Manufactured homes are a wise investment for homeowners looking for more flexibility than traditional homes at lower costs. While getting a loan for a manufactured home is not difficult, the process is different from getting a loan for a traditional home.
What Are Manufactured Homes?
Contractors build off-site housing in a factory before transporting the home for final assembly. When describing these homes built off-site, you may hear various terms such as “prefabricated” or “prefab.” Manufactured homes are types of prefabricated housing with many distinctions. CIS provides manufactured home loans to people across the United States. We’re in the business of making homeownership more accessible.
Mobile Homes
People often use the term “mobile home” to refer to today’s manufactured homes. The difference between a mobile home and a manufactured home lies in the construction year. In 1974, the United States Congress passed the National Mobile Home Construction and Safety Act to establish specific construction standards for mobile and manufactured homes.
The U.S Department of Housing and Urban Development (HUD) Manufactured Home Construction and Safety Standards or HUD code shortly followed this act in 1976 and set federal standards for areas such as fire safety and thermal protection in manufactured homes.
Before creating these standards in 1976, many mobile homes were mass-produced due to the increased demand for affordable and moveable housing. However, these houses had very few safety requirements. Early mobile homes closely resembled the structure of modern-day campers and featured an exposed trailer coupler and wheels for easy transportation. The mobile home itself was typically on steel I-beams that homeowners could set up on wooden blocks or a concrete foundation at the desired location.
In 1980 the Housing Act passed, mandating the use of the term ‘manufactured’ in place of ‘mobile’ in all laws and literature that referenced homes built after 1976. This act’s new codes and standards gave rise to today’s manufactured homes.
Manufactured Homes
Modern manufactured homes are different in construction and design compared to the mobile homes built before 1976. Contractors build manufactured homes with quality materials inside climate-controlled facilities according to standards set in the HUD Code. 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 their types of foundations. Contractors specializing in manufactured homes can relocate homes with pier and beam foundations. Depending on the location of your home, you can also place your manufactured home on top of a permanent foundation, crawl space or basement.
Manufactured homes differ from modular homes, however, CIS 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.
FHA Loans
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.
Fannie Mae
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.
Freddie Mac
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.
VA Loans
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
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.
Our Interest Rates
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:
- Just Home: If you’re looking to purchase a manufactured home but don’t own the land, our Just Home 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.
- Home Turf: If you own property and want to purchase a manufactured home to place on this property, our Home Turf loan is for you. With our Home Turf 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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