Manufactured Housing News

In Georgia, mobile homes can offer a practical and affordable path, especially for families who want to bypass the rising costs of traditional real estate. However, financing your new mobile home is affected by several factors, with your credit scores playing a major role. Understanding how credit scores affect mobile home financing in Georgia is important for any potential buyers, so that they can get the best possible loan terms.

Credit scores give lenders a snapshot of a person’s financial responsibility. Scores are calculated based on factors like payment history, debt levels, credit utilization, and the age of credit history. For mobile home loans in Georgia, lenders use credit scores to figure out the risk involved in lending to someone. The higher the score, the lower the potential risk, which can get you and your family better loan terms.

Related: Factors that Impact Manufactured Home Loan Interest Rates

Types of Mobile Home Loans

Before understanding the direct impact of your credit score on your loan, it’s important to distinguish between the main types of mobile home loans: 

Conventional Loans: Offered by private lenders, conventional loans are only an option if the mobile home is permanently affixed to land. In this case, your home would be considered real estate. Lenders usually require higher credit scores for these loans, often above 620.

FHA Loans: Federal Housing Administration (FHA) loans cater to buyers with lower credit scores. For Title I and Title II loans, FHA often accepts scores as low as 500, though scores above 580 can get better terms.

VA Loans: Veterans Affairs (VA) loans provide favorable terms for veterans and service members. While no specific credit score is required by the VA, most lenders prefer scores of at least 620.

Chattel Loans: These loans are for mobile homes that are classified as personal property. Lenders for chattel loans may require higher credit scores, around 660.

How Credit Scores Affect Your Loan Terms

Interest Rates: Higher credit scores usually translate to lower interest rates. For example, a borrower with a score above 700 might qualify for rates below 5%, while someone with a score of 600 may be given rates of 8% or higher. This difference significantly impacts the overall cost of your loan.

Down Payments: Lenders may ask for lower down payments from borrowers with high credit scores. For instance, FHA loans usually require a 3.5% down payment for scores above 580, but those with scores below 580 may need to put down 10% or more up front.

Chances of Being Approved: Borrowers with high scores are more likely to get approved for their mobile home loan in Georgia. Lenders are more confident in your ability to repay the loan when you have a strong credit history, reducing their potential risk.

Loan Terms: The length of a loan can be affected by credit scores. Longer loan terms are usually available to borrowers with higher scores, allowing them to spread out their payments over time.

If you are looking into financing a mobile home in Georgia, considering taking the next several months to work on improving your credit score. Make every payment on time, pay above the minimum amount, and reduce your credit utilization. This could help you to get a great loan with favorable terms for when you finally become a homeowner.