How to get a VA loan for a manufactured home

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A VA loan for a manufactured home can offer military borrowers a low-cost, accessible path to homeownership. Manufactured homes are roughly half as expensive as traditional site-built homes on a per-square-foot basis, and VA loans typically offer competitive interest rates and loan terms.

However, only VA-approved lenders can provide VA loans for manufactured homes. In addition, the property must meet specific VA standards in order to qualify for a VA loan.

In most states, a manufactured home by itself is considered personal property — similar to a car or boat. To get a VA loan for a manufactured home, though, it must be permanently attached to land that you own and categorized as real property.

A VA loan can finance the purchase or refinance of both the home and the land, as well as the improvements necessary to meet VA manufactured home foundation requirements.

Here are three of the most common mortgage options that VA-approved lenders offer to help you buy or refinance manufactured homes:

  • Buy a manufactured home and put it on land you already own
    Maybe you own the perfect lot that’s ready and waiting for you to add a home. You can use a VA loan to finance the home purchase, plus any improvements needed to bring electricity and water to the lot. You can also roll the VA funding fee into the loan balance.
  • Purchase both a manufactured home and land
    If you want to buy land and a manufactured home together, a VA loan may cover the land purchase and the expenses related to preparing the site for your home to be permanently anchored to your land.
  • Refinance a manufactured home to put on a lot you purchase
    If you own a manufactured home that’s on rented land, consider buying your own lot. Once you find the perfect plot, you can use a VA loan to buy the land, transport the manufactured home to the new site and permanently attach it to the land. The loan proceeds can also be used to pay off some (or all) of the balance of an existing manufactured home loan. Even better, if the existing loan is a VA loan, you can use a VA streamline refinance to replace your loan using a fast, hassle-free process.

The VA requirements for manufactured home loans aren’t the same as a loan for a traditional, site-built home. Here’s what to expect:

Borrower requirements

Higher down payment

The VA requires a minimum 5% down payment for a manufactured home, compared with 0% down for a site-built home.

Stricter credit score minimum

The VA doesn’t set a minimum credit score for any loan type, but lenders’ requirements may be more stringent than the 620 score they commonly require for a traditional home loan. Lenders consider manufactured homes a slightly riskier investment.

Lower debt-to-income (DTI) ratio

VA-approved lenders may also expect you to carry less total debt compared to your income than they would for a site-built home. The metric they use to measure this is called your debt-to-income ratio. The VA recommends a maximum 41% DTI ratio, but be prepared for lenders to lower that ratio as a safeguard against risk.

VA funding fee

Most borrowers must pay a VA funding fee between 1.4% and 1.65% of the loan amount. Borrowers with a qualifying disability may qualify for a funding fee exemption.

Certificate of eligibility

The easiest way to find out if you’re eligible for VA loan benefits — as well as how much of your benefit remains — is to look at your certificate of eligibility (COE). You can request a COE online using the Veterans Information Portal.

Property requirements

Minimum property requirements

Each regional VA loan center has unique local requirements for the manufactured houses in its region, which address things like installation procedures, required utilities and weatherproofing measures. The home must also meet general VA minimum property requirements, which ensure that it’s safe and sanitary.

HUD standards

The home must meet HUD Manufactured Home Construction and Safety Standards, and should have HUD tags. Homes manufactured before June 15, 1976, aren’t eligible.

Square footage

The manufactured home must have at least 400 square feet of living space.

Permanent foundation

The title company handling your purchase or refinance must prove that your home is permanently affixed to the land and classified as real property to meet VA manufactured home guidelines. A document called an affidavit of affixture is often used to prove that the property is attached to land you own.

Property classification

The manufactured home must be classified as real property, not personal property (also known as “chattel”).

  • In states that have adopted the Uniform Manufactured Housing Act, the owner of the manufactured home can get the home reclassified through a straightforward process set out in the statute.
  • In states where there is no established way to reclassify a piece of property — Connecticut, Hawaii, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont, as well as the District of Columbia — the VA will accept an ALTA Endorsement 7-06 instead.

