How To Get a VA Loan for a Manufactured Home
With soaring home prices, it’s easy to see why manufactured homes are an appealing option — their average cost is $87,900, compared to $410,800 for a traditional, site-built home, according to U.S. Census Bureau data. If you’re a military member or veteran, you may be able to use a VA loan to buy a manufactured home. Here’s what you need to know.
Can you get a VA loan on a manufactured home?
Yes, it’s possible to use a VA loan to purchase a manufactured home, as long as it meets specific standards set by the U.S. Department of Veterans Affairs (VA) and Department of Housing and Urban Development (HUD).
You may have trouble securing VA financing for a manufactured home built before June 15, 1976, since homes constructed before that date weren’t required to meet HUD’s building and safety standards. Homes built before June 15, 1976, are classified as mobile homes.
There’s technically no such thing as a VA loan for a mobile home; the term VA-approved lenders use is manufactured home. Manufactured homes must follow regulations set by HUD, which spell out how manufactured homes must be built. Homes that don’t follow HUD’s guidelines are called mobile homes. They’re typically older — often built before 1976 — and aren’t eligible for government-backed loan programs.
Requirements for VA home loans on manufactured homes
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 for a VA loan.
- Permanent foundation: The home must be affixed to a permanent foundation.
- Square footage: Single-wide homes must have at least 400 square feet of interior floor space, while double-wides must have at least 700 square feet.
- Property classification: The manufactured home must be classified as real property.
Borrower requirements
- Certificate of eligibility: You’ll need a certificate of eligibility (COE) to get a VA loan. You can request a COE online using the Veterans Information Portal.
- Down payment: Many VA lenders require 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, but lenders may require a higher score, since manufactured home loans are considered slightly riskier.
- Lower debt-to-income (DTI) ratio: VA-approved lenders may expect you to have a lower debt-to-income (DTI) ratio — which compares your monthly income to your monthly debt payments. The VA recommends a maximum 41% DTI ratio, but lenders may require a lower number as an extra buffer against risk.
- VA funding fee: Most borrowers will have to pay a VA funding fee between 0.5% to 3.3% of the loan amount. Borrowers with a qualifying disability may qualify for a VA funding fee exemption.
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You can also use VA loans to buy modular homes, which are generally factory-built and shipped to the home location in pieces or sections. Modular homes must follow local building and safety codes, as well as VA and HUD standards.
Pros and cons of using a VA loan to buy a manufactured home
Pros
- Affordability: Manufactured homes are generally more affordable than traditional homes.
- Potentially lower down payment: Many lenders will require at least 5% down for a VA manufactured home loan. Since manufactured homes are usually less expensive than traditional homes, your down payment amount may be lower.
- No mortgage insurance: VA loans don’t require private mortgage insurance (PMI), unlike conventional loans, when you put down less than 20%.
Cons
- Limited lenders: It can be challenging to find mortgage lenders that finance manufactured homes.
- Funding fee: The VA funding fee can run up your closing costs.
- Difficult to sell: It may take longer to sell a manufactured home than a traditional home, since securing financing for these properties can be slightly more complex.
Shopping tips for VA manufactured home loans
1. Make sure your rate quotes are for a manufactured home
Whether you’re using an online rate comparison tool or calling loan officers directly, be sure to gather quotes specifically for manufactured home financing. Mortgage rates for manufactured homes are usually more expensive than traditional homes — if you don’t let lenders know upfront that you want to buy a manufactured home, your quotes may not be accurate.
2. Gather rate quotes on the same day
Interest rates change daily, so comparing quotes from the same day is the best 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 mortgage rate lock. This guarantees that the quoted interest rate 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.
Alternatives to VA home loans for manufactured homes
If you don’t qualify for a VA loan, here are some other options to consider:
- FHA loans: You can use a loan insured through the Federal Housing Administration (FHA loan) to buy a manufactured home. Down payments start as low as 3.5% with a 580 credit score or 10% with a 500 credit score.
- USDA loans: The U.S. Department of Agriculture (USDA) offers loans for properties in rural areas. USDA loans have no minimum down payment or credit score requirements.
- Chattel loans: You can use a chattel loan to buy moveable personal property, including manufactured homes.
- Conventional loans: A conventional loan is another financing option, however, you’ll need at least a 3% down payment and a 620 credit score to qualify.
Frequently asked questions
Most VA lenders won’t finance a manufactured home if it has been moved. If you have your eyes set on a moveable property, you’ll likely need to consider other financing options, such as chattel loans.
Yes, you have a wide array of options for refinancing a manufactured home, including:
- Conventional loans
- FHA loans
- VA loans
- USDA loans
Your VA options include a limited cash-out refinance, a standard VA cash-out refinance or a VA streamline refinance (also known as an IRRRL).
Any manufactured home built before June 15, 1976, won’t qualify for a VA loan, as it doesn’t conform to HUD standards. Also known as the “HUD Code,” these rules are set out in the Federal Manufactured Home Construction and Safety Standards, which serves as the federal building code for manufactured homes.
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