Manufactured Housing News

Purchasing a used mobile home can be a great way to become a homeowner, especially in today’s real estate market. However, financing a used mobile home can be different from getting a mortgage for a traditional house. 

It’s important to understand the nuances involved with each financing option, especially when dealing with mobile homes, which are often classified differently depending on factors like the home’s age, foundation, and location. Triad will walk you through the different types of used mobile home loans, the eligibility criteria, and the financing options available to help you make an informed decision.

Understanding Used Mobile Homes and Their Classification

Before diving into financing options, we want to clarify how used mobile homes are classified. A mobile home, also known as a manufactured home, is a pre-built structure made in a factory and transported to the site where it will be used. These homes can be placed on a permanent foundation or remain mobile, depending on your preference.

One major factor that affects the type of loan available to you is whether the mobile home was built before or after June 15, 1976. Homes built before this date are often referred to as "pre-HUD" homes since they were constructed before the U.S. Department of Housing and Urban Development (HUD) implemented nationwide construction and safety standards for manufactured homes. These older homes may be more challenging to finance due to their age and construction standards.

Financing Options for Used Mobile Homes

Financing a used mobile home can be done through several different loan options, each with its own set of criteria and terms. The main options include personal loans, manufactured home loans, and specialized loans through programs like Freddie Mac and Fannie Mae. While we do not offer all loan types at Triad, we can advise you on finding the best possible plan for your needs and navigate you through the challenges of mobile home ownership.

1. Personal Loans: Personal loans are a common financing option for used mobile homes, especially if the home is not permanently affixed to land and is considered your personal property. These loans usually have shorter loan terms—often around 5 to 10 years—and might come with higher interest rates compared to traditional mortgages. Personal loans don’t require the home to be your primary residence, making them flexible, but they usually offer lower loan amounts and require a higher credit score.
2. Manufactured Home Loans: Manufactured home loans are specifically designed for mobile homes, whether they are classified as personal property or real estate. These loans often offer terms of up to 20 years and can be used to purchase homes located in mobile home parks or on private land. If the home is permanently affixed to a foundation and meets certain criteria, it may be eligible for better financing terms, similar to a traditional mortgage.
3. Freddie Mac and Fannie Mae Loans: Both Freddie Mac and Fannie Mae offer loan programs specifically for manufactured homes, including used mobile homes. These programs typically need the home to be on a permanent foundation, and to be classified as real estate. The loan terms under these programs are often similar to traditional mortgages, with competitive interest rates and loan terms of up to 20 years or more. However, your eligibility depends on the home being the borrower’s primary residence and meeting certain property standards.
4. Title I and Title II Loans: The HUD offers Title I and Title II loans for manufactured homes. Title I loans are designed for homes classified as personal property, meaning they are not permanently affixed to land. These loans can be used to finance both the mobile home and the land if the borrower wants to place the home on a permanent foundation. Title II loans, on the other hand, are more like traditional mortgages and are used for homes classified as real estate. These loans can have longer terms and lower interest rates, making them an attractive option for a lot of borrowers.

When applying for a used mobile home loan, several factors will influence your eligibility and the terms of the loan. Understanding these factors can help you better prepare for the application process.

1. Credit Score: Your credit score plays a huge role in determining your loan and the interest rate you’ll receive. Lenders use your credit score to assess the risk of lending to you. Generally, a higher credit score will qualify you for better loan terms like lower interest rates and longer repayment periods.
2. Permanent Foundation: Whether the mobile home is on a permanent foundation or not can impact the type of loan you qualify for. Homes on a permanent foundation are often classified as real estate, making them eligible for traditional mortgage loans and better financing terms. If the home is not permanently affixed, it may be classified as personal property, limiting your loan options and potentially resulting in higher interest rates and shorter loan terms.
3. Primary Residence: Many loan programs, including those from Freddie Mac, Fannie Mae, and HUD, require that the mobile home is your primary residence to qualify for financing. That means you have to live in the home full-time rather than using it as a vacation property or rental.
4. Location: The location of your mobile home can also affect loan options. Homes in mobile home parks might have different financing terms compared to those on privately owned land. Some lenders may also be hesitant to finance homes in certain areas due to market conditions or the perceived risk of natural disasters.

Financing a used mobile home is a viable option for many homebuyers, but it comes with its own set of challenges and considerations. Understanding the different loan options available—such as personal loans, manufactured home loans, and programs through Freddie Mac and Fannie Mae—can help you find the best financing solution for your needs. By considering factors like your credit score, the home’s foundation, and whether the property is your primary residence, you can improve your chances of securing a loan with favorable terms. Whether you’re purchasing a home built before June 15, 1976, or after, being informed and prepared will help you navigate the financing process with confidence.