What Are Manufactured Homes?
Manufactured homes, which are pre-built in a factory and then fully assembled on-site, are a great way for many people to realize the dream of homeownership. People can buy homes that are more affordable and come with fewer hoops to jump through, versus traditional mortgages. This also makes them a wise investment for people who can’t afford a traditional site-built home, or who prefer the flexibility that a manufactured home provides.
Manufactured Homes vs. Mobile Homes
You’ll often hear the terms “mobile home” and “manufactured home” used interchangeably—but there’s a big difference. At this point, nothing built after 1976 is actually considered a mobile home.
Throughout the ‘70s, Congress passed a number of safety regulations around the construction of manufactured homes, shoring up fire safety, thermal protection and structural stability. Earlier mobile homes were mass produced, and more closely resembled the structure of modern-day campers, including an exposed trailer coupler and wheels for easy transportation. The home would then typically be set on wooden blocks or a concrete foundation at the desired location.
Modern manufactured homes are far different in construction and design, compared to mobile homes. Manufactured homes are built by contractors in climate-controlled facilities, using high-quality materials that conform to all modern safety standards. Buyers also have three choices when choosing the size of their manufactured homes: single-, double- and triple-section.
Manufactured homes can also have some versatility in what types of foundations they use. Contractors can relocate homes with pier and beam foundations, or you can place your home on top of a permanent foundation, crawl space or basement.
Note: Manufactured homes differ from modular homes. However, CIS also provides loans for modular homes, in addition to traditional manufactured housing.
How To Finance A Manufactured Home
Once you decide on the specific features of your manufactured home and where you would like to place it, you will need to explore your manufactured home financing options. As a buyer, you have several options when it comes to manufactured home financing.
Borrowers are eligible for a manufactured home loan from the U.S Department of Housing and Urban Development through the Federal Housing Administration loan program. This program includes Title I and Title II loans.
Title I Loans
Title I manufactured home loans can finance the purchase of your new home or improvements and repairs. Borrowers can still apply for a Title I Loan even if they are not planning to purchase the land where they put their manufactured home, such as in a manufactured home community. Depending on the terms of the loan, buyers may have additional manufactured home loan requirements they must fulfill.
Title II Loans
The Title II loan program can provide financing for manufactured homes and land as long as they meet specific requirements. For example, a borrower may only apply for a home loan for a manufactured home if the home is to be their primary residence. Other requirements for this loan include:
- The manufactured home must have a floor area of or above 400 square feet.
- The construction date of the home must be after June 15, 1976.
- The home must have real estate classification but not necessarily for state tax purposes.
- The home must remain on a permanent chassis.
- The loan must finance the home and land the home stands upon.
A buyer cannot use a Title II loan to purchase a manufactured home on leased land or in manufactured home communities.
If a buyer plans to finance their manufactured home through the MH Advantage™ Program, they may be eligible for a Fannie Mae mortgage. The terms of this loan specify that a borrower must satisfy a certain number of criteria, such as installing a carport or detached garage and a driveway with a connecting sidewalk.
A manufactured home must also meet specific construction standards similar to houses built on-site.
Borrowers can also apply for the Freddie Mac manufactured home mortgage program. If a buyer qualifies for a Freddie Mac loan, they have the option of a fixed or adjustable-rate mortgage.
Members of the military community may qualify for a loan from the Department of Veterans Affairs, or a VA loan. Borrowers can use a VA loan to buy a manufactured home and place it on land they already own, buy a house and land at the same time or refinance a home you plan to move to land you already own.
Chattel loans are a form of personal property loan borrowers can apply for to finance the purchase of a manufactured home. Even if a buyer does not own the land on which they are placing their manufactured home, they may still be eligible for a chattel loan. A chattel or equity loan for a manufactured home is a popular lending option for borrowers who want to rent a lot in a manufactured home community.
Many lenders, such as the U.S Department of Veterans Affairs and the Federal Housing Administration, offer chattel loans for lenders.
Steps to Obtain a Manufactured Home Loan
Before you begin the process of obtaining a loan for a manufactured home, you must be financially prepared. Being financially ready can help you secure a better rate and spending terms. These five steps can help you get optimal financing.
1. Check Credit Reports
When applying for a loan for a manufactured home, CIS Home Loans will obtain a copy of your credit report. Having a clean credit history will improve your chances to secure a loan and receive a better rate from your lender.
2. Decide If You Are Buying Land
Lenders often look at the stability of your manufactured home when examining your application. A borrower’s eligibility may change depending on whether they are buying land.
3. Think About the Specifics of Your Home
The model you plan to purchase may affect your loan eligibility. For example, purchasing a double-section home may make you eligible for different types of financing compared to a triple-section home.
4. Look for Financing Options
Once you decide on the type of loan you will use, compare and contrast options from different lenders. Interest rates can vary between lenders, so take your time examining your options. CIS allows applicants to use gifted funds for their down payment to make the home buying process more affordable.
5. Apply for a Loan
When completing your loan application, the goal is for it to be as complete and transparent as possible. Do some research to learn more about possible manufactured home financing requirements, such as the amount of your down payment. At CIS, we accept applicants with a credit score of 640 and require all applicants to borrow a minimum of $50,000.
As with any loan, your manufactured home loan’s rate depends on several factors. Your credit score, the type of manufactured home you are purchasing, whether the home is new or used and whether you are buying the land will affect your loan rate.
At CIS, we offer competitive rates on manufactured home loans. During our over 30 years in business, we have helped countless people become homeowners in less time through streamlined application services. We are also a five-time winner of the prestigious Manufactured Housing Institute award.
We offer two types of loans for manufactured homes:
- Home Only: If you’re looking to purchase a manufactured home but don’t own the land, our Hone Only program can help. This loan program is great for borrowers looking to place their manufactured home on family land or in a manufactured housing community.
- Land in Lieu: If you own property and want to purchase a manufactured home to place on this property, our Land in Lieu loan is for you. With our Land in Lieu Program, borrowers can use their land as a down payment to purchase a new manufactured home.
Apply for a Manufactured Home Mortgage From CIS Today
Since the creation of CIS, our goal has been to give everyone the chance to achieve the American dream of homeownership. To learn more about our low-income manufactured home loan options or apply for a manufactured home loan online, please contact us today!
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