If you have less than perfect credit, where can you turn if you want to be a homeowner? Youreally do have several options available to you right now. Buying a mobile home ormanufactured/modular home are excellent choice with very attractive financing programs thatare available even if your credit report reflects slow payment, judgments, repossessions,foreclosure or bankruptcy.
Five Traditional Financing Alternatives
1. Borrow money from a friend or relative. (Consider yourself lucky if you can do this).
2. Have at least 20% saved up for the down payment.
3. Hope to find a seller who is willing to financing your loan for you.
4. Obtain financing from the mobile home dealer, but the interest rate may be too highresulting in higher monthly payments.
5. Secure financing through a credit union, which historically are more open to lending onmobile homes and manufactured homes.
Related: How to Finance a Mobile or Manufactured Home
Best Manufactured Home Loans
Trying to purchase a mobile home with bad credit and figuring out the best option can be a hassle. Luckily, our lenders are ready to help you find the lending option that works best for you. These are the top choices when it comes to manufactured home loans.
Even within each of these types of loans, you may find other, more specific, lending options. Commonly, you’ll see chattel, construction, and end (permanent) mortgage loans.
If you already own your land or have a downpayment and can verify your income, we might have a program. We work with a variety of mobile home loans and will help you figure out the next steps.
A conventional home loan is one of the most straightforward types of home loans. With this loan, a lender puts forward money that allows the borrower to purchase a home. If the borrower cannot make the payments on the loan they took out, the lender will take possession of the property.
This makes lending for mobile homes a little dicey. Mobile homes don’t rise in value as much as other properties do. So, many lenders are reluctant to extend this type of loan for the purchase of mobile homes. When they do, they often require a large down payment, often a larger percentage of the price than a borrower would pay with a traditional home.
This makes conventional loans a lackluster option when it comes to purchasing a mobile home. They still have potential but other options may be a better choice.
FHA loans are very similar to conventional home loans. A lender puts forward money, and a borrower is able to make a purchase. However, these loans are insured by the Federal Housing Administration (FHA).
This simple change dramatically alters the process of obtaining one of these loans. Since a reputable institution is backing the loan, borrowers can borrow with less risk and worry. So, they are able to borrow with less strict requirements on credit score and income, alongside a smaller down payment. All of this makes these loans a solid choice for anyone looking to purchase a mobile home.
Home Nation offers FHA loans through our lenders. If you’re interested in one of these loans, make sure to check out the finance page on our site. There, you can find the form you must fill out to be considered by our lenders.
Refinance loans aren’t loans that exist on their own. Instead, they are an extension of existing loans. They involve taking out a new loan to pay off the old one.
At first, this seems illogical and appears to be an unnecessary step in the process. Why would you use one loan to cover another? However, it makes sense when you consider the nature of loans. Since some time has passed since the original loan was taken out, the size of the loan is now smaller. Getting a better rate is easier when dealing with a smaller loan. So, the new loan will generally be more favorable to the borrower than the old one.
This is most commonly seen with conventional loans, which can get marginally better through the refinancing process. However, since the new loan can be entirely different from the original loan, it also gives a chance to change the nature of the loan completely. You can take out a FHA loan to cover a conventional loan. This allows you to reap the benefits of an FHA loan even if you didn’t have one originally.
Alt text: A mobile home on a foundation on the beach
A few US government departments work to make owning a home easier. The US Department of Agriculture (USDA) offers USDA rural housing loans which can be found through the USDA Income and Property Eligibility Site. These are designed to help low- and moderate-income households to purchase homes in rural areas. In addition, the Department of Veterans Affairs (VA) offers VA-backed mortgages. These are available through the VA website and are designed to help veterans receive loans with more favorable rates than they can find elsewhere. Both of these programs have very specific requirements borrowers will need to meet.
USDA loans have basic income requirements, and the property must also meet certain qualifications. VA-guaranteed home loans are available for active or retired military service members, their spouses, and eligible beneficiaries.
