March 15, 2019
Mobile Home Financing: Is there such a thing?
Mobile home financing is a niche market. Is there such a thing as mobile home financing? This question comes up in almost every single conversation that I have with buyers, sellers, investors, or just curious minds. Does this even exist? The short answer, yes, it does exist.
Mobile home financing or manufactured home financing is a specialized market. It is even more so if you need financing for a mobile home in a park/community. Which is what most of this post will be about. A few things to keep in mind when you are seeking mobile home financing:
It is highly unlikely that your local bank will give you a loan for a mobile/manufactured home in a park. When I say “local bank”, I mean Wells Fargo, Chase, Bank of America, credit unions, etc. They may offer financing if the manufactured home is going to be put on its own land (meaning you own the land and don’t rent it), but not in a park/community. If you plan on buying a manufactured home in a park/community (or on rented land) be sure to indicate that to your bank. They will assume that you are buying land and putting the home on it. If you really want to stick with your bank, you could try and apply for a personal loan. The personal loan does not put a lien on any asset because “you” have proved to be credit worthy.
Loan pre-approval for mobile home financing is not common. Pre-approval is tough when purchasing a mobile home in park. There are so many variables that a lender has to take into consideration like lot rent, year of home, your credit, price of home, location, etc. So how do you know if you can get a loan? Find a home that you want to purchase, then apply for financing. The lenders will be able to able to help you because they can figure out your debt to income ratio, in other words, how much you can truly afford. I know it is the opposite of purchasing a traditional home but this is how it works in the mobile home financing world.
You will need to have a down payment if you a buying a manufactured home in a park. Unfortunately, the government programs of 0% down payment do not exist if buying a home in a park/community. Some argue then why buy a manufactured home in a park? My response is that a mortgage payment for a home in a park is going to be less than if you are purchasing the land, in most cases. The lender wants to see that you have “skin in the game” and that you are not going to walk away from your home. In Washington State, a buyer will need to have more money to put down than in Oregon. The reason is because the mortgage broker fee (this is the fee the lender charges to borrow money) can not be rolled into the loan, unlike it can in Oregon.
The down payment amount varies depending on where and what you are buying. Unlike traditional homes, there are a lot of variables when buying a mobile/manufactured home in a park. For instance, the year of the home, the size, the lot rent (aka space rent) varies from park to park. All of these factors will determine the down payment amount. Typically, we’ve seen down payments as little as 10% but as high as 50%. Some lenders won’t touch a home if it is older than 20 years. Other lenders will finance as old as 1976 but require a high down payment. So, you can see it is really difficult to quote a down payment unless the the lender know which home you want to buy.
Make sure you have documented income. Lenders need to know that you can afford the home you want to buy. The banks will want to see your pay stubs, bank statements, tax returns, award letters from social security/disability, pension income, and source of your down payment. If you can’t prove any of this information, it will be tough to get financing. If you have a ITIN (click here to read more) , make sure your ITIN is the same number that was given to your employer. If the ITIN does not match your pay stubs, it is highly likely that you will be denied financing with traditional banks and could be reported to the IRS. However, that doesn’t mean that all hope is lost. We have come across some non-traditional lenders that will finance but they usually require a much higher down payment to compensate for the risk of financing.
If you know of a home that you want to purchase, have a down payment, and reported income, you are in the fast lane to getting a manufactured home!
Still have questions about purchasing a manufactured home? Feel free to view our videos of FAQs by clicking here.
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