Legal Guide

Manufactured Home Loan Access Easier Than Ever Before

There was a time when lending institutions considered manufactured and mobile home mortgages to be part off a niche market. But rising manufactured home sales and a robust endorsement by the U.S. Department of Housing and Urban Development (HUD) has opened increased access to mortgages. In fact, people of all income brackets are finding that getting a loan to purchase a quality manufactured home has never been easier.

Cost Differences Between Manufactured Homes & Site-Built Models

The average cost of a new home in 2019 hovered around $324,000, and buyers often paid upwards of $383,000, according to reports. Rising listing prices in site-built real estate markets have been driven by shortages, slower than expected new home construction, and Millennials increasing first-home competition, among other factors. Housing industry experts anticipate site-built prices to skyrocket in the coming years.

By contrast, the average cost of a manufactured home reportedly stands around $50 per square foot, depending on the luxury amenities new home buyers select. According to the U.S. Census Bureau, the most recent manufactured home sales averaged just under $80,000. What makes the startling cost contrast even more significant is that today’s manufactured homes enjoy quality construction and luxury items that are second to none.

Given that first-time manufactured homebuyers are frequently paying less to own than rent apartments, lenders have recognized low- and middle-income families are viable borrowers. With some proactive financial planning, securing a loan for a manufactured home can be seamless.

Financing Manufactured Homes

It’s important for prospective buyers to understand that HUD has made a strong push to open access to loans and help working families enjoy the prosperity that comes with homeownership. Under the Title I program, approved Fair Housing Act (FHA) lenders are now in a position to provide borrowers with improved financing.

Traditional lending institutions are now insured against potential loan default under the FHA program. This policy has provided lenders with enhanced confidence to increase access to qualified borrowers. Simply put, HUD’s proactive measures have resulted in more money being accessible for everyday people to buy cost-effective manufactured homes under the following criteria.

Loan Purpose

The mortgage must be for a manufactured home or home-land combination. Buyers need to understand they may enjoy the flexibility of leasing land for the newly financed home. A 3-year land lease is generally required to qualify for a manufactured home loan.

Maximum Loan Amounts

Under this federally-insured program, buyers can secure the approximate national average of $69,678 for the home. An additional $23,226 can be accessed for land, placing the maximum combination home-land loan at $92,904.

Maximum Term of Manufactured Home Loans

The federally-supported program allows borrowers to take out 20-year loans for single-wide manufactured products, and 25-year mortgages on double-wides. Land ownership loans are generally limited to 15 years. Borrowers may also qualify for refinancing on existing mortgages.

Borrowing Eligibility Requirements

Today’s manufactured home loans enjoy competitive interest rates similar to site-built mortgages. In many respects, these HUD-backed programs are mirror images of traditional lending programs. The substantial difference is the borrowers are purchasing a quality living space at a much lower cost. That being said, these are standard eligibility requirements.

The borrower must have adequate resources to make a minimum down payment. You must demonstrate through documentation that you have sufficient, ongoing income to adequately repay the loan on time. These mortgages are only available to people who plan to occupy the manufactured home as their primary residence. A viable lot must be secured that is owned, leased, or part of the purchase by the borrower.

Manufactured Home Companies May Provide Guidance, Additional Resources

One of the unique differences between the site-built real estate industry and manufactured homes is that prospective buyers often get improved customer service from the latter. Unlike real estate professionals who are selling existing structures or spec homes, American-made manufactured living spaces are often soup-to-nuts oriented. In other words, they take you through the entire process and generally have lending referrals in place.

In terms of easy access to home loans, companies that build your manufactured home to your specifications and within your budget often have long-standing lending resources. Although generally not a wing of the home manufacturing outfit, there are companies that specialize or underwrite the bulk of their mortgages in the manufactured sector.

Lenders who work hand-in-hand with manufactured home organizations are experts at helping everyday people realize the American Dream. They have fingertip access to flexible loan programs and options that can make the difference between renting and owning. But the bottom line is that financing for manufactured homes is prominently trending among lenders. That means it has never been easier to own your very own manufactured home.

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