Trying to get a loan for a mobile home? You may be surprised learn there is financing options available for non-single-family residence homes. What to know…
Your property type holds all the cards in whether or not you’ll be able to obtain competitive loan terms. For starters, you need to own the land. If you own the structure, but you don’t own the land, your options become very limited and pricey. The classic scenario is you own a unit in a mobile home park where one entity owns land and all of the people who reside in the complex pay a housing obligation called ‘space rent’. Bank lenders consider this to be a more risky type of lending most will not dabble in (few exceptions here-more on this momentarily).
Manufactured homes – These homes are bought at a dealership and moved on a flatbed truck to the final destination and affixed to the earth with a permanent foundation. The key here is that the property was already built in its entirety someplace else, then simply moved and subsequently attached. Another unique way to identify a manufactured home is that it has if it has a 433 form filed with the county signifying the property is on a permanent foundation. These properties also have HUD tags attached to the home as well further supporting the property is indeed, manufactured. Financing options can be limited for this property type if the goal is to buy a manufactured home for the purposes of attaching it to the earth.
It is critical the home is already attached to the earth as real estate. In other words the lender is going to make the loan against the property with the structure attached to the land, meaning dwelling and land transfers in the sale when buying the home. Fannie Mae and Freddie Mac do make conventional loans on manufactured homes that is if you can find a lender who will do so. More lenders will finance this type of property with an FHA Insured Loan, as the FHA is much more forgiving in their underwriting standards and the lender has far less buy-back risk (a situation where a new loan goes bad and the originating lender is forced to buy-back the bad loan for a steep loss). FHA Loans pack in more insurance against lending risk, making the FHA a far more likely financing vehicle for manufactured home transactions.
Three Unique FHA Manufactured Home Requirements:
- property cannot be in a flood zone
- the home structure cannot have been previously moved
- the structure must have been dealt after 1978
- mortgage insurance and impound account for taxes and insurance applies (no matter what down payment %)
- 2 units will be to be classified with the county as real property
Modular/Prefab Homes-same thing exists wherein the property needs to be transferred to the buyer with the land and the structure in one transaction. Modular homes are built on site at the property with a permanent foundation and built up. These homes do not have HUD tags, or other stronger lending conditions the way manufactured homes do. Financing options for modular homes are the same as single family home options.
If you are looking purchase one of these unique property types, make sure you are pre-approved upfront providing your lender all of the littlest of details. The tiny details left unknown are the ones that cause home transactions to go awry. Do not assume a unique property type that is anything other than single family 1-4 unit home is automatically going to be a slam dunk. Non-bona structures fall into our unique property type description as well. Not sure? It is always a best practice to bring any and all pertinent information to your lender and real estate agent as early on in the process as possible.
Looking to refinance or buy a unique property? Start with a free rate quote online now!