Manufactured homes are an important source of affordable housing. People can customize the home to fit their financial situations and needs. Although it is a lot more affordable compared to traditional homes, you can still enjoy walk-in closets, fireplaces, and stainless steel appliances. However, if you want to buy a manufactured home, you might need to get a loan. Read on to learn about the types of manufactured home loans!

Several Types Of Manufactured Home Loans

Unless you have a huge amount of cash available to purchase a manufactured home straight up, you will need to take a loan to cover the total cost first. Manufactured home loans can be tricky, but you have some options to choose from.

  • Conventional Mortgage

It is possible to purchase a manufactured home with a traditional mortgage loan. But it has to be considered real property. Your home has to be attached to a permanent foundation, consist of at least 400 square feet, and have all the basic features that are needed for living, such as sleeping, eating and sanitary facilities.

  • Government-Backed Loans

It is possible to qualify for a manufactured home loan with the U.S. Department of Veterans Affairs (VA). If your manufactured home falls under the “real property” definition, you can use a VA loan for:

  • Refinancing or purchasing a manufactured home
  • Refinancing or purchasing a manufactured home, plus the lot
  • Refinancing a manufactured home to buy the lot
  • Purchasing and improving a lot for your existing mobile home

The U.S. Department of Agriculture (USDA) provides people with manufactured home loans. The home has to be considered real property, permanently fixed to a foundation and at least 400 square feet to qualify.

  • Chattel Loan 

Chattel loans are similar to auto loans. This is done with the manufactured home serving as the collateral, which is something of value that the lender can repossess if you default or fail to repay the payment. You will need to put at least 5% down in order to qualify. The mortgage rates are usually higher than traditional mortgage loans, and they come with smaller loan amounts and shorter terms.

A chattel loan, made for movable properties like airplanes or manufactured homes, can be a good option if you don’t plan on buying the lot together with the home. The loan will be intact even if you move the home.

  • Dealer Or Owner Financing

Finally, you can arrange financing directly through the entity or person you are buying from. If you buy your manufactured home through a dealership, they will likely offer financing.

If you buy a manufactured home from a private seller, you may be able to work out a deal with them. You have to make sure that the seller owns it outright. If you choose this way, make sure the terms of the loan are crystal clear, written on paper and signed so you don’t experience disagreements in the future.

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