Can You Get a Loan for a Mobile Home?

Mobile homes can provide the stability and comfort of a traditional home, but at a much lower price. The catch? If you want to buy a mobile home and finance the cost, it can be more difficult than taking out a regular mortgage loan. Here’s what you need to know if you want a mobile home loan.

Is It Hard to Get a Loan for a Mobile Home?

When shopping for a mobile home loan, you might also come across the term “manufactured home.” Mobile and manufactured home loans are essentially the same thing; “mobile homes” are factory-built before June 15, 1976, and “manufactured homes” are mobile homes built after this date.

Manufactured homes are subject to construction and safety standards put in place by the U.S. Department of Housing and Urban Development. HUD’s Manufactured Home Construction and Safety Standards regulate thermal protection, plumbing, electrical, fire safety and more.

So how difficult is it to get mobile loans? “Financing a mobile home is more difficult than financing a conventional home, but getting a loan for a mobile home is still feasible,” says Daniela Andreevska, content marketing director at Mashvisor, a real estate data analytics company.

The type of loan you ultimately borrow will depend on a few key factors.

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“When approaching the purchase of a mobile home, you first need to determine whether it’s on a permanent foundation,” says Matthew Yu, vice president of loans and investments at real estate lending and investment firm Socotra Capital. You’ll have more options, including conventional and federally backed mortgage loans, if the home is on a permanent foundation.

Mobile homes that meet certain requirements can qualify for a traditional home loan. In addition to sitting on a foundation, the home needs to have its wheels removed so that it’s stationary, and you should also own the land under it. In most cases, it must be at least 400 square feet in size — sometimes more. If these requirements are met, it qualifies as “real property” and can be financed with a mortgage.

“For manufactured homes financed as real property, the terms are pretty much the same as those for traditional ‘stick-built’ houses,” says Gina Pogol, staff writer for consumer mortgage information website HSH. For example, you can choose a 15-year or 30-year fixed-rate loan. Mortgage rates are about the same, too, although they may be slightly higher because there is less competition for that business, Pogol says.

On the other hand, if the home does not meet the requirements for a mortgage and is movable, you will need to apply for a chattel loan, a type of personal property loan, not a real estate loan, according to Andreevska.

Types of Mobile Home Loans If your manufactured home qualifies as real property, there are a number of mobile and manufactured home loan programs you can consider.

Conventional Mortgage Programs

Fannie Mae. You can borrow a manufactured home loan under the Fannie Mae MH Advantage program, as long as the title includes both the home and the land it’s on. It must also qualify as real property. Thirty-year fixed-rate mortgages are available, as well as 7/1 and 10/1 adjustable-rate loans. The down payment can be as low as 3%. Some homes are ineligible, including investment properties and single-wide homes.

Freddie Mac. To qualify for a manufactured home loan through Freddie Mac’s program, the home must be considered real property. Fixed-rate mortgages are available, as well as 7/1 and 10/1 ARMs. Both primary residences and second homes qualify, but investment properties don’t. You can put down as little as 5%.

Agency-Backed Mortgage Programs

Federal Housing Administration. FHA Title I and Title II loans are available for manufactured homes. These loans come with terms of up to 30 years and allow for down payments as low as 3.5%.

U.S. Department of Veterans Affairs. Some VA lenders allow mobile home financing. VA loans can be used to purchase or refinance a mobile home, plus the lot if you wish; to purchase and improve a lot for your existing mobile home; to refinance a mobile home in order to buy a lot; or to refinance an existing VA mobile home loan. The home must be considered real property with a permanent foundation. It’s possible to finance with no money down and no mortgage insurance, as long as you meet the lender’s credit and income requirements. Loan terms range from 15 to 25 years, depending on the type.

Chattel Mortgage Loan

Another financing option is a chattel loan, which actually is not a type of mortgage but a personal property loan. Chattel loans are designed specifically for movable property, which is what the term “chattel” means. “Chattel loans are usually used when the mobile home will be located in a park or a manufactured home community, and they are home-only loans, excluding the land,” Andreevska says. Because these loans do not include real estate, the closing process is typically faster and less demanding, and the loan processing costs are lower than with a conventional mortgage loan.

However, the amount you can borrow is usually much smaller than with a traditional mortgage. Repayment periods are also usually limited to 15 to 20 years. “Moreover, the interest rate is higher because of the shorter loan period,” Andreevska says. “This means that overall, the monthly payment amounts often actually exceed the payments on a conventional home.”

Installment Agreement

If you’re buying a mobile home from a private owner, it’s also possible to work out a financing deal with them. In this case, you’ll want to be sure that the home’s title is clear, meaning there are no liens or judgments against it, and that the seller owns it outright. You’ll also need to put a promissory note and bill of sale in writing and have both parties sign.

Source: Casey Bond, U.S.News & World Report

Financial Assistance Programs

What state/local financial assistance is available to low-income mobilehome owners? Some programs that provide financial assistance to low-income or senior park residents include:

Mobilehome Rehabilitation: Loans or grants are available to low-income mobilehome owners through the Department of Housing and Community Development’s CalHome program to make specified repairs on their mobilehomes. Although not all jurisdictions participate, the funds are channeled through qualified local government housing or non-profit agencies. For more information, check with your city or county housing department, authority or commission.

Section 8 Housing Assistance: Rent subsidies may be available to eligible low-income residents who live in mobilehome parks. This program is funded by the federal government but administered by local housing agencies. Section 8 allocations are often full and many jurisdictions have waiting lists of a year or more. Not all mobilehome park owners accept Section 8 vouchers. For more information, check with your city or county housing department, authority or commission.

