VA Loans For Manufactured Homes: What They Are and How They Work

 
Manufactured homes (also known as mobile homes) are a low-cost path to home ownership — one chosen by 6% of homeowners nationwide and, notably, by around 15% of those living outside of U.S. cities. Military borrowers can finance manufactured homes with VA loans from lenders approved by the U.S. Department of Veterans Affairs (VA). However, to qualify for a VA loan on a manufactured home, the property must meet specific VA standards.

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How to use a VA loan to buy a manufactured home

To get a VA loan for a manufactured home, it must be permanently attached to land that you own. By itself, in most states, a manufactured home is considered personal property similar to a car. This makes sense, as manufactured homes have their roots in truly “mobile” homes and are often built with wheels. However, once the home is permanently attached to land and categorized as real property, it’s eligible for VA financing. A VA loan can finance the purchase or refinance of both the home and the land, as well as the improvements necessary to meet VA manufactured home foundation requirements.

Here are three of the most common mortgage options VA-approved lenders offer to help you buy or refinance manufactured homes:

BUY A MANUFACTURED HOME AND PUT IT ON LAND YOU ALREADY OWN 

Maybe you own the perfect lot that’s ready and waiting for you to add a home. You can use a VA loan to finance the cost of the home, plus any improvements needed to bring electricity and water to the lot. You can also roll VA funding fees into the loan balance.

PURCHASE A MANUFACTURED HOME AND LAND AT THE SAME TIME 

If you want to buy land and a manufactured home together, a VA loan may cover the land purchase and the expenses related to preparing the site for your home to be permanently anchored to your land.

REFINANCE A MANUFACTURED HOME TO PUT ON A LOT YOU PURCHASE 

If you own a manufactured home that’s on rented land, consider buying your own lot. Once you find the perfect plot, you can use a VA loan to buy the land, transport the manufactured home to the new site and permanently attach it to the land. The proceeds of the VA loan can also be used to pay off some (or all) of the balance of any existing manufactured home loan. Even better, if the existing loan is a VA loan, you can use a VA streamline refinance to replace your loan using a fast, hassle-free process.

Am I eligible for a VA loan for a manufactured home?

The VA requirements for receiving a manufactured home loan are not the same as when buying a site-built home. Here’s what to expect:

Higher down payment

The VA requires a minimum down payment of 5% for a manufactured home, compared with 0% down for a site-built home.

Stricter credit and debt guidelines

Credit score requirements may be more stringent, as VA-approved lenders consider manufactured homes a slightly riskier investment. Lenders may require less total debt compared with your income, a measure more commonly referred to as your debt-to-income ratio (DTI).

Property requirements

• Affixture. The title company handling your refinance or purchase must prove that your home is permanently affixed to the land and classified as real property to meet VA manufactured home guidelines. A document called an affidavit of affixture is often used to prove that the property is attached to land you own.
• Property classification. The mobile home must be classified as real property, not personal property (also known as “chattel”).

→ In states that have adopted the Uniform Manufactured Housing Act, the owner of the manufactured home can get the home reclassified through a straightforward process set out in the statue.

→ In states where there is no established way to reclassify a piece of property — Connecticut, Hawaii, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont, as well as the District of Columbia — the VA will accept an ALTA Endorsement 7-06 instead.

• Local minimum property requirements. Each regional VA loan center has unique requirements for the manufactured houses in its region, which address things like installation procedures, required utilities and weatherproofing measures.
• HUD standards. The home must meet HUD Manufactured Home Construction and Safety Standards, and should have HUD tags.

Loan terms for VA loans for manufactured homes

A 30-year, fixed-rate mortgage is popular among buyers using conventional loans, but VA financing for manufactured homes requires shorter payoff periods. The chart below shows the longest terms available for a VA mortgage based on different scenarios.

