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How To Buy a Manufactured Home and Land

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A manufactured home, often called a mobile home, is built in a factory and moved to a permanent location. Buying a manufactured home is sometimes more complex than purchasing a regular home. Learn more about financing a manufactured home.

What is a manufactured home?

Manufactured homes are built in a factory and then taken in one or more sections on a chassis — or permanent frame — to a dealer, plot of land or manufactured home community. Many people think a manufactured home is mobile, but manufactured homes are typically not moved after being installed at a site.

What is a mobile home?

Manufactured homes are often referred to as mobile homes, but technically they aren’t the same thing. In 1976, the U.S. Department of Housing and Urban Development (HUD), implemented the Manufactured Home Construction and Safety Standards (HUD Code) that regulated mobile home construction. Manufactured homes built before June 15, 1976 are mobile homes; those constructed after that date are manufactured homes.

While “mobile home” is a dated term, it continues to be used in everyday speech to talk about modern manufactured homes. Manufactured homes of today are built to follow HUD standards and they can look and function surprisingly similarly to homes built on a specific site. One main difference, though, is that manufactured homes are usually bought from a dealer or retailer.

Manufactured home vs. modular home

Modular homes is another term closely associated with manufactured homes, but they’re not identical. Like manufactured homes, modular homes are factory-built and then transported before being finished at the site. But, just like site-built homes, modular homes follow state, local or regional building codes rather than federal requirements.

Unlike manufactured homes, modular homes are not usually sold through a dealer. Instead, as is also common with site-built homes, a general contractor or builder has already completed construction before the house is put on the market.

How much does a manufactured home cost?

The average cost per square foot for a new manufactured home in the United States is $72.21 as of 2021, according to data from the U.S. Census Bureau. However, manufactured home costs vary by location and size of the home, so expect to find a broad range in prices.

What’s included in the cost of a manufactured home

When you buy a manufactured home, here’s some other expenses you’ll need to consider as part of the costs of owning a manufactured home:

  • Land purchase
  • Site preparation
  • Delivery and installation
  • Utility hookups
  • Insurance
  • Taxes

You may be able to finance some of these costs along with the home.

How to get manufactured home financing: 5 types of loans

You have several options for a loan to buy a manufactured home and land, but your choices will depend on how your manufactured home is titled. Here’s a look at the requirements side by side:

Conventional Government-backed
Fannie Mae Freddie Mac FHA  VA USDA
Minimum down payment 3%-5% 5% 3.5% 5% 0%
Maximum loan amount Based on lender requirements Based on lender requirements Home only: $69,678

Lot only: $23,226

Both: $92,904

Based on lender requirements Based on lender requirements
Loan type Fixed- and adjustable-rate Fixed- and adjustable-rate Fixed rate Both, but adjustable-rate may be difficult to find Fixed
Minimum credit score 620 720 580 with 2.5% down,

500 with 10% down

Varies by lender No minimum
Must be titled as real property and/or affixed to the land

Conventional loans

Many private lenders offer manufactured home loans, including financing a manufactured home with land. However, in most cases, to qualify for a manufactured home mortgage you must place the home on a permanent foundation and title it as real estate property. Here are some options for conventional loans on manufactured homes.

Fannie Mae MH Advantage To finance a manufactured home, it must be certified as an MH Advantage home. Homes that qualify typically have construction, design and features similar to site-built homes and are placed in residential areas. These manufactured homes are built on a permanent chassis, installed on a permanent foundation on land and are titled as real estate. Loans can be fixed- or adjustable-rate mortgages with terms up to 30 years.

Fannie Mae Standard MH This loan option is for homes that don’t meet the eligibility requirements of the MH Advantage program, including traditional single- and double-wide manufactured homes. However, unless it is in a co-op or condo project, the borrower must own the land the home is placed on. The manufactured home must be built on a permanent chassis, installed on a permanent foundation on land the borrower owns (with or without a mortgage) and titled as real estate. Loans may be fixed- or adjustable-rate, up to 30-year terms.

Freddie Mac Manufactured Home Mortgage These manufactured home mortgages are available in most states. Loan terms include both fixed- and adjustable-rate mortgages. Homes must be on a permanent foundation and can be placed on private property owned by the borrower, in a planned development or project or — with written permission — on leased land.

