Loans for Manufactured Housing

What are manufactured homes?

A manufactured home is a structure that is built almost entirely in a factory. The house is then placed on a steel chassis and transported to the site where it will be permanently located. The wheels are then removed, but the chassis stays in place. They can come in many sizes

and shapes; from simple one-story homes to ones that are large and complex and do not look like the were built in a factory. They are not built under existing local building codes, but under the guidelines of HUD, the Department of Housing and Urban Development.

While many use the terms manufactured and modular interchangeably, these homes are constructed differently and follow different lending guidelines.

 

What are the benefits of a Manufactured Home?

There are several benefits to purchasing a manufactured home. The greatest benefit is the cost. Since the cost of construction is generally less than that of a similar-sized home built on-site, the manufacturer can pass the savings on to the buyer.

There are several reasons why the cost of construction is less, but they include the following:

• Since they are constructed in a factory, weather and darkness do not interfere and cause delays.
• The building materials can be purchased in bulk which saves money.
• The building is much less susceptible to theft, vandalism, or weather-related damage.
• Since the builder does not have to get construction financing, the costs can be passed on.

 

Is it difficult to get financing to purchase an existing manufactured home?

Not really! Many manufactured homes can be purchased using a conventional mortgage with a 5% down payment or a government-backed loan under FHA guidelines with just 3.5% down. USDA does not currently allow financing on preexisting manufactured homes but will lend on new homes. Most borrowers that will qualify for financing on a traditional home will be able to secure a mortgage on one that is factory built.

Get more information on FHA Loans or Conventional Loans for manufactured housing.

 

 

Are there any additional requirements when I apply for a mortgage?

The only differences are in the appraisal and inspection process. The appraisal is a little more detailed, but that is something that the appraiser will handle. Due to this, the appraisal is usually a little more expensive.

The only other difference is that the guidelines require a structural inspection to verify that the home is correctly attached to the foundation, whether it be a slab or a crawl space. This requires a structural engineer ‘s report and usually costs around $400.

Both the appraisal and the inspection fees are usually paid prior to the inspections being completed, so there are some additional out-of-pocket costs that may need to be budgeted for.

 

What do I do now?

If you are interested in purchasing a manufactured home, the first step would be to get preapproved. This allows you to make sure that there are no existing issues with debt or credit that need to be addressed and often make you look better in the eyes of a seller when you submit a purchase offer.

You may fill out an application here.

If you have questions or need additional information, feel free to contact me at 219-695-0369 or email scott@nwiloanguy.com.