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Can Modular Homes Be Financed?

Updated: Nov 15, 2023

Modular homes are an excellent option for those looking for an affordable and energy-efficient home. They are also a good choice for those looking for a home that can be built quickly and easily. However, one of the most common questions people have about modular homes is whether or not they can be financed.

The answer is yes, modular homes can be financed. There are several different financing options available for modular homes.

modular home can be financed

Conventional Mortgages

Conventional mortgages are the most common type of mortgage for modular homes. Banks and credit unions typically offer them. To qualify for a traditional mortgage, you must have a good credit score and a down payment of at least 3%.

FHA Loans

FHA loans are another excellent option for financing a modular home. They are insured by the Federal Housing Administration (FHA), which makes them easier to qualify for than conventional mortgages. To be eligible for an FHA loan, you must have a credit score of at least 580 and a down payment of at least 3.5%.

VA Loans

VA loans are available to veterans and their spouses. The Department of Veterans Affairs (VA) offers them and does not require a down payment. You must have a valid Certificate of Eligibility (COE) to qualify for a VA loan.

Other Financing Options

In addition to conventional mortgages, FHA loans, and VA loans, several other financing options are available for modular homes. These include chattel loans, land-home loans, and construction loans.

Chattel Loans

Chattel loans are similar to car loans. They are secured by the modular home itself rather than the land it is on. This means you cannot refinance a chattel loan into a traditional mortgage. This would not be an excellent choice for financing your modular home. There are several better options shown here.

Land-Home Loans

Land-home loans are used to finance the purchase of both the modular home and the land it is on. Banks and credit unions typically offer them. To qualify for a land home loan, you will need to have a good credit score and a down payment of at least 3%.

Construction Loans

Construction loans are used to finance the construction of a modular home. They are typically offered by banks and credit unions. To qualify for a construction loan, you will need to have a good credit score and a down payment of at least 10%. This is the most common way to finance your modular home if you build a new one. When construction is complete, it can be converted into a traditional mortgage.

No matter which type of financing you choose, shopping around for the best rates and terms is essential. You should also understand your loan's terms and conditions before you sign anything.

If you are considering buying a modular home, there are a few things you can do to make the financing process easier:

  • Get pre-approved for a loan. This will help you know how much you can afford to borrow and make finding a lender willing to finance your home easier.

  • Make sure you have all of your paperwork in order. This includes your tax returns, pay stubs, and bank statements.

  • Be prepared to answer questions about your financial situation. Your lender will want to ensure that you have a reasonable credit risk and can afford to repay your loan.

With some planning, you can easily finance your dream modular home.

Additional Information:

  • Modular and manufactured homes are often referred to interchangeably. However, there is a difference between the two. Modular homes are built in sections, transported to the building site, and assembled.

  • Manufactured homes are built in a factory and transported to the building site. (in many cases, these are more like mobile homes and not permanent)

  • Modular homes are typically considered to be real property, while manufactured homes may be considered to be personal property. This can affect the type of financing that is available to you.

  • Modular homes are typically more expensive than manufactured homes. However, they are also considered a higher quality product, like a stick-built home.

In addition to the financing options mentioned in the blog post, several other lenders specialize in financing modular homes. You can find a list of these lenders through a quick online Google search.

It is also a good idea to talk to a local builder who specializes in modular homes and can help you find a modular home that is right for you and help you navigate the financing process. With planning, you can easily finance your dream modular home.

We can help answer any questions you have about modular homes and financing. We know where to get the answers if we still need the answers. We can also refer you to several lenders that can help finance your new modular home.

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