Manufactured homes are a good alternative to conventional homes, but still follow a similar home buying process. A manufactured home, also referred to as a mobile home, is a type of home that is factory built, with a steel frame, and that can be transported anywhere on its own wheels. This can also mean homes that are prefabricated, meaning that they look very similar to traditional houses, but are built as modules that are then transported and assembled on a normal house foundation.
These types of homes are usually cheaper than traditional homes, but most people will still probably have to take out a mortgage loan in order to purchase a manufactured home. Unfortunately, getting a home loan for a manufactured home can be more difficult than taking out a mortgage for a traditional home. Not only that, but you will most likely have to pay a higher interest rate on a manufactured home. Two or three percent more on your interest rate can mean thousands over time. Here are a few options if you are considering buying a manufactured home with a mortgage loan.
FHA or VA Loans
The Federal Housing Administration (FHA) and the United States Department of Veterans Affairs (VA) have designed mortgage loans that can help home buyers with lower incomes as well as for military active and retired personnel.
Because the minimum square footage is required to be 400 feet for an FHA loan to be approved for purchasing a manufactured home, single-wide homes cannot be bought using this type of government insured mortgage loan. Also, the home owner must pay the same property taxes as he or she would pay on a traditional home. In most areas the owners are required to strap the manufactured home to the ground using anchors or concrete pylons. The home’s wheels may have to be taken down, depending on that area’s regulations. The amount that you can borrow to purchase a manufactured home is much lower than the amount that you can borrow for a traditional home, when taking out an FHA mortgage loan, and it is based on whether you take out a mortgage for the lot, the home, or both.
The United States Department of Veterans Affairs requires that you use the home as your primary residence in order to qualify for a VA loan. Your credit score must be good and your debt shouldn’t be more than 41 percent of your income. You are able to borrow up to 95 percent of the home’s value with a VA mortgage loan.
Lot Owners Are At An Advantage
If you own the lot on which the manufactured home will be placed, and if it will be placed on a house foundation, you will receive better interest rates and loan terms from lenders. If the home will be your residence, you will be able to deduct your interest payments. However, this won’t be the case if you rent the property.
Normally, financing for manufactured homes is done through the company that sells the home. Other lenders will, most likely, require that you own the lot on which the house will be, or your mortgage loan application will risk being denied.
Manufactured homes are cheaper than traditional homes and is a great alternative when you don’t have enough money available to buy a home. Before buying a home with a mortgage loan, do a little research in order to avoid being denied the loan for something that could have been prevented.