Buying a mobile home can be a great alternative if you are on a tight budget or if you want to own a house at lower prices and with fewer complications. Compared to traditional homes, the requirements for buying a mobile home are less strict. If you are having difficulty obtaining a mortgage loan, it’s also a good idea to consider this type of housing. Most loans for mobile homes come from institutions that specialize in prefabricated housing.
Requirements for Buying a Mobile Home or Trailer
It’s important to understand that there are two sets of requirements for buying a mobile home. The first set refers to all the documentation and permits required by law to purchase a trailer, while the second set pertains to the requirements for obtaining a financial loan to pay for it.
Trailer Requirements
- Choose the type of mobile home you want to buy.
- Decide between a new or used home.
- Obtain location authorization.
- Fulfill permit requirements.
- Have the property title.
Financing Requirements
- Determine the type of financial loan you want.
- Review your credit reports.
- Decide if you will purchase the land.
- Consider the home’s details.
- Submit your loan application.
1. Choose the Type of Mobile Home to Buy
There are four types of mobile homes available: mobile homes, prefabricated homes, modular homes, and park homes. Each type has different construction, mobility, and maximum loan amounts.
Mobile home: Refers to homes manufactured before 1976. These are homes built before the U.S. Department of Housing and Urban Development (HUD) enacted the National Manufactured Housing Construction and Safety Standards Act.
Prefabricated home: These homes are built in factories and are not designed to be moved once installed. Their construction is strictly regulated by HUD.
Modular home: Also built in factories, these homes can include extra spaces such as basements, giving them a more traditional appearance. They cannot be moved once installed and must comply with local building codes.
Park home: These are newer models of mobile homes that are allowed to be installed within authorized parks or zones. Originally designed as vacation homes, they are also a viable housing option.
2. New or Used Mobile Home
Choosing between a new or used mobile home makes a difference when it comes to obtaining a loan. Some financing options require the home to be new and meet certain architectural requirements, while others do not. If you are seeking a personal loan, you may consider purchasing a used mobile home as they are significantly cheaper. This is an excellent alternative for single mothers looking for affordable housing.
3. Location Authorization
Obtaining a document from your county that designates the land where you will place your mobile home is crucial. This authorization ensures that the land you choose has access to basic services such as electricity, water, telephone, internet, and sewage.
4. Permits for Placing a Mobile Home
To place a mobile home in your chosen state, you will need to obtain various permits. Additionally, you will need to ensure that you are up to date with taxes to install your home in the area. Moving a mobile home also incurs expenses such as permits, transportation costs, and labor for installation.
5. Property Title
Having the property title or registration is essential. This document must be issued by the Department of Housing and Community Development of the state where you will live. If you are buying a used prefabricated home, you will need to transfer the title through the local registry office. You will be required to provide a Certificate of Tax Clearance, proving that you have paid the necessary taxes.
6. Type of Financial Loan
Most banks do not provide financing for mobile homes. However, there are alternatives available. You can obtain a conventional mortgage or a loan specialized in prefabricated housing. You can also consider a personal loan. If you prefer a traditional mortgage, the best option is to apply for loans from the Federal Housing Administration (FHA). They offer various programs for mobile homes ranging from $69,678 to $92,904 (including land). Another option is to choose a loan from the Department of Veterans Affairs (VA), which only requires that you own the land and have all the necessary state permits. A less explored possibility is to apply for a loan from the Rural Development program of the U.S. Department of Agriculture (USDA Rural Development), especially if you plan to live in a rural area. If you are interested in specialized loans for prefabricated homes, you can look into Fannie Mae’s MH Advantage program or Freddie Mac’s Home Possible mortgage program, both of which have specific requirements. Lastly, you can also consider a chattel loan, a special type of personal loan used to acquire expensive assets, or opt for a traditional personal loan if it proves more advantageous.
7. Review Your Credit Report
Lenders will first review your credit history when you apply for financing. Therefore, it’s essential to maintain a clean credit record and a good credit score to increase your chances of approval and obtain lower interest rates.
8. Decide Whether to Purchase the Land
It’s important to determine whether the loan you are applying for is only for the mobile home itself or includes the purchase of the land where you will place it. All lenders have programs that offer financing for both scenarios. However, if you choose a VA mortgage, you will be required to purchase the land, as it is a requirement for loan approval.
9. Consider the Home’s Details
When applying for a loan, you will be asked about the type of mobile home you plan to buy. This is important because mortgage programs vary depending on the type of mobile home. For example, the FHA, through HUD, offers two types of loans for mobile homes known as Title I and Title II. Fannie Mae requires prefabricated homes to meet certain architectural and energy efficiency criteria.
10. Submit Your Loan Application
Complete the loan application and provide all the necessary documentation and information. The more complete your application is, the higher the chance of approval. Additionally, keep in mind that lenders will require an initial down payment, which is usually a percentage of the total cost of the home. Make sure you are aware of this percentage and have the funds for the down payment.
