Have you seen home prices lately?
Yes you have. Which is why you're probably considering a manufactured home. For many first-time and even repeat buyers, it’s an affordable alternative to site-built homes.
But how do you finance these homes? Can you get a conventional loan on them?
The good news is that there are plenty of ways to get a mortgage on a manufactured home, including a conventional loan.
Request Your Conventional Loan Pre-Approval. Start Here.
Should You Buy A Manufactured Home?
The question that should be asked first is whether a homebuyer should consider a manufactured home.
There are pros and cons to this strategy. Buying a manufactured home is not without risk. Here’s what to consider.
Pros
More affordable: You can often find a manufactured home at half the cost of a site-built home in many markets.
Less competition: Most buyers are in the market want site-built homes. You will have less competition from other buyers and may be able to make below-market offers.
Modern designs: Most newer manufactured homes come with designs that make them look more like site-built homes.
Cons
Depreciation: The manufactured home structure itself depreciates over time. While the land it sits on may appreciate, the structure loses value as time goes on. Well-built and maintained site-built structures generally appreciate over time along with the land.
Land rent: Some manufactured homes are on rented land. These are not eligible for traditional financing. And, they can come with sky-high monthly land rent costs.
Harder to sell: There is less demand for manufactured homes since most buyers are only interested in site-built homes.
Manufactured Home Eligibility Requirements
If you’ve decided a manufactured home is for you, here’s what to look for.
A manufactured home must meet the following criteria to be eligible for a conventional loan offered by Fannie Mae or Freddie Mac.
It must be permanently attached to a foundation with tow hitch, wheels, and axles removed
The vehicle title is eliminated and is classified as real estate
It must have been built on or after June 15, 1976
The home is at least 12 feet wide and 400 square feet (600 square feet for Freddie Mac)
A HUD Data Plate and HUD Certification Label are attached to the home (more about this below)
The home was never previously installed at another location
The borrower owns the land on which the manufactured home sits unless in a condo project. Leased land is not allowed
The home is connected to utilities and located on a publicly or privately maintained street
There is no accessory dwelling unit (ADU) on the property
Incomplete additions or renovations are not allowed; completed renovations must meet local code and may require an inspection
Single-wide homes are often eligible under stricter requirements; many lenders will only accept multi-wide manufactured homes.
See if You Qualify for a 2024 Conventional Loan
Conventional Loan Requirements for Manufactured Homes
Manufactured homes are generally more difficult to finance than site-built homes. Lenders view these structures are riskier, since they are harder to sell on the open market and can depreciate over time.
Following are conventional loan requirements for manufactured homes.
Primary residence (second homes and investment properties are allowed with larger down payments)
5% down in most cases
Minimum credit score of 620
Mortgage insurance required for down payments of less than 20%
30-year fixed rate, 7- or 10-year adjustable-rate mortgages only
Mortgage rates are higher
What is MH Advantage?
MH Advantage is a special program offered by Fannie Mae and Freddie Mac that allows similar financing as site-built homes.
With this program, the standard manufactured home interest rate increases are waived. Additionally, you can put 3% down instead of 5%.
To meet MH Advantage requirements, the home must be built to specific standards defined by Fannie Mae and Freddie Mac. And, the home must have the MH Advantage label, typically found by the HUD data plate.
If you are considering a manufactured home, ask the seller’s real estate agent whether the home qualifies for MH Advantage.
What are the HUD Data Plate and HUD Certification Label?
The HUD data plate and HUD certification label are important pieces of the manufactured home loan approval. Without them, the loan can’t be approved.
HUD data plate: A paper document that details manufacturer information such as the model number, factory-installed equipment, and more. This can be found in the interior of the home, typically in a utility closet or other indiscrete area.
HUD certification label: A metal tag on the exterior of the home verifying the structure was built to HUD standards.
Source: IBTS
The manufactured home appraisal must have pictures of these two documents. If there is no data plate in the home, a letter with the same information may be available from the Institute for Building Technology and Safety (IBTS) for a fee.
