Manufactured homes are not what they used to be. These homes are now built using higher construction materials, easier layouts, and practical design. We get a lot of calls from people asking if they can get a home loan on a manufactured home and the basic answer is yes, but it is a little bit different than a conventional loan.
Loans for manufactured homes are issued by Fannie Mae and Freddie Mac, the two major agencies that offer conforming mortgages. FHA loans, as well as USDA and VA, can be used to finance a manufactured home as well, so there are several options.
Your eligibility is based on not just you, but the type and age of the home and whether it’s considered real or personal property. Because manufactured homes can literally be taken off the foundation and moved, this can affect whether or not you get a loan.
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Not all manufactured homes are considered real estate. This means that in order to qualify for a traditional home loan, the property must be categorized as “real” property. If the mobile home is at least 400 ft.², on an approved foundation, and taxed as real property, chances are you can apply for a conventional or government-backed loan. These will work exactly the same as a traditional house. If the property is still on wheels, you’re technically living in a vehicle, not a house and then a manufactured housing loan will be for personal property, not classified as real estate.
Manufactured home loans do have stricter guidelines about the property’s condition and age. Manufactured homes tend to depreciate faster while traditional homes usually increase in value.
So how do you know whether it’s real or personal property?
If the mobile home has at least 400 ft.², sits on an approved foundation, and is currently taxed as real property, you can usually apply for a traditional loan. If you pay annual fees to the DMV or the building is on wheels, it’s a vehicle and therefore is personal property, not real property.
If the property has been classified as “real” property, you can finance it with a traditional mortgage through Fannie Mae, Freddie Mac, or government-backed mortgage provider. Several of these loans require as little as 5% down but there are extra risk-based loan fees for manufactured housing so interest rates might be a little bit higher. For FHA, the required down payment is 3.5% if your credit score is 580 or higher. If it’s between 500 and 579, a 10% down payment is required. The home must also have been built after 1976 and not located in a flood zone.
VA loan programs require 5% down and the loan terms are shorter depending on the property, typically between 20 and 25 years.
USDA loans require no down payment but the home must be brand-new and borrowers must meet certain income eligibility guidelines.