Manufactured Home Loans and Mortgage Programs Explained

There are a number of mortgage loans and programs available to people wanting to purchase a manufactured home and/or the land it will sit on. With the exception of guaranteed loans, you can expect to pay a higher interest rate as manufactured homes depreciate quicker and don’t last as long as traditional homes.

Most manufactured homes are bought with chattel or personal property loans, meaning the manufactured home is considered personal property – like your car – rather than real estate. If you do not own the land where you place your manufactured home, you will be getting a chattel loan. The downside of this type of financing is that, as your manufactured home is not considered real estate, you cannot get any real estate tax breaks.

Down payments for these loans can be as little as nothing, but expect higher interest rates the lower the down payment. Loan periods tend to be shorter, often than 10-15 years, than traditional home mortgages although you may qualify for a longer loan period, especially if you own the land where the home will sit.

Indeed, if your manufactured home is not actually “mobile” – for example, you place it on a foundation on land you own – you may qualify for a traditional real estate mortgage, rather than a personal property loan.

80/20 Loans: These loans require you pay a down payment of at least 20 percent of the purchase price. The higher the down payment, the lower your monthly payments. They will be even lower because you will not be paying private mortgage insurance (PMI) that protects the mortgage company from losing money if you stop making your mortgage payments.

When the amount you owe gets down to 80 percent of the value of your home, contact the company holding your mortgage and have them drop your PMI because it does not protect you…only the mortgage company.

VA Loans: Manufactured homes can be bought by qualifying veterans with a VA guaranteed loan. The federal government guarantees these loans, making them great loans to get because generally no down payment is required and you usually get a lower interest rate. As in the case of most other manufactured home loans, you will not get be able to get a 30-year mortgage. If you are a veteran, definitely look into VA loans when buying your manufactured home.

FHA Loans: The Federal Housing Administration is part of HUD (Department of Housing and Urban Development). It insures private loans issued for new and existing housing and works to get people into their own homes. The main benefit to someone purchasing a manufactured home with an FHA loan is that they always pays the same mortgage insurance rate regardless of their credit score.