD).

To get a personal loan, you likely need decent credit, and rates will be higher than a mortgage. But the lender won’t care how you spend the money.

Since a personal loan isn’t connected to the property, you could buy a mobile home even if it doesn’t conform to traditional mortgage standards for size and age. 

For example, borrowers could get financing even if the home is less than 400 square feet and built before 1796. 

Maximum personal loan amounts vary by lender. Some reach as high as $100,000. If you can’t get financing to buy your home, try a personal loan.

What’s with the 1976 cutoff?

Manufactured homes must have “HUD tags” to meet most mortgage lending guidelines. 

These tags, or more properly, ‘certifications,’ state that the manufacturer complies with safety standards created by the U.S. Department of Housing and Urban Development, or HUD. 

A HUD tag shows the home meets safety and livability standards, so it’s a good thing to have.

What do HUD tags have to do with 1976?

This rule became law on June 15, 1976. HUD notes that while it is the only agency with this requirement, most lenders also follow its guidelines.

Prior to the 1976 rule, manufactured housing was prone to safety problems like electrical and wiring issues that caused home fires. 

Should I buy a pre-1976 mobile home?

Why are manufactured home loans hard to get?

Mobile homes are, obviously, mobile. So it is possible for a borrower to take a huge residential loan on very favorable terms and then haul the home out of state or even out of the country. 

The same is true for cars, and that’s one reason car loans usually come with shorter terms (five years, say, instead of 30) and higher interest rates. It’s also why there is an entire industry built around recovering runaway autos.

If you got a mortgage on a mobile home, chances are you wouldn’t stop making monthly payments and disappear from your mobile home park, taking the home with you. But lenders know it is possible. 

So lenders differentiate between manufactured homes as real estate and mobile homes that are truly movable.

Modular home vs. mobile home loans

Typically, it’s easier to get a traditional mortgage on a modular home compared to getting a mobile home loan.

A modular home is built in a factory but delivered in pieces and assembled on site. It’s placed on a permanent foundation and often includes a porch or a carport.

Manufactured home loans vs. mobile home loans

A manufactured home is a mobile home built after 1976 that has HUD tags to show its compliance with modern codes.

It is possible to get a traditional home mortgage, such as an FHA loan or a VA loan, on a manufactured home. 

But keep in mind manufactured houses tend to depreciate, or lose value, as they age. This also makes lenders less likely to approve loans with competitive interest rates for these homes.