Conventional Loan Alternatives For Manufactured Homes
There are other ways that may provide advantages over conventional loans to buy a manufactured home.
FHA loans: Just 3.5% down is required and lower credit scores are acceptable.
VA loans: Those with eligible military experience can qualify for a zero-down manufactured home loan.
Chattel Loans: These loans may work for manufactured homes that are not on a permanent foundation or not classified as real estate. They are more like an auto loan than a mortgage.
Personal Loans: Personal loans are not attached to the property. They are loans you get based on your income and credit level. They may be a solution for low-priced manufactured homes that don’t meet traditional loan requirements.
Apply For A Conventional Manufactured Home Loan
Conventional loans are a strong option for manufactured homes, especially if you have stronger credit and at least 5% down.
Apply for your conventional manufactured home loan to see if you can buy one of these properties.
Check Your 2024 Conventional Loan Eligibility
About The Author:
Tim Lucas spent 11 years in the mortgage industry and now leverages that real-world knowledge to give consumers reliable, actionable advice. Tim has been featured in national publications such as Time, U.S. News, MSN, The Mortgage Reports, My Mortgage Insider, and more.
I'm Tim Lucas, and I spent 11 years in the mortgage industry, gaining real-world knowledge and expertise that I now leverage to provide consumers with reliable and actionable advice. My insights have been featured in national publications such as Time, U.S. News, MSN, The Mortgage Reports, My Mortgage Insider, and more. Let's delve into the concepts covered in the article about financing manufactured homes.
Manufactured Home Overview: The article discusses the rising home prices, prompting many to consider manufactured homes as an affordable alternative to site-built homes. It addresses the financing aspect and assures readers that there are various ways to secure a mortgage for manufactured homes, including conventional loans.
Pros and Cons of Manufactured Homes: Pros include affordability, less competition in the market, and modern designs. However, the cons involve the depreciation of the home structure over time, potential land rent costs, and lower demand in the market compared to site-built homes.
Manufactured Home Eligibility Requirements: To be eligible for a conventional loan from Fannie Mae or Freddie Mac, a manufactured home must meet specific criteria. These include being permanently attached to a foundation, eliminating the vehicle title, being built after June 15, 1976, having certain dimensions, and having necessary labels and certifications. Additionally, the borrower must own the land, and the home should be connected to utilities.
Conventional Loan Requirements for Manufactured Homes: Manufactured homes are generally considered riskier by lenders, leading to stricter requirements. For conventional loans on manufactured homes, primary residence status is required (second homes and investment properties are allowed with larger down payments), a minimum down payment of 5%, a credit score of at least 620, mortgage insurance for down payments below 20%, and specific mortgage terms (30-year fixed rate or 7- or 10-year adjustable-rate mortgages).
MH Advantage Program: MH Advantage is a special program by Fannie Mae and Freddie Mac that offers financing similar to site-built homes. This program waives standard manufactured home interest rate increases and allows a lower down payment of 3% instead of 5%. The home must meet specific standards, and the MH Advantage label is crucial for eligibility.
HUD Data Plate and HUD Certification Label: These are essential documents for manufactured home loan approval. The HUD data plate is a paper document detailing manufacturer information, and the HUD certification label is a metal tag on the exterior verifying that the home was built to HUD standards. Both are required for the loan approval, and their absence may be compensated by a letter from the Institute for Building Technology and Safety (IBTS).
Conventional Loan Alternatives: The article suggests alternatives to conventional loans, such as FHA loans with a 3.5% down payment and lower credit score requirements, VA loans for eligible military personnel with a zero-down option, chattel loans for homes not on a permanent foundation, and personal loans that are not attached to the property.
Applying for a Conventional Manufactured Home Loan: Concluding the article, it encourages readers to explore conventional loans, especially if they have strong credit and a minimum 5% down payment. It emphasizes the importance of checking eligibility and applying for the loan.
In summary, the article comprehensively covers the various aspects of financing manufactured homes, addressing eligibility requirements, pros and cons, conventional loan specifics, alternative financing options, and a special program like MH Advantage.
