Mobile Home Financing Options

If you’re considering purchasing a mobile home, financing is one of the most important factors to consider. Luckily, several cheap mobile home financing options are available to help make your dream of homeownership a reality.

Credit scores are a big factor in determining which loan you’ll qualify for. Typically, lenders require a minimum credit score of 620 for conventional loans and 580 for FHA, VA, and USDA loans.

FHA VA Loans

The federal government backs both FHA VA loans and conventional mortgages, but they offer slightly different features. FHA loans are available to a wider range of borrowers and typically have less-strict requirements, while VA loans are designed to benefit veterans and certain eligible surviving spouses.

Choosing between these two types of mortgages can be complicated, but it’s important to consider your financial situation and real estate goals before deciding. If you’re a veteran, for example, you might find that a VA loan offers several benefits, including no down payment and no private mortgage insurance.

Another big difference between the two types of mortgages is the maximum loan amount. FHA loans use the federal conforming loan limit (CLL) to determine their maximum mortgage, which is reset annually based on the median housing costs in the country. In 2022, the CLL for single-family homes was $420,680 in most areas and $970,800 in counties with higher housing costs.

Conventional Loans

The best way to choose a loan type is to consider your finances, needs, and preferences. Then, compare the pros and cons of FHA, VA, and conventional loans to help you make an informed decision.

Conventional mortgages, also called conforming mortgages, are backed by the federal government and comply with the guidelines of Fannie Mae and Freddie Mac. They meet loan limits set by the government, which can vary based on the county you live in and the number of units on the property.

A conventional mortgage can be fixed or adjustable, depending on your needs and financial situation. Adjustable-rate mortgages typically have a lower interest rate for the first few years of the loan and then reset to a new rate.

FHA and conventional mortgages require private mortgage insurance, which can be removed if you save at least 20 percent of the home’s value for a down payment or reach certain equity levels. The amount of mortgage insurance varies by lender and will depend on the borrower’s credit score and other factors.

USDA Loans

A USDA loan is a government-backed mortgage that allows you to finance up to 100% of the appraised value of your home. The program does not require any down payment, and you pay an upfront “guarantee” fee that works into your monthly expenses.

USDA loans are available to buyers who want to purchase homes in rural areas. However, they have some limits, including geographic restrictions that limit where you can live.

They also have strict income requirements. Your gross monthly income must fall within the USDA’s loan limit for the area where you plan to live.

Credit is also a factor; your debt-to-income ratio must be lower than the USDA’s maximum. This number reflects how much of your income is used to cover existing debts and how much is left over for your mortgage payments.

FHA is more flexible regarding credit requirements but requires a higher down payment than the USDA. Applicants with credit scores as low as 580 may qualify for an FHA mortgage.

Modular Homes

If you’re looking for a home that doesn’t require a lot of upfront cash, modular homes are a great option. They’re cheaper and faster to build than traditional on-site homes.

Because modular homes are constructed in a factory, they don’t experience the same construction delays as on-site-built homes. They can be completed in weeks as opposed to months.

Modular homes are also more customizable than site-built houses. They offer more choices in style, material, and size.

They are more affordable than on-site-built homes and can be financed like a regular house. However, you should understand exactly what type of loan works best for your situation.

You may be eligible for a VA loan on a modular home if you’re a veteran or active-duty service member. But you should always check with your lender first to make sure they can approve it.