Mobilehome Park Rehabilitation and Resident Ownership Program (MPRROP): On a limited basis, this program makes shortand long-term low interest rate loans for the preservation of affordable mobilehome parks for ownership or control by resident organizations, nonprofit housing sponsors, or local public agencies. MPRROP also makes long-term loans to individuals to ensure continued affordability. For more information about the MPRROP process and requirements, go to www.hcd.ca.gov/ grants-funding/active-funding/mprrop. shtml n

Source: What Every Mobile Home Owner Should Know, published by the Senate Select Committee on Manufactured Home Communities

MHP Residents Rental Agreement Options

Renting a site in a mobile home park is far different than renting an apartment, condo or single- family home. The State of California has adopted many laws that specifically apply to mobile home park tenancies and not to other types of rentals. Because of the different rules that apply in mobile home parks, the rental agreements and leases are longer and more comprehensive than the short few pages of a “standard” rental agreement for renting an apartment, condo or single-family home.

When a mobile home buyer makes the decision to move into a rental mobile home park, the process is more involved than just purchasing the mobile home. In fact, as a prospective mobile home park tenant they need to complete transactions that do not apply to other forms of rental housing. The purchaser of a mobile home that is located in a mobile home park must first apply to the mobile home park for residency and be approved. The mobile home purchaser may not finalize the purchase of the mobile home without first receiving the approval from the park owner to move into the park and completing and signing all of the park documents. Once this is done the sale of the mobile home may be finalized.

Included in the “move-in” documents to be signed by the prospective mobile home park resident are various disclosure forms, the parks rules and regulations, pet agreements and the rental agreement. In mobile home parks, the State law requires a park owner to offer the tenants a 12-month lease. The prospective tenant, or current resident, is responsible for picking between a month- to-month rental agreement or a one-year agreement. Additionally, many parks offer a third choice of a long-term lease agreement, which is defined as being longer than 12-months.

Typical long-term agreements are five, ten or fifteen years, but some extend to 20 years or longer. These long-term lease agreements outline in detail what the rent increases will be and under what circumstances rents may be increased. As an example, if government imposes tax increases or fees on the mobile home park, the lease will outline how those increases will be passed through to the residents. Often the lease will address the change in rent upon resale and will also address how disputes will be resolved.

A long-term lease provides certainty to mobile home owners regarding future costs. However, at any time if a mobile home owner wishes to sell their mobile home and move, they simply provide notice to the park owner.

Long term lease agreements are indeed complex legal. It is similar to other legal documents signed by business owners to lease land or a building or office space. Additionally, all legal documents must be written in English.

In this case, the mobile home owner is leasing or renting a site for the mobile home they own. Along with the site comes the various amenities offered within the mobile home park community including various facilities, as well as management and maintenance.

When considering signing a lease document — regardless of the term — it is important to review it very carefully and to fully under- stand the legal document. Park owners encourage park residents and prospective residents, who are considering long term leases, to have their legal advisor review the lease contract.

Affordable Housing vs Low-Income Housing

There is lots of talk these days about the need for more low-income affordable housing in the Southern California region. It is important to recognize the difference between “low-income” housing and “affordable” housing.

Low-income housing is subsidized by the government. There are several projects throughout the region that are monitored by local government housing authorities. An on-line search or call to the regional housing authorities will provide a list of available low-income housing rental units. Some are for veterans, seniors and others for all-ages. There are also low-income for-sale housing projects sponsored by housing authorities and by organizations like Habitat for Humanity.

In these low-income housing developments, renters or home buyers must meet strict income guidelines. Only low-income can qualify to live in these developments.

The income is determined by the income of individuals or families, and includes funds in the bank and investments.

Affordable housing, on the other hand, is not limited to low-income renters or purchasers. There is no limit to the amount of income a person or family has. It is their choice to live in the available affordable housing. Apartments, condominiums, and mobile home parks/manufactured housing communities are generally considered affordable housing stock

in the various individual jurisdictions’ housing plans. However, the location of the housing also dictates the cost. The same apartment or mobile home will sell/rent for far different rates on the beach vs. inland, as an example.

Mobile home Parks/Manufactured Housing Communities, offer a lifestyle choice that attracts a wide range of renters and home buyers. Mobile Home Park residents are both home owners and renters. They own the mobile home or manufactured home and rent the site or lot within a Mobile Home Park for their home. The Park is a little city that provides all of the services and facilities to the renters of individual home sites. The owner of the Park is responsible, just like a city, to maintain the streets, utility systems, public areas facilities, and amenities.

Living in Mobile Home Park is a lifestyle choice, not necessarily an income driven decision. Residents living in Parks may be high income retirees or may have moderate incomes. Many Mobile Home Parks are senior housing communities and attract seniors who are down-sizing after selling a home.

Other Parks are attractive to families because, unlike an apartment and many condominiums, most lots/sites rented in a Mobile Home Park have yards, patios, and parking spaces adjacent to the home. In addition, these communities often offer many amenities such as a clubhouse and pool, which are attractive to both seniors and families.

There is no doubt that the cost of housing in many areas of Southern California is higher than many other regions. Inland counties such as Riverside and San Bernardino, a region referred to as the Inland Empire, offer considerably more reasonable housing than most areas of coastal Orange County, as an example. While rents in a typical Orange County Mobile Home Park may be over $1,200 a month, a similar Park in areas of the Inland Empire monthly rents are as low as $600.

Living in a mobile home park provides a unique lifestyle for all ages and all income groups