Shopping tips for VA loans for manufactured homes

MAKE SURE INTEREST RATE QUOTES ARE FOR A MANUFACTURED HOME

Whether you’re using a comparison tool website or calling loan officers directly, make sure that all the quotes are specifically for manufactured home financing. Mortgage rates and fees are usually marked up for manufactured homes, and if you don’t let lenders know upfront that you want to buy a manufactured home, you’ll likely get a quote for a single-family home.

EXPLAIN YOUR SCENARIO TO THE LOAN OFFICER

There’s no 30-year, fixed-rate option available to finance a manufactured home with a VA mortgage. The maximum term depends on the loan scenario outlined in the table above, and each lender will need to know your plans for your manufactured home and land.

GATHER RATE QUOTES ON THE SAME DAY

Interest rates change daily and comparing quotes from the same day is the only way to look at apples-to-apples offers.

GET WRITTEN CONFIRMATION OF THE RATE-LOCK

Once you review competing lender loan estimates and make your choice, ask for a rate lock. Your credit score will be verified by a credit report so check your credit score to avoid surprises when it’s time to lock your loan.

Alternatives to a VA loan for your manufactured home

• FHA manufactured home loans. The Federal Housing Administration (FHA) insures two types of loans for manufactured homes that can finance a manufactured home by itself, a lot by itself or both together.
• Title I loans are available for those who want to live in mobile home parks or other communities where lots are typically leased rather than owned. In these cases, the FHA requires that the borrower have a lease that entitles them to live at the property for at least three years. Title I loans offer a fixed interest rate and typically cover a 20-year term.
• Title II loans are available for buyers who want to purchase a manufactured home and the land on which it’ll sit. Along with down payments that can be as low as 3.5%, these loans require a minimum credit score of 500 and offer terms ranging from 6 months to 20 years.
• Fannie Mae MH and MH Advantage loans. These programs from The Federal National Mortgage Association (“Fannie Mae”) allow borrowers with credit scores of 620 or higher to qualify for financing on manufactured homes. They can even be combined with a HomeReady mortgage.
• Freddie Mac HomePossible loans. Through this loan program, backed by The Federal Home Loan Mortgage Corporation (“Freddie Mac”), borrowers with credit scores of 660 or higher can make a down payment as low as 3% on a manufactured home.
• Chattel loans. 42% of loans issued to people purchasing manufactured homes are chattel loans, according to a report from the Consumer Financial Protection Bureau. Like a mortgage, a chattel loan is secured — the only difference with chattel loans is that if you default on the loan, your manufactured home can be repossessed by your lender, but the land it sits on cannot.
• Personal loans. Unlike a chattel loan or mortgage, a personal loan isn’t secured. This means that your credit score and financial situation will play a large role in determining the interest rate and total amount you might be able to find in a personal loan. And although you almost certainly won’t find a personal loan that offers to finance dollar amounts as high as a traditional mortgage, the average manufactured home costs far less (in 2021, only around $112,000). If you can’t qualify for a mortgage or chattel loan, a personal loan might make sense for you.

Frequently asked questions

What is the oldest that a manufactured home can be and still qualify for a VA loan?

Any manufactured home built before June 15, 1976 won’t qualify for a VA loan, as it wouldn’t conform to the U.S. Department of Housing and Urban Development (HUD) standards (these were put into effect on that date). 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.

How can I make my manufactured home permanent so that it qualifies for a VA loan?

In order to qualify for a VA loan, the VA requires that a manufactured home have a permanent foundation that meets state and local requirements, as well as certain building requirements. The VA also requires manufactured homes to be classified as real estate, though in most states manufactured homes are classified as personal or “chattel” property by default. The process for getting a home reclassified, which converts it from chattel property to real property, varies from state to state.

What is a mobile home vs. manufactured home vs. modular home?

Mobile homes and manufactured homes are essentially the same thing: prefabricated houses built in a factory on a chassis that allows them to be transported to a site. However, according to the government, if it was built before June 15, 1976, it is a mobile home. If it was built after that date, it is considered a manufactured home and should conform to HUD standards. A modular home is different from these two types of homes, in that it does not need to meet HUD standards and is instead built to the same building codes and standards as typical site-built homes.