If you think the credit crunch has made it hard to obtain a home loan just multiply by 10 or more when searching for a mobile home loan.
Mobile homes can provide affordable housing options but are continually turned down for bank loans leaving sellers and buyers searching for alternative financing solutions.
Why All the Fuss?
The first step to finding a solution is a quick overview of how the mobile home financing challenge was born. Mobile homes, now known as manufactured homes, are built on a non-removable steel frame designed for transport.
Most mobile homes are titled, similar to a car, and are considered personal property. If a manufactured home is placed on land, following guidelines for attachment to a permanent foundation, it can be reclassified as real property in certain states.
Each transportable unit (single, double, triple, etc) has a red certification label to show it was built according to the health and safety standards established by the US Department of Housing and Urban Development (HUD).
HUD started regulating the construction of mobile homes under established guidelines in June of 1976. Another major overhaul to the guidelines occurred in 1994 providing for greater protection from wind and hurricane damage.
These events all contribute to three financing challenges:
- Depreciation – Manufactured homes tend to depreciate or go down in value as they age. This is partly due to any personal property classification as well as construction quality. This makes lenders afraid that something worth one value today might be worth less tomorrow, especially when the sale is for a mobile home only without land involved.
- Construction Quality – While great improvements have been made in recent years, manufactured homes generally do not last as long as stick built homes. They are prone to suffering from roof leaks, uneven settling, and overall shorter life span.
- Age Restrictions – Mobile homes that are built according to the HUD guidelines established in 1976 are eligible for mortgage loans insured by the Federal Housing Administration (FHA). This means conventional type lenders don’t like to lend on manufactured homes built before June 1976. There are some lenders that set even stricter age requirements, including built since 1988, 1994, or even newer.
Fortunately sellers and buyers can turn to owner financing and private investors when banks say no to mobile home loans. Learn more about these options in the article entitled: Owner Financing – How to Finance Older Manufactured Homes.
Hello I am offering a “8% interest only” loan to refi my Manufactured Home in California. My loan would be for $50,000 on a 10 year interest only, then paid after that tenth year. I am in a beautiful park with all the amenities that make it a paradise. Lovely huge swimming pool and a Jacuzi with a dry sauna indoors and tennis courts with night lighting. All the space you could want for throwing a huge party in the community room / full kitchen / washer & dryer and the Adult Only community is in Santa Rosa, Calif located just an hour from San Francisco and the pacific ocean is 45 minutes West. I love my home and I just need the refi of the $50,000 to complete my property needs.I would appreciate your consideration on this or a suggestion /referral if your not the right fit for this loan. Thanks, Leslie
Private investors are missing the profit when not considering mobile/manufactured home loans. I wish I had more capital to invest at 20% return I’ve been doing these for 20 years now, over 300 contracts and only one repo we made money on.
Hello Mark,
You are right – great returns (but shhh somebody might hear us 🙂 ). Your repo rate on over 300 contracts is truly impressive. You know how to select the right buyers! If you are ever interested in writing an article sharing your techniques we’d love to share it with our readers. I promise that they will identify tremendous opportunity!
So can u help me get a loan on an older mobile home I a coop?
I am interested in buying a manufactured home in Indiana, But I can not find any one who will do the loan. It is a newer home built in 1997 I beleive very nice..
If you now any one who could help , Please fell free to send me anything you can find ..
Thank you!!
Abigail Shaw
Hello Abigail! If the transaction involves land along with the 1997 mobile home you might be able to finance through a local bank, credit union, or private investor. When the banks say “No” to mobile home loans a win-win solution can be asking the seller to provide owner financing. The seller agrees to sell the mobile home to you and accept payments over time at a rate and terms that work for both of you. For more tips on using owner financing with mobile homes please read the examples found in the “Real Deals” Category along with the article Owner Financing – How to Finance Older Manufactured Homes.