VA financing for manufactured homes requires shorter payoff periods than the typical 30-year fixed-rate mortgage that’s popular for traditional homebuyers. The chart below shows the longest terms available for a VA mortgage, based on different scenarios.

Manufactured home scenario: If you’re purchasing … Your maximum VA loan term is …
Single-wide manufactured home 20 years and 32 days
Single-wide manufactured home and lot 20 years and 32 days
Land for a home you already own 15 years and 32 days
Double-wide manufactured home 23 years and 32 days
Double-wide manufactured home plus land 25 years and 32 days

1. Make sure your rate quotes are for a manufactured home

Whether you’re using an online rates comparison tool or calling loan officers directly, be sure to gather quotes specifically for manufactured home financing. Mortgage rates and fees for manufactured homes are usually more expensive, and if you don’t let lenders know upfront that you want to buy a manufactured home, you’ll likely get quotes for a single-family home.

2. Gather rate quotes on the same day

Interest rates change daily, so comparing quotes from the same day is the only way to make an apples-to-apples comparison of your offers.

3. Estimate your monthly payment amount

The shorter your loan term, the more expensive your payments are for the same loan amount. And since there’s no 30-year fixed-rate option available to finance a manufactured home with a VA loan, you’ll need to adjust your expectations to fit the available VA loan repayment terms.

  Use a mortgage payment calculator to estimate your monthly payments before committing to a loan.

4. Get written confirmation of your rate lock

Once you review loan estimates and make your choice, ask for a rate lock. This guarantees that the interest rate you were quoted in the loan estimate will still be valid when your loan closes. Some lenders will automatically lock in the rate when they make you an offer. Check Page 1 of your loan estimate paperwork to see if this is the case.

It can be tough to find a lender who offers VA loans for manufactured homes. Lenders consider them a risky investment, in part because they depreciate far more quickly than site-built homes. If you aren’t able to find a VA-approved lender who will offer you a manufactured home loan, you may want to explore these alternatives.

  • FHA manufactured home loans. The Federal Housing Administration (FHA) insures two types of loans for manufactured homes that can finance either a manufactured home, a plot of land or both.
  • Title I loans are available for those who want to live in a mobile home park or other communities where lots are typically leased rather than owned. In these cases, the FHA requires that the borrower have a lease that entitles them to live at the property for at least three years. Title I loans offer a fixed interest rate and typically cover a 20-year term.
  • Title II loans are available for buyers who want to purchase a manufactured home and the land on which it’ll sit. Along with down payments that can be as low as 3.5%, these loans require a minimum 500 credit score and offer terms ranging from six months to 20 years.
  • Fannie Mae MH and MH Advantage® loans. These Fannie Mae programs allow borrowers with a minimum 620 credit score to qualify for financing on manufactured homes. They can even be combined with a HomeReady® mortgage, which is tailored to low-income borrowers.
  • Freddie Mac HomePossible. Through Freddie Mac’s loan program, borrowers with credit scores of 660 or higher can make a down payment as low as 3% on a manufactured home. Those without a credit score may also be able to qualify, but they must put down at least 5%.
  • Chattel loans. About 4 out of 10 (42%) loans issued to people purchasing manufactured homes are chattel loans, according to a report from the Consumer Financial Protection Bureau. Like a mortgage, a chattel loan is secured — the only difference is that if you default on a chattel loan, your lender can repossess your manufactured home but not the land it sits on.
  • Personal loans. Unlike a chattel loan or mortgage, most personal loans aren’t secured. This means that your credit score and financial situation will largely determine the interest rate and total amount you qualify for. And although you likely won’t find a personal loan that pays out as much money as a traditional mortgage, the average manufactured home costs far less (in 2022, only around $125,200) than a site-built home.

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This article originally appeared on LendingTree and was syndicated by MediaFeed.

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This article originally appeared on LendingTree and was syndicated by MediaFeed.

Like MediaFeed's content? Be sure to follow us.