Manufactured homes in community parks are often called ‘mobile homes’ because they are not permanently secured to the land and are considered moveable. The FAQs below cover financing mobile homes in California.
Because mobile home loans are considered personal property loans and you don't own the land, government loans like VA, FHA, and USDA are unavailable. These loans require the land to be owned and the home to be permanently secured, making it real property when recorded with the county.
The minimum down payment is 5% of the purchase price or appraised value, whichever is lower. This allows financing up to 95% of the home with good credit. For mobile home loans, good credit usually means a score above 640, with few recent negative marks and no major negative marks in the past few years.
Absolutely. Less-than-perfect credit can be considered based on the loan details. A credit score below 600 may be allowed, subject to underwriting approval. In some cases, no credit is permitted with a down payment of 35% or more of the purchase price, pending specific loan details and underwriting approval.
A co-borrower who will live in the mobile home as their primary residence can be added to improve credit. Mobile home loans can use a 'blended credit score', averaging all borrower credit scores, which is unique since mortgage lenders typically use the lowest credit score. This blended score can help improve loan terms.
If the mobile home is a secondary/vacation residence, you don't need to live in it to get financing. A minimum down payment of 15% and good credit are required. The payment for your primary residence will be considered in the approval process. Mobile homes intended for investment purposes are not eligible for loan financing.
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Yes, it's called a "Buy For" loan. In this case, the individuals qualifying for the loan are buying the home for someone else, who cannot be borrowers on the loan. A minimum 20% down payment is required, and the payment for their current residence will be factored into the approval process.
Up to 4 applicants can be on a mobile home loan and do not need to be related. However, they must all occupy the mobile home as their primary residence. This allows the combined income and funds for the down payment and closing costs to be utilized, which can be beneficial for qualifying and maximizing the household income used to determine the debt ratio.
Yes, you can qualify if you are a Permanent Resident Alien with a valid social security number or have an Individual Taxpayer Identification Number (ITIN). Permanent Resident Alien applicants must have their social security number on all income documentation. ITIN applicants must have their ITIN on all income documentation.
‘Park Approval’ is required before a mobile home lender will approve your loan documents. Prospective buyers must complete an application with the park, and it is recommended to do this immediately. Most parks provide an approval decision within 1-2 weeks, though some may take longer. The buyer’s agent typically assists with the park approval process.
Depending on the lender and transaction details, you may finance all closing costs into the loan, except prepaid expenses like notary fees, annual homeowner’s insurance premiums, property tax prorations, and park space rent prorations. This unique feature makes buying a mobile home attractive as it typically requires less money. The loan process will explain everything in detail, and this is a great option!
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Yes, one key qualification criterion is the debt ratio, which is the relationship between your payments and gross income. For mobile home loans, the total payment cannot exceed 45% of your gross income. This includes the loan principal and interest, homeowner’s insurance, and property taxes, known as the ‘front-end’ debt ratio. The ‘back-end’ debt ratio includes all payments, such as car and credit card payments, in addition to the ‘front-end’ debt ratio.
A 30-year term is not available for mobile home loans; the maximum term is 25 years. Despite the shorter term, mobile homes typically cost less than traditional homes, making payments more affordable. Most mobile home loans are fixed and lack risky features like pre-payment penalties, balloon payments, or increasing balances.
On a conventional mortgage, when your down payment is less than 20% of the purchase price of the home mortgage lenders usually require you get Private Mortgage Insurance (PMI) to protect them in case you default on your mortgage. Sometimes you may need to pay up to 1-year's worth of PMI premiums at closing which can cost several hundred dollars. The best way to avoid this extra expense is to make a 20% down payment, or ask about other loan program options.
It's generally a good time to refinance when mortgage rates are 2% lower than the current rate on your loan. It may be a viable option even if the interest rate difference is only 1% or less. Any reduction can trim your monthly mortgage payments. Example: Your payment, excluding taxes and insurance, would be about $770 on a $100,000 loan at 8.5%; if the rate were lowered to 7.5%, your payment would then be $700, now you're saving $70 per month. Your savings depends on your income, budget, loan amount, and interest rate changes. Your trusted lender can help you calculate your options.
An Appraisal is an estimate of a property's fair market value. It's a document generally required (depending on the loan program) by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property. The Appraisal is performed by an "Appraiser" typically a state-licensed professional who is trained to render expert opinions concerning property values, its location, amenities, and physical conditions.
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