Alternatives to Traditional Home Loans

If you’re looking for an article on manufactured home loans, you’re in the right place. Getting a loan for a manufactured home is different than getting a traditional home loan.

Not all manufactured housing is considered real estate, which is a requirement to qualify for a traditional home loan. If your mobile home is at least 400 square feet, on an approved foundation and taxed as real property, you can apply for conventional or government-backed mortgages. The loans work almost exactly the same as financing for traditional “stick-built” houses.

 

If you pay annual fees to the DMV or the building is still on wheels, however, you’re technically living in a vehicle, not a house. Manufactured housing loans for personal property — homes that are not classified as real estate — are readily available if you have at least five per cent down and the home is reasonably new. However, interest rates are higher than mortgage rates.

Many manufactured home loan programs have strict guidelines about the property condition and age. That’s because manufactured housing tends to depreciate, while traditional home values tend to increase over time.

Financing your manufactured home

Is it hard to get a mortgage for a mobile or manufactured home?

No really, but it is much different than what it used to be. Loans for manufactured homes come from Fannie Mae and Freddie Mac, two agencies that write the rules for conforming mortgages.

FHA loans, plus financing from USDA and VA, are other avenues to finance a manufactured home. Personal loans can work, too.

What’s available to you depends on your eligibility as a borrower, the type and age of the structure, and whether it’s considered real or personal property.

Financing for foundation-secured “real” property

If your manufactured house is classified as real property, you can finance it with a mortgage. Most likely, that’s a Fannie Mae, Freddie Mac or government-backed mortgage.

The loans work almost exactly the same as financing for traditional “stick-built” houses.

With Fannie and Freddie loans, you can put as little as five per cent down. There are extra risk-based loan fees for manufactured housing, so rates are slightly higher.

FHA loans work the same way for manufactured or traditional homes: the required down payment is 3.5 per cent if your FICO score is 580 or higher and ten per cent if it’s between 500 and 579. The home must have been built after June 15, 1976, and it cannot be in a flood zone.