FAQs
What Is a Mobile Home Loan?
A mobile home loan is a loan for factory-built homes that can be placed on a piece of land. Styles may vary from modest trailers to dwellings that look like houses attached permanently to the land upon which they sit.
Mobile home loans differ from a traditional property loan because most lenders and counties do not consider them real property, but rather personal property. In fact, in many counties, a mobile home is taxed by the department of motor vehicles rather than the property tax assessor. In most cases, if you want to buy a mobile home and place it on land that you lease, your loan will more closely resemble a personal loan, with higher interest rates and shorter terms than a traditional home mortgage.
There are exceptions, however, and we’ve included them in this list. Some home lenders do have loans for mobile homes if they are attached to the homeowner’s land. Others, and there are fewer of them, will lend on a mobile home even if it sits on land you lease.
What Is Required to Get Approved for a Mobile Home Loan?
The lenders we’ve reviewed have loan amount ranges from $75,000 to $2 million for jumbo loan programs. The debt-to-income (DTI) ratio ceiling for most lenders is in the low 40s. The lender will use your DTI and income to determine how much you can borrow.
If you qualify for one of the government-backed loan programs, such as the FHA, VA, or USDA, you can buy a mobile home with a 3.5% down payment, and in some cases less.
If you own the land or plan to buy the land together with the mobile home, you’ll have more lender options than if you want to buy a mobile home that sits in a rented lot in a mobile home park.
Do You Have to Own Your Land When Buying a Mobile Home?
When you purchase a mobile home, it is not necessary to own the land, but it will open up more loan options for you.
Mobile homes are sometimes located in a mobile home park where the park owner holds title to the land and you lease it. In these cases, the homeowner leases a plot of land but owns the mobile home itself. Many lenders will require you to sign a three-year lease minimum for the land before they will lend on the mobile home.
Alternatively, owners of mobile homes can place mobile homes on land they own or land they are buying in conjunction with the mobile home. When you own the land and the home, your loan rates and terms will be better, and you’ll have more lending options.
What Credit Score Do I Need to Buy a Mobile Home?
The lenders we’ve reviewed and selected as the best can work with low credit scores in the 500 and 600 range. A credit score lower than 500 may not qualify at all.
Of course, higher credit scores will always get you better rates and terms. Credit scores in the 700s and 800s will get the lowest interest rates.
If you have a credit score on the lower end, look for a lender that is strong in the USDA, FHA, and VA programs. Conventional loans will not be so forgiving of scores below 700. You may get your loan approved, but it will carry higher rates and a term of 20 years or less.
How We Chose the Best Mobile Home Loan Providers
We reviewed 12 mobile home lenders to select the best five. We analyzed company history and reputation, whether they financed both newly constructed and used mobile homes, and their minimum and maximum loan value limits.
Borrower credentials mattered, too. We compared firms to see who allowed borrowers to have lower credit scores, higher debt-to-income ratios, and whether they had low-down-payment programs.
Finally, we analyzed lender requirements for whether you leased or owned the land upon which your mobile home would sit. If you own the land, you’ll have more loan options, but it’s not a deal-breaker.
In most cases, interest rates start a few points higher than conventional loans because mobile homes tend to depreciate, so we looked at interest rate ranges for the lenders to make sure these were lower than the higher rates you’ll pay for an unsecured personal loan, which is also an option for buying a mobile home.
Financing just the mobile home, with good credit and stable income, can be underwritten in as little as two weeks. To buy the home and the land, and using a low-down-payment government program, can extend the underwriting period to as long as 60 days.
Source: investopedia.com