Neither the USDA nor VA have a minimum credit score to be approved. Some lenders may require a minimum, with 640 being the most common credit minimum credit score required. However, depending on your lender, you may be able to qualify even if you have bad credit.
Want to learn more about how Home Nation can help you purchase a mobile home even if you have bad credit? Check out our financing page to learn more!
FHA Home Loan: A Better Option
FHA home loans work well for people with bad credit especially when buying a mobile home ormanufactured home. Just to clarify, you don’t apply for a home loan through the FHA (theFederal Housing Administration). You apply through a financial institution, such as a creditunion. Becoming a member of a credit union is as very easy as a phone call to the credit union.Lenders are encouraged to fund FHA home loans.
- With FHA loans, you don’t need to have a large 20% down payment. FHA loans are approved every day with down payments as low as 3.5%
- Interest rates are fixed for the entire term of the loan, generally 20 years for mobile homes and manufactured homes.
- Maximum loan amount for a manufactured home only is $66,678.
- Maximum loan amount for a manufactured home and lot is $92,904.
- Borrowers with scores even lower than 640 may still be able to finance a home, but can expect to pay increased interest rate, higher down payments, and even more for gettingqualified.
- At Home Nation, we offer FHA loans to customers looking to buy their first mobile home with credit scores of as low as 580, but these kinds of loans are certainly not easy to comeby as most will not be accepted by lenders.
Related: What Questions You Should Ask Before Buying a Mobile Home
Eligible Borrowers must:
1. Demonstrate that they have sufficient funds to make the minimum required downpayment.
2. Be able to demonstrate that they have adequate income to make the proposed monthlypayments on the loan and meet their other expenses, such as credit card payments, vehicleloan payments, etc.
3. Intend to occupy the manufactured home as their principal residence.
4.Have a suitable siteon which to place the manufactured home.
a. The home may be placed on a rental site in manufactured home park, provided thepark and lease agreement meet FHA guidelines.
b. The home may be situated on an individual home site owned or leased by theborrower
Veterans Assistance Loans
VA loans are available to home buyers who have served in the Armed Forces and to thesurviving spouses of those who have served. Buyers can qualify and obtain a VA loan if theymeet the specific VA requirements, such as a Certificate of Eligibility, which looks at servicehistory, work history and income. We at Home Nation proudly work with our veterans andtheir families to make this home buying process very easy.
Requirements for Manufactured Homes
The FHA and VA have specific requirements about mobile homes and manufactured homes.Fortunately,Home Nationhas expert staff to make sure your new home meets all FHA and VArequirements. An Eligible Manufactured Home must:
1. Meet the Model Manufactured Home Installation Standards.
2. Carry a one-year manufacturer's warranty if the unit is new.
3. Be installed on a home site that meets established local standards for site suitability and hasadequate water supply and sewage disposal facilities available.
4. The proceeds of a Title I manufactured home loan may not be used to finance furniture (forexample, beds, chairs, sofas, lamps, rugs, etc.). However, built-in appliances and equipmentand wall-to-wall carpeting are eligible for financing.
Related: Can I Use Land as a Down Payment for a Mobile Home?
Your Annual Income
Whether your income is the same month after month or fluctuates throughout the year orcomes from the same employer or from different sources, your lender will work with you tocalculate a reliable and stabilize monthly income amount that is used to determine the loanamount and monthly payment which you can reasonably repay each month.
Once the amount of your monthly income is calculated, this ratio is a primary factor todetermine how much of a monthly housing payment you can afford. Lenders calculate theminimum payments on your proposed home loan and other obligations and divide this totalpayment amount by your income. What this means to you is that neither the lender, the FHA,the VA or Home Nation want you to get strapped with a home payment that you cannot afford.
This payment is for your new home and we want you to keep your home.
An FHA loan or a VA loan can be a very attractive option for buyers looking to get their firstmobile home, who may not have perfect credit or a large down payment. However, owning anew mobile home or manufactured home really is closer than you think. Home Nation is herefor you.
Are you ready to make your dream of owning your own home a reality? Fill out our financing information form and get in touch with one of our representatives!