Manufactured home loans are specialized financing products tailored to the unique nature of factory-built homes. Manufactured homes are built to federal standards set by the Department of Housing and Urban Development (HUD) and differ significantly from older mobile homes produced before 1976. Because of this, financing a manufactured home requires understanding whether the home is titled as personal property or real estate, which affects the loan type, interest rates, terms, and down payment requirements.
There are two primary types of manufactured home loans:
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Chattel Loans: These loans finance the manufactured home itself when it is placed on leased land, often in manufactured home parks. Since the home is considered personal property, these loans resemble vehicle financing, usually have shorter terms (10-20 years), higher interest rates, and require larger down payments.
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Real Estate Loans (Mortgages): When the manufactured home is permanently affixed to owned land and titled as real estate, it can qualify for traditional mortgage loans with longer terms (up to 30 years), lower interest rates, and potentially lower down payments. This setup allows the home and land to appreciate together, building more equity over time.
Government-backed financing options further support manufactured homebuyers:
- FHA Loans: The Federal Housing Administration offers Title I loans for chattel financing and Title II loans for homes permanently affixed to land.
- VA Loans: Available for eligible veterans, these loans often require no down payment for homes classified as real estate.
- USDA Loans: For rural area buyers with low-to-moderate income, these loans support homes on permanent foundations.
Eligibility depends on factors such as credit score, income, down payment, home condition, and land ownership status.
To improve financing terms, buyers can consider permanently affixing their home to land they own and converting the title from personal property to real estate. This transition often unlocks better mortgage rates and loan options.
For more detailed information on related loan pricing factors, see FinHelp’s article on Loan Level Pricing Adjustment (LLPA).
References:
- U.S. Department of Housing and Urban Development (HUD), Manufactured Homes: https://www.hud.gov/manufacturedhomes
- Manufactured Housing Institute (MHI), FAQs About Manufactured Homes: https://www.manufacturedhousing.org/faqs/
- Consumer Financial Protection Bureau (CFPB), Manufactured Home Loan Basics: https://www.consumerfinance.gov/ask-cfpb/what-is-a-manufactured-home-loan-en-1994/