Mobile home financing

You’ve done your research and found the perfect manufactured home. Now comes the hard part: Finding the money to pay for it. Depending on your credit and the model you’ve selected, you may be able to move right in with a mortgage. If not, there are plenty of other ways to finance your mobile home.

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What types of loans are available for mobile homes?

Manufactured or prefabricated homes are considered either personal or real property — the distinction determines what type of loan you’re eligible for.

• Personal property. If your home is designed for the road or sits on rented land, it may be considered personal property, which means you’ll need a personal loan or similar financing options to pay for it.
• Real property. If your home is designed for a solid foundation and sits on land you own, it’s likely considered real property, making it eligible for a mortgage.

• Chattel mortgage

  If your home is movable property and you plan to lease the land you move it to, it isn’t typically eligible for a traditional mortgage.

  Instead, look into a chattel mortgage. Also called a personal property lien, this type of mortgage secures the loan with the personal property you intend to move into. The loan remains active even if you move your mobile home to another location, though you’ll often pay a higher interest rate than with a traditional mortgage.

• Unsecured personal loans

  Depending on your credit and financing needs, an unsecured personal loan could be a better option than a chattel mortgage. You aren’t required to put up your home as collateral. But many lenders limit borrowing to $50,000, which may not be enough to fully finance your manufactured home.

  If you have savings or are looking for a simple place to live on rented property, an unsecured loan could be useful in getting you settled.

• Seller financing

  Large sellers of manufactured homes offer in-house financing. You may not get the strongest rates, but it makes for a simplified buying process all under one roof. With some sellers, you can prequalify for a loan and then select the floor plan and fixtures based on your budget.

• Traditional mortgage

  Though not easy to get for a mobile home, a traditional mortgage might be an option if your home is on a foundation and you own or plan to buy the land it’s placed on. Generally, traditional mortgages offer stronger rates than other types of loans, and you might qualify for a Federal Housing Administration (FHA) loan to finance a mobile home and the property it sits on.

• FHA loans

  While the Federal Housing Administration doesn’t loan money directly to borrowers, it insures mortgages in an effort to boost the number of loans provided to people looking to finance a manufactured home.

  Eligible borrowers must meet basic requirements that include:

  • A plan to use the manufactured home as your primary residence.
  • A regular source of income to cover the loan and other living expenses.
  • Enough money to make a minimum down payment.
  • A leased or owned site to place the manufactured home.

  You can use an FHA-backed loan to purchase a manufactured home, a lot or both as long as the home is intended as your principal residence.

  Loan terms range from 15 to 25 years and maximum borrowing amounts depend on the home you plan to purchase. For a lot to place your manufactured home on, you may be able to borrow up to $23,226. For the manufactured home itself without property, your borrowing limit increases to $69,678. And for the home and lot, you may be approved to borrow up to $92,904.

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What interest rate can I expect with mobile home financing?

The interest rate you’ll pay depends on the home you intend to purchase, the type of loan you’re looking at, the loan term and the amount you’re interested in borrowing. Your credit, income and existing debt will also play a role in the rate a lender is willing to offer.

If you have decent income, good credit and your mobile home qualifies for a competitive loan, you could see approval at prevailing rates — from 5.25% to 6.00% at the time of writing. On the other hand, those with less-than-perfect credit who are looking for a chattel mortgage or personal loan can find interest rates that border on the upper-end of legal — up to 36%.

Many lenders offer preapproval that can help you gauge potential approval amounts and interest rates before committing to a loan.

How much does it cost to buy a manufactured home?

The US Census Bureau reports the average price for a single-wide trailer in 2017 at $44,900 to $53,400. For a double-wide, prices range from $88,000 to $99,100. How much you pay varies by region, with manufactured homes in the Northeast and South costing less than those purchased in the West or Midwest.

When you’re ready to buy a manufactured home, account for more than just the purchase price. Every type of home comes with unique costs, which a budget can help you tackle.

How much does moving a mobile home cost?

Unless your home is built on-site, you’ll need to transport it to the land you plan to live on. Consider the full costs of moving that include:

• A moving company. Most mobile homes don’t allow for DIY moving. Get estimates from two to three moving companies to compare prices. Costs can range from $2,000 to $5,000 for short moves and up to $20,000 for longer moves of more than 100 miles.
• Weight and size. Moving a lightweight single-wide trailer is usually less expensive than hauling a heavy triple-wide. Your moving company should estimate the weight and size of your trailer for a more accurate moving price.
• Permits. Most cities and counties across the US require a permit to move and set up your manufactured home. Call your local authorities to learn how much you’ll need to budget.
• Setup. Your moving company likely folds this cost into your estimate, but it’s best to double-check. Correctly placing your home on the right foundation is critical to meeting safety standards and keeping your home maintained for years to come.
• Foundation. If you’ve purchased a preowned home and intend to move it, your price may vary by the type of foundation it currently sits on. Homes on block foundations are generally more expensive to move.

Do I need to own the land under my mobile home?

No. You don’t need to buy the land you intend to place your mobile home on. But you’ll likely need to lease the land — either from a private party or from a mobile home park.

Like renting, you’ll agree to a set lease period with a contract that includes what is — and isn’t — included in your lease. Some owners offer amenities like garbage pickup, gardening services and maintenance. Compare potential rental costs to the cost and benefits of owning the land to determine the best place to place your mobile home.

What else should I consider when purchasing a mobile home?

When comparing your options, determine the needs of you and your family foremost. Factors that can play a role in the type of mobile home you finance include:

• Age. The age of your manufactured home likely affects its selling price. Older homes may be cheaper, but they’re also considered more difficult to move and maintain.
• Previous ownership. Consider the previous owners and the condition of their home. Ask about repairs, maintenance records or recent updates made to the property.
• Zoning laws. Every county and city restricts where you can put your mobile home, so check the zoning laws in your area.
• Size. Single-wide trailers generally come with two bedrooms, while double- and triple-wides can be as large as a standard home. Think of the space you and your family need.
• Utilities. Utilities costs money. Contact the city or county you’re moving to so you can have a general idea of hookup and starting fees.

Bottom line

Many Americans call a mobile home … well, home. Offering a wide variety of styles, sizes and models, a manufactured home can offer the space and amenities that suits your requirements. And because manufactured residences are typically less expensive than more traditional properties, you might be able look beyond traditional mortgages to other loan options that could unlock the door of your next home.

Frequently asked questions

• Can I get financing to purchase a used mobile home?

  Yes. If you’re getting an unsecured personal loan, whether the home is used or new won’t play much of a factor in your eligibility. With secured loans like mortgages, the condition of the home may factor into how much you’re approved for.

• Are modular homes and mobile homes the same thing?

  No. Manufactured homes, commonly called mobile homes, are single units that remain on a steel chassis even when the wheels are removed and the exterior is finished. Modular homes are often built in pieces and sent to the build site. Once in place, they resemble traditional homes and generally cannot be moved.

• What's the difference between a mobile home and a manufactured home?

  The only difference is age. Manufacturers of mobile homes technically stopped producing them in 1976. But the term remains in common use around the US.

  When dealing with sellers and government financing, you’ll see manufactured home rather than mobile home.

• Can I rent a mobile home instead of buying it?

  Yes. If you’re unable to secure financing for your mobile home, you may find trailers for rent in mobile home parks.

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