VA Loans For Manufactured Or Mobile Homes: Your Options Explained
If you’re serving in the military, or are a veteran or the qualified spouse of one, you can use a Veterans Affairs loan to buy a manufactured home and land to install it on. Learn more about using a VA loan to buy a manufactured home.
Key Takeaways:
- VA loans are backed by the U.S. Department of Veterans Affairs and can be used to buy a manufactured home.
- To use a VA loan, the borrower must meet eligibility requirements, and the home must meet specific property requirements.
- The manufactured home must be affixed to a permanent foundation and contain at least 700 square feet of interior space.
Can You Get A VA Loan For A Mobile Or Manufactured Home?
If you’re eligible for a VA loan, you can use one to buy a manufactured home. Some of the perks of VA loans include lower interest rates, a minimum 5% down payment and no mortgage insurance. However, not all lenders offer VA loans for this property type.
“VA loans for manufactured homes can be used for purchases, refinances and improvements, with specific loan limits and lender credit requirements,” says Austin Glanzer, co-founder of 717 Home Buyers in Lancaster, Pennsylvania. “The loan must come from a VA-approved lender, and the home must be appraised by a VA-approved appraiser to meet minimum property standards.”
Mobile Home Vs. Manufactured Home
Though many people use manufactured and mobile homes interchangeably, there’s a fundamental difference. The term manufactured home refers to homes built after June 15, 1976, when federal construction and safety standards took effect. Because mobile homes are older and were not made to meet those safety standards, you typically won’t be able to use a VA loan to purchase a mobile home.
The two most common types of manufactured homes are single-wide and double-wide homes:
- Single-wide homes are built in one long section.
- Double-wide homes consist of two sections joined together to add more space.
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Ways To Use A VA Loan To Buy A Manufactured Home
There are several ways you can use a VA loan to buy a manufactured home, land to install it on, and combinations thereof:
- Buy a manufactured home for land you already own.
- Buy a manufactured home and land together.
- Buy a manufactured home to install on land you lease.
- Refinance a manufactured home once you buy land.
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Requirements To Buy A Manufactured Home With A VA Loan
Let’s look at some eligibility requirements for using a VA loan to purchase a manufactured home.
Requirements For Borrowers
Here are some of the minimum requirements for VA loan borrowers:
- Minimum down payment: 5%
- Minimum credit score: No set minimum, but lenders may require at least 620
- Maximum DTI: 41%
- Maximum loan amount: None
- Minimum military service: Must have served at least 90 continuous days
- Certificate of Eligibility: Borrowers must provide this document, which verifies your eligibility for VA benefits.
- VA funding fee: A one-time fee that helps fund the VA loan program
Requirements For The Manufactured Home
To use a VA loan, the manufactured home must:
- Be affixed to a permanent foundation.
- Meet minimum VA property requirements.
- Be your primary residence within 60 days.
- Have a minimum of 700 square feet of interior floor space.
- Meet state law requirements to be considered real estate.
- Have a certification tag on the outside of the home that verifies the home meets HUD construction and safety standards.
- Have a data plate inside the home listing factory-installed equipment and appliances, and the home’s roof and wind load zones.
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What Are The Maximum VA Loan Terms On A Manufactured Home?
Your loan term is the amount of time you have to pay back the loan. The maximum loan term on a VA loan depends on the type of manufactured home and whether you’re buying the land along with it.
Maximum VA Loan Terms For Manufactured Homes
| Type Of Property | Maximum VA Loan Term |
|---|---|
| Single-wide only | 20 years and 32 days |
| Single-wide and land | 20 years and 32 days |
| Land for a manufactured home you own | 15 years and 32 days |
| Double-wide only | 23 years and 32 days |
| Double-wide and land | 25 years and 32 days |
What Are The Advantages Of Using A VA Loan For A Manufactured Home?
Some of the perks of using a VA loan to buy a manufactured home include:
- Lower interest rates and better terms than conventional loans
- No monthly mortgage insurance
- Smaller upfront investment
- No loan limits
- Fewer closing costs
- No prepayment penalty
Other Options For Financing A Manufactured Home
If you’re ineligible for a VA loan, you can consider another type of manufactured home loan.
Conventional Loan
Conventional loans are the most common type of loan, but they tend to have stricter eligibility requirements. When it comes to manufactured homes, the home must be permanently attached and converted to real property to be eligible for a conventional loan.
Chattel Loan
A chattel mortgage is a loan for a movable piece of property like a manufactured home or a vehicle. Unlike a traditional mortgage, a chattel loan typically only finances the property and not the land where it will sit. Chattel loans tend to have shorter terms and lower loan limits. Plus, the lender owns the financed property as collateral until the loan is paid off. The upside is that chattel loans tend to have more lenient eligibility requirements than traditional mortgages.
Personal Loan
It’s possible to use a personal loan to buy a manufactured home. Personal loans have fewer restrictions on how the home is built. However, they usually come with higher interest rates – especially if you have bad credit.
Title I Loan
A Title I loan is one of two loan programs offered by the Federal Housing Administration to finance the purchase of a manufactured home. These loans come with a fixed interest rate, shorter loan terms and low loan limits. The home must serve as your primary residence, be connected to utilities, and meet FHA guidelines.
Title II Loan
A Title II loan is the other type of manufactured home mortgage and can be used to purchase the home and the land it sits on. The home must have been built on or after June 15, 1976, and qualify as real property, meaning it must be permanently attached to the land.
FAQ
Here are answers to common questions about buying a manufactured home with a VA loan:
“Banks often hesitate to finance mobile homes due to their depreciation over time, the nature of chattel loans with higher interest rates and shorter terms, the risk of the home being moved, limited resale value, and the higher susceptibility to damage and maintenance issues,” Glanzer says.
The Bottom Line
If you’re eligible for a VA loan, you can use it to buy a manufactured home. VA loans tend to have lower interest rates, require a 5% down payment and no mortgage insurance. The manufactured home must be permanently affixed to a foundation and be at least 700 square feet. Also, keep in mind that not all VA lenders offer financing for manufactured homes.
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