Home Loans for Mobile, Manufactured, and Modular – What’s the Best Loan for Your Borrower?
Working with clients that are financing manufactured, mobile and modular homes can complicate the task of qualifying and identifying which program will best fit your customers. There is no need to avoid this segment of the market as many mortgage professionals have done in the past. Several excellent program options are available and your reputation as someone with solutions in this niche can increase your business while diversifying your clientele.
First determine the type of structure your borrower is buying or refinancing. Modular homes are manufactured in sections offsite, then transported to the home site, where construction is completed onto a permanent foundation. Those buildings generally qualify for the same financing as stick-built homes, which are constructed on-site in compliance with local building codes and labor regulations.
Mobile and manufactured homes are produced off-site, permanently attached to a chassis for transport, and then trucked to the home site in one or more sections. Financing for those properties must be with programs that allow for manufactured homes within their guidelines.
The home's location can be a factor to help identify which mobile home mortgage option is best suited for the particular customer. Rural borrowers may qualify for USDA Rural Housing Loans and thereby take advantage of up to 100% financing. To be eligible, the borrowers must be able to afford the monthly payments (based on the USDA guidelines) with income that falls below the current USDA Loan Limit for their location. USDA lending restrictions are intended to help those with low to moderate income achieve the dream of homeownership.
This solution is only for new mobile homes. USDA regulations specify that the home must be less than 12 months old and previously unoccupied.
Credit History and Score
Applications from borrowers with less than perfect credit raises concerns about finding attractive options to offer them. Thankfully, the FHA Manufactured Home Loan program can be a solution even for clients that have blemishes in their credit history. Credit scores as low as 600 are considered, making the low down payment requirement very enticing to homebuyers and homeowners for whom credit is an issue.
As an excellent mobile home financing option, the VA Manufactured Home Loan is available for qualified veterans and active duty military personnel. The program enables borrowers to purchase a new mobile home with zero down payment, making homeownership attainable even for those without a great deal of savings. This program is for financing a primary residence only, not for investors, nor those looking to buy a second home.
Home size can also impact qualification, whether the property is a single wide, transported in a single unit, or a larger home delivered in two units (double wide) or even three units (triple wide.) The sections are joined together after delivery at the home site. The Fannie Mae Manufactured Home Loan and Freddie Mac Manufactured Home Financing can be great options for those double and triple wide homes with low mortgage rates and fees.