Tip. If you are purchasing a manufactured home to place on land you already own, you may be able to use your equity in the land to cover all or part of the down payment.

Government-backed loans

FHA manufactured home loans

You can buy a manufactured home with a loan insured by the Federal Housing Administration (FHA). These loans are available to finance the purchase of a manufactured home only, a lot only or both at once. In addition, you can use an FHA manufactured home loan for a home installed on a leased lot. Terms range from 15 to 25 years.

VA loans for manufactured homes

Loans backed by the U.S. Department of Veterans Affairs (VA) provide financing options to military service members, veterans and surviving spouses. VA loans for manufactured homes require that the homes be attached to a permanent foundation on land owned by the borrower or a manufactured home and land together. The home must qualify as real property.

USDA manufactured home loans

Low- to moderate-income homebuyers in rural areas who want to finance a manufactured home, or a home and lot, may qualify for a USDA Single Family Housing Guaranteed Loan. These loans offer flexible qualification requirements including no minimum down payment and no minimum credit score.

Personal loans for manufactured homes

Depending on the cost of the manufactured home you’re buying, a personal loan may be an option. Personal loans generally go up to $50,000, however some lenders issue loans up to $100,000.

These loans come with fixed rates, and terms are usually between two and five years. However, personal loans typically have higher interest rates than mortgages and auto loans. Exact personal loan qualifications vary by lender, but most will usually review your credit score, income and other financial details.

Chattel loans

Another way to buy a manufactured home is with a chattel loan, which is like a mortgage except that it’s for high-price personal property such as boats, planes or heavy equipment (“chattel” is another word for “personal property”). Chattel loans for manufactured homes are common and typically have higher interest rates than mortgages. The loan will be secured by your manufactured home alone so, unlike with a traditional mortgage, if you default on the loan only the home can be repossessed, not the land.

Pros and cons of buying a manufactured home

Manufactured homes represented about 9% of new single-family residential buildings in 2021, according to data from the US Census Bureau’s most recent Manufactured Housing Survey. But before you jump into any type of homeownership, it always pays to consider the pros and cons.

Pros

  Affordability. In 2021, the average manufactured home price was $108,100, but a single-family home cost an average of $365,904 (excluding, in both cases, the value of the land).

  Efficient construction. Because manufactured homes are made in factories, their construction is not affected by weather or other factors that affect site-built homes.

  Multiple financing options. There are a wide range of options to help you finance a manufactured home. We’ve focused on options that allow you to finance both the land and the home, but it’s very possible to finance or refinance just the manufactured home itself.

Cons

  Higher interest rates. Manufactured home loans typically come with higher interest rates than other loan types.

  Social stigma. Manufactured housing has come a long way in recent decades, but that doesn’t mean that everyone has gotten the memo. You may receive negative opinions from colleagues, family or friends if you buy a manufactured home.

  Depreciating home value. Unlike traditional site-built homes, which tend to appreciate over time, manufactured homes may depreciate.

  Difficult resale. Manufactured homes are not easy to resell, and can pose especially expensive challenges if you want to sell only the home while keeping the land. It will likely cost thousands of dollars to move a manufactured home to a new site.

6 steps to buy a manufactured home

Buying a manufactured home includes a different process than purchasing traditional real estate. The exact method will vary by state, so contact the Manufactured Housing Association for information on regulations, permits and the process of buying a manufactured home in your state.

Here are six steps for how to buy a manufactured home and land.

1. Decide on the location for your manufactured home

If you’re purchasing land or placing the manufactured home on property you already own, study the zoning laws and any other guidelines you’ll need to follow.

2. Search for a manufactured home

Work with your manufactured home retailer to customize your manufactured home, unless you’re purchasing a standard model or an existing manufactured home.

3. Secure financing

Work directly with a lender, mortgage broker or your manufactured home retailer to weigh your options for manufactured home loans. Similarly, compare lenders and loan terms if you’re considering a personal loan or chattel loan.

4. Prepare the home site

Your retailer will work closely with you to make sure the site is ready for the installation of your home. This includes securing necessary permits, addressing any issues that affect the installation of the home and preparing utility hookups.

5. Arrange delivery and installation of your home

Your home is delivered and installed after the land or lot is ready.

6. Sign up for insurance

Before you can move in, you’ll need to insure the home and fulfill any other occupancy and maintenance requirements to avoid potential problems or delays.

 

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