At a Glance
Mobile homes are expensive purchases but can afford you or your family a lifetime of memories. Learning how to finance a mobile home can allow you to achieve your dream of owning this type of residence while also helping you potentially save money in the long run.
In this article, you’ll learn:
What is a mobile home?
While the general term mobile home is extremely common, there are three primary types of mobile homes that you can look into financing:
1. Mobile home
The age-old mobile home is the stereotypical home on wheels. Technically, any type of home that exists on wheels and can be driven or moved from place to place is a mobile home, but an RV is the most common example.
2. Manufactured home
Secondly, a manufactured home is the other type of common mobile home. Despite the name, manufactured homes cannot technically be moved. They are assembled in a factory away from the location where the house will be set, and then are moved to that location once assembly is complete. The house is then secured on a single site, typically a concrete slab. While it is technically possible to move a manufactured home, it is extremely expensive.
3. Modular home
Finally, modular homes are a unique modern type of mobile home that you have likely seen in the past without realizing it. If you have ever been on the highway and seen what looks like part of a home being driven on a large truck, you’ve seen a modular home. Large pieces of these homes are assembled offsite and then transported to the location where the home will be where they are fully assembled.
How to finance a mobile home?
Regardless of the type of mobile home you choose to purchase, learning how to get financing for a mobile home is a must:
1. Personal loan
A personal loan is one of the most common loan types available today. With amounts ranging from $1,000-$100,000, it’s possible to get a personal loan large enough to cover the cost of a mobile home. This amount of money comes in the form of a lump sum and encompasses a monthly repayment amount and APR. Keep in mind that personal loans often have higher interest rates than some other loan types.
2. FHA loans
For those unfamiliar with the term, an FHA loan or Federal Housing Administration loan is a specialty loan type for home purchases. There are title one and title two loans associated with this type and, depending on the type of mobile home you have, one of these two may be utilized.
3. Conventional loans
At the end of the day, using a conventional loan to finance your mobile home purchase is one of the most common strategies. Due to the fact that a mobile home is not considered property in the same way a standard home is, most lenders will only offer conventional loans.
4. Chattel loan
As more of a specialty loan type, a chattel loan provides mobile home financing specifically for property that is moveable. The moveable property itself serves as a form of collateral on this loan type. Interest rates offered on a chattel loan are typically higher than other loan types, but the overall length of the loan is shorter than other types which reduces the total amount owed.
5. Seller/manufacturer financing
Most sellers of mobile homes will offer their own personal financing options, similar to how auto dealerships offer financing for the vehicles they sell. Compare the offer from the seller to the other financing options available to see who offers the best terms for the loan.
6. RV loans
If the mobile home you are looking at purchasing is an RV, financing a mobile home with a custom RV loan is an excellent strategy. A loan for mobile home purchases that are RVs are structured specifically to account for average costs of an RV and any specialties associated with an RV purchase.
Learn more: All You Need to Know About RV Loans
Steps in financing your mobile home
Regardless of which type of mobile home financing you wish to use, there are a number of steps to follow:
1. Checking credit reports
Before starting the loan application process, be sure to check your credit report and history for any abnormalities. A shaky credit history and credit score will result in a lower likelihood of your loan application being approved. If there are any points to note on your credit report, aim to address them before applying for your loan.
2. Making land decisions for your home
Despite the fact that your new home will be mobile, it will need to be parked somewhere if it is an RV, or it will need to be settled somewhere if it is a modular or manufactured home. Deciding where you are going to store your home prior to actually purchasing the home is a must-do step.
3. Deciding the specifics of your home
Choosing the type of home that you want is the next step in financing your mobile home. You will need to choose between the three types and better understand the costs associated with each type. When assembling a modular home or manufactured home, there may be additional costs incurred from transporting the home to its location. Understanding these costs will allow you to choose a loan amount that covers the entire cost.
4. Looking at financing options
Compare all of the different lenders who are willing to provide financing for your mobile home, along with the different types of loans available. Never settle for the first loan offering you are given, and always compare terms such as APR, interest rate, length of the loan, monthly payments, and other factors.
5. Submitting loan application
Finally, the last step in learning how to finance a mobile home is submitting your loan application once you have chosen an offering. If you are approved, begin repayments as soon as possible and avoid ever missing a payment.
Pros and cons of mobile home financing
Things to consider while financing your mobile home
When looking at loans for mobile home purchases, there are a number of additional factors to consider:
1. Location of installation
Prior to purchasing your mobile home, you will need to determine where you want to place the home. For a modular or manufactured home, this will likely be a permanent location which means you need to purchase the land first. For an RV or other similar type of mobile home, you will still need to be allowed to park your home at that location.
2. Size of your home
The size of your home will play a factor in how much financing you may need for your new or used mobile home. Additionally, it will help determine how much space you will need to place your home which will allow you to see how much land you new.
3. New or used mobile home
Choosing between a new or used mobile home is always an important decision. While used mobile homes will likely have less costs associated with them upfront, there may be unexpected maintenance costs in the future to consider.
4. Current interest rates
Interest rates fluctuate with the economy and it’s not always the right time to make a major purchase. Consider the state of the economy before diving into a major purchase such as a mobile home. When looking at how to finance a mobile home purchase, you will want to be sure that your interest rate isn’t a rip off.
5. Other associated ownership costs
Owning a mobile home is not a single up-front cost. In fact, ongoing maintenance costs and other similar expenses make the true cost of owning a mobile home far higher than what you may be expecting off the bat. Consider these costs before requesting your loan amount, as including some of these expected costs within the requested loan amount can help you save money.
When looking at how hard is it to finance a mobile home, the answer greatly depends on your income level, credit history and score, and other factors. Acquiring a loan for a mobile home is no harder than applying for any other type of property loan, but you will have the best chance of getting approved if you get all your documents in order ahead of time.
While there is no single accepted credit score for a mobile home purchase, lenders typically like to see a credit score above 600.
In some cases, getting financing for a mobile home can be easier than getting financing for a house due to the lower cost. Additionally, due to the fact that some mobile homes are not considered property, the loan may not require collateral or other factors.
Mobile home financing, on average, can have terms as long as 20 to 25 years depending on the lender.
Generally speaking, lenders want to see a credit score above 600. Anything not above 600 will likely receive a less than favorable interest rate or loan terms that aren’t ideal for saving money in the long run.