Some people use the terms mobile home, manufactured home, and modular home interchangeably, but these words are not really synonyms. If you have any doubt, consider the question of financing. Only two of these three types of housing can normally be financed with a mortgage. What do you need to know about manufactured home loans?
Manufactured Home Loans 101
Any discussion of mortgages for manufactured homes needs to start with a definition. What do lenders consider a manufactured home? After all, it’s hard to get accurate information if you’re not on the same page with the person who is answering your questions. Naturally, you’ll also want to explore what factors impact your loan options and the possibilities for financing.
Mobile, Manufactured, or Modular?
Is a recreational vehicle, often referred to as an RV, a vehicle or a mobile home? What about a tiny house? Is a double-wide trailer a mobile home or a manufactured one? Most modular homes consist of prefabricated sections that are built in factories and assembled on site. Does that make them manufactured homes? While you may get different answers to these questions depending on whom you ask, if you’re seeking financing, only the lender’s answers matter. According to The Balance, lenders use the following definitions to determine if a home is a mobile, manufactured, or modular home:
- Mobile homes are factory-built homes constructed before June 15, 1976. Why does the date matter? Homes built before this date did not have to meet the same safety standards as newer homes. If you’re considering a home in this category, finding a lender who will provide you with a mortgage is likely to be impossible, although you may be able to use a personal or chattel loan.
- Manufactured homes are factory-built homes constructed on a permanent metal chassis and made after June 15, 1976. This means that they must meet the safety standards laid out by the U.S. Department of Housing and Urban Development, which are often called the HUD Code. In addition, they fall under the authority of the National Manufactured Housing Construction and Safety Standards Act of 1974. They are built to be movable, but moving a manufactured home around can make getting a mortgage incredibly difficult.
- Modular homes are not subject to the HUD Code. Instead, they are held to the same building codes that site-built homes are required to meet. While they are built in sections in a factory, they are assembled on site and are typically permanently installed on a concrete foundation. Like stick-built homes, modular homes generally hold their value and even appreciate in value, so you shouldn’t have to look too hard to find a lender willing to finance one.
Factors That Affect Your Financing Options
As The Mortgage Reports indicates, there are several factors that can impact your financing options for a manufactured home:
- Is it real property? Generally, manufactured homes must be on an approved foundation, at least 400 square feet in size, and taxed as real property in order to be considered for a conventional or government-backed mortgage.
- Is it still on wheels? If a home would require the payment of annual fees to the Department of Motor Vehicles and is still on wheels, then lenders are likely to view it as a vehicle rather than a home. You’re unlikely to find a lender willing to extend a home loan to finance the purchase.
- How old is it? Unlike modular or stick-built homes, which typically gain value over time, manufactured homes tend to depreciate. You’ll have a hard time convincing a lender to loan you money to purchase an older manufactured home or one that is in poor condition.
- Will you own the land beneath it? Some loan programs only finance the purchase of both a manufactured home and the land it sits on. Others allow the land to be leased. Some can even be used to purchase land that will serve as a permanent site for a manufactured home that you already own.
Manufactured Home Mortgage Programs
Are you having trouble finding home loan programs for a manufactured home? PrimeLending of Kansas City can help. We offer conventional, VA, and FHA manufactured home loans with fixed rates and terms of 15, 20, 25, and 30 years so that you can find a manufactured home loan that suits your situation. To qualify, the home must be your primary residence, a multi-section double-wide on an approved permanent foundation, no more than 20 years in age, and be classified and taxed as real property.
At PrimeLending of Kansas City, we’re committed to assisting would-be homeowners achieve their goal of homeownership. Whether your dream home is a manufactured home, a modular home, or a stick-built home, our knowledgeable team will offer personal attention and expert guidance as we work with you to make your dream a reality. Contact us today to get started.