Mobile home financing: What you need to know
Even though mobile homes are generally less expensive than a house, you may still need help financing such a large purchase.
Written by
Writer, Fox Money
Jacqueline DeMarco has spent more than seven years in finance, with bylines featured at Bankrate, USA TODAY Blueprint, AOL, and the New York Post.
Updated October 16, 2024, 3:05 AM EDT
Mobile homes can be a lower-cost way to own a home — they’re generally less expensive than traditional stick-built homes. Utility costs and taxes will likely be cheaper. And mobile homes offer the flexibility of moving your home to a new location if you buy land or find a lot in a different community — although moving one is not an easy process.
While mobile homes are usually more affordable than traditional homes, they can still cost tens of thousands of dollars. Many buyers will need financing to buy a mobile home.
Here’s what to know about mobile home financing, how it works and how to get it.
- Mobile homes vs. manufactured homes
- Options for mobile home financing
- How to get mobile home financing
- What credit score do I need to get mobile home financing?
Mobile homes vs. manufactured homes
Both mobile homes and manufactured homes are regulated by the Department of Housing and Urban Development (HUD). The only difference between mobile and manufactured homes is the date they were built. HUD classifies a factory-built home constructed before June 15, 1976, as a mobile home. The same type of home built after that date is considered a manufactured home.
Mobile and manufactured homes share the following characteristics:
- They’re typically built by a manufacturer in a factory before being transported to a property.
- The homes may be built on a metal frame instead of a basement or crawlspace.
- They may have tie-downs instead of a permanent foundation.
Options for mobile home financing
When it comes time to buy a mobile home, you have multiple options for financing, and the one that's best for you depends on your unique financial situation. Consider the following mobile home loan types as you begin your research:
FHA loans
FHA loans are insured by the Federal Housing Administration, which gives lenders more confidence in accepting borrowers with lower down payments or less-than-outstanding credit scores. These loans also come with low closing costs, and your down payment can be as low as 3.5% of the mobile home’s purchase price. With an FHA loan, you can buy a manufactured home, a manufactured home lot or both.
The maximum FHA loan for these types of homes depends on what you’re buying:
- Manufactured home: $69,678
- Manufactured home lot: $23,226
- Manufactured home and lot: $92,904
Mobile home repayment terms also vary depending on those factors:
- Manufactured home lot: 15 years
- Manufactured home: 20 to 25 years
Fannie Mae MH Advantage®
Fannie Mae has a few lending options for manufactured homes, including MH Advantage. Through this particular lending program, you can put down as little as 3%. Mobile homes that qualify for MH Advantage tend to have a lower price point, come with customizable finishes and are built to blend into traditional neighborhoods.
Freddie Mac Home Possible®
Through Freddie Mac’s Home Possible program, very low- to low-income borrowers can put down as little as 3% on a mobile home. Once you reach 20% equity, you can cancel your mortgage insurance, which can help lower your monthly mortgage payments. Possible borrowers are allowed to have additional financed properties.
Personal loans
When you take out a personal loan, you receive a lump sum distribution that you can use to pay for anything you’d like. You can use a personal loan to buy a mobile home if you can secure one large enough to make this type of purchase. You’ll repay the loan in fixed installments, and you’ll pay interest on the money borrowed.
VA loans
The Department of Veterans Affairs backs this type of loan — available to eligible veterans, service members and survivors — giving banks, credit unions and mortgage lenders protection in the event that you fail to repay your mortgage. The government provides the borrower with a guarantee of up to 25% of the value of the home (up to a maximum value based on the cost of local housing). The VA doesn’t require a down payment for these loans, though your lender may require one. Plus, if you have full entitlement, you don’t have a loan limit.
Chattel loans
About 42% of manufactured home loans are chattel loans, according to a Consumer Financial Protection Bureau report. Chattel loans are secured by the home, but not the land they sit on. These loans tend to have higher interest rates and fewer consumer protections than mortgages do. But some borrowers take out chattel loans to avoid putting the land at risk if they default on their loan.
How to get mobile home financing
Once you’re ready to buy a mobile home, you’ll need to take a few steps in order to get financing.
- Calculate your down payment needs. Do some research on the type of mobile home you’d like to buy and what it’ll cost you. Then calculate how much you’ll need for a down payment. If you don’t have that amount saved and ready to go, make a savings plan to help you work toward your goal of buying a mobile home. Remember that certain loans have much lower down payment requirements than standard mortgages, and if you qualify for a VA loan, you may not have to pay a down payment at all.
- Review your credit reports. Each year, you can go to AnnualCreditReport.com and request a free copy of your credit report from each of the three major credit bureaus (Equifax, Experian and TransUnion). Take some time to review your credit reports — if you find any errors, alert the corresponding credit bureau. You’ll want your credit score in the best possible shape before you start applying for mobile home financing.
- Compare rates from multiple lenders. When you start shopping for a mortgage, compare rates from several lenders to get the lowest interest rate and the best loan terms for your situation.
- Apply for mobile home financing. After you’ve finished comparison shopping and found the right loan for you, it’s time to apply. Many lenders allow you to complete this process online.
What credit score do I need to get mobile home financing?
Your credit score will affect what types of loans and interest rates you qualify for. Some loan types are much more forgiving with credit score requirements than traditional mortgage loans.
While most lenders typically want to see a credit score between 580 and 650 for a mobile home loan, requirements vary. Here are a few examples of minimum credit score requirements for different types of mobile home financing:
- FHA loan: 580 (3.5% down payment)
- Fannie Mae MH Advantage®: 620
- Freddie Mac Home Possible®: 660
- VA loans: None