When buying a mobile home, several factors need to be considered, such as size, location, whether it is new or used, and the most advantageous time of the year to make the purchase. Here’s a checklist to help you make an informed decision:
Average Cost of a Mobile Home: The average price of a single-story mobile home is around $59,000, and a double-story home costs approximately $115,000, well below the $150 per square foot cost of a traditional single-family home.
Best Time of Year to Buy: Study market prices for mobile homes. For example, it is known that prices drop between January and March, but certain states may offer better deals than others.
Size of the Home: Mobile homes typically come in three basic sizes: single-wide (15 feet), double-wide (26 feet), and triple-wide (45 feet). It is recommended to buy a large mobile home.
Floor Plans: All prefabricated homes come with architectural plans. Evaluate these plans to determine which design best suits your family’s needs.
Location: Whether you are placing your mobile home on your own land or in a mobile home park, consider the neighborhood, quality of life, and proximity to recreational areas, healthcare facilities, and educational institutions.
Sources of Financing: Various financing options are available, from specialized lenders like Freddie Mac or Fannie Mae to well-known organizations such as FHA, HUD, USDA Rural, and VA.
Possible Additional Costs: In addition to the initial home purchase cost, take into account connection fees for utilities, home insurance, and a budget for home repairs if purchasing a used mobile home.
Obtaining a loan for a mobile home is different from obtaining one for a traditional home. Most mobile home owners do not own the land, so the home is considered personal property rather than real estate. To help you find a suitable lender, we have evaluated those that offer competitive interest rates, finance various types of mobile homes, require low down payments, have flexible credit score requirements, and offer a good coverage margin. Let’s take a look at each of them:
Manufactured Nationwide
Advantages:
- Available in all 50 states.
- Can cover 100% of the financing.
- Specializes in mobile homes.
- Competitive fixed rates.
Disadvantages:
- Requires you to own the land.
- Construction loans are currently suspended.
- Closing process can be lengthy in some programs.
- Difficulty finding rate and term information on their website.
This lender is ideal for individuals with a low credit score who are looking for flexible down payment requirements and terms. They specialize in loans for manufactured homes and provide guidance on the topic.
Vanderbilt Mortgage and Finance, Inc.
Advantages:
- Loan terms of up to 30 years.
- Low minimum credit score requirements.
- Associated with Clayton Homes.
- Simple application process.
Disadvantages:
- Limited online information.
- Mixed customer reviews.
- Requires a down payment.
Vanderbilt Mortgage and Finance, Inc. offers a significant benefit through its association with Clayton Homes, a manufacturer of mostly prefabricated homes. This partnership gives you access to a catalog of floor plans when purchasing your mobile home.
21st Mortgage Corporation
Advantages:
- Excellent option for individuals with bad credit.
- Available in 45 states.
- Can cover 100% of the financing.
- Provides loans for used mobile homes.
Disadvantages:
- No prequalification available.
- High-interest rates.
- Mixed customer reviews.
- Not available in Alaska, Hawaii, Massachusetts, New Jersey, and Rhode Island.
This lender is the best alternative if your credit score is not ideal or if you want to avoid prepayment penalties. It is also a good option if you are buying a used mobile home or if you plan to place it in a mobile home park.
ManufacturedHome.Loan
Advantages:
- Programs for first-time homebuyers.
- Financing for mobile homes in parks.
- Offers loans for mobile homes as vacation homes.
Disadvantages:
- Rates are not published on their website.
- Requires a good credit score for approval.
- Precalification requires filling out an online form.
ManufacturedHome.Loan is ideal for borrowers with good credit who qualify for the best interest rates. They offer loans for both new and used mobile homes, even if they won’t be your primary residence.
ELend
Advantages:
- Assistance with down payments.
- Can cover 100% of the financing.
- Low mortgage rates.
- Offers long payment terms.
Disadvantages:
- Requires you to own the land.
- Some programs are only available in certain states.
- Requires a relatively high credit score for approval.
eLend is your best option if you need a low or no down payment, as they can cover up to 100% of the home’s price. Additionally, they provide the best online service to educate borrowers and help them choose the best option.
According to the Manufactured Housing Survey (MHS) conducted by the U.S. Census Bureau, the average price of a new mobile home in June 2022 is $126,900. When it comes to pricing by size, a single-wide home costs around $87,600, while a double-wide home has an average price of $159,600. There is no available data for triple-wide homes, but the average price is estimated to be around $250,000.
The California Department of Housing and Community Development (HCD) requires permits for operating a mobile home or special occupancy park, making modifications to a mobile home, or building a prefabricated home from scratch.
Yes, all types of financing are available in the state of California. However, prior approval from HCD is required, especially when applying for an FHA loan.
A mobile home is a prefabricated home built on a permanent chassis with wheels. They are also known as manufactured homes. This type of housing can be transported by a tractor-trailer to any location in the country.
A standard single-wide mobile home is approximately 18 feet wide (5.5 meters), while a double-wide home measures around 90 feet wide (27 meters).
Please note that this article provides a comprehensive guide to the requirements for buying a mobile home, steps to acquire one, banks that provide financing, and additional information about mobile homes in the United States.
