Home Financing and Manufactured Homes

So, you've set your sights on a fantastic manufactured home, but there's still a hurdle to jump: financing. Unlike traditional stick-built houses, manufactured homes, also known as double-wides or single-wides, can be tricky to get a mortgage for. Let's unpack why that is.

Legal “Real Property”

The key difference boils down to how lenders view the property itself. Traditional mortgages are for "real property," which by legal definition has to include both the house and the land as one unit. Manufactured homes, on the other hand, can be a bit of a gray area. Traditionally, they were built on wheels, making them more like mobile homes (although today's manufactured homes are quite different!). This mobility makes lenders see them as closer to "personal property" like a car or boat, which isn't something you can get a mortgage for. 

Mobile home communities, which typically are made up of manufactured homes, are built around a community structure where the management company owns and leases the land to the individual owners of each home. In this arrangement, the manufactured home is not considered legal “real property”, instead it is considered personal property - like a boat or a car. 

The Depreciation Dilemma

Another factor lenders consider is depreciation. Most manufactured homes depreciate in value over time, unlike traditional houses that may appreciate. This means if the borrower defaults on the loan (meaning they can't make payments), the lender might have trouble recouping their money by selling the property.

Fixed or Permanent Foundations

There is some good news, though! If the manufactured home meets certain criteria, you might still be able to snag a mortgage. The key is ensuring it's considered "real property" and, typically, also involves the home being permanently affixed to a solid foundation, usually concrete. There might also be requirements regarding the age of the home, current condition, and its connection to utilities.

Alternative Financing Avenues: Beyond the Traditional Mortgage

If the traditional mortgage route proves difficult, there may be other financing options:

• FHA Title I and II Loans - The Federal Housing Administration (FHA) offers government-backed loans specifically for manufactured homes that meet certain HUD code requirements. These loans typically come with lower down payments and more flexible qualifications compared to traditional mortgages.

• Chattel Loans - These loans treat the manufactured home more like a car, with shorter repayment terms and higher interest rates. While not ideal, they can be an option if other avenues aren't available.

• Seller Financing - In some cases, the seller of the manufactured home might offer owner financing, where they act as the lender. This can be a flexible option, but be sure to have a clear and well-defined agreement in writing. You can learn more about seller financing by clicking here to read this article. 

So, what can you do?

• Do your research - Before diving headfirst, understand the financing landscape for manufactured homes. Talk to lenders specializing in these loans and get pre-approved to know your budget and what type of home to look for.

• Location, location, location - The community where the manufactured home is located can also play a role. Some communities have restrictions on financing manufactured homes.

• Foundation matters - Ensure the home is permanently affixed to a qualifying foundation and meets HUD code requirements.

• Get some help - It can be very difficult from just looking at real estate listings online to know what is “real property” and what is not. This is where a licensed real estate broker can help you, making sure you are only looking at (and getting excited about) homes that fit your needs and situation. 

While getting a mortgage for a manufactured home might require some extra legwork, it's not impossible. By understanding the reasons behind traditional lenders' hesitance and exploring alternative options, you can turn your dream of manufactured home ownership into a reality. 

After years in advertising and marketing, living and working for companies in Georgia, North Carolina, and China, I decided to acquire my real estate license so I can use my established marketing and communications skills to help others and work for myself.

For many people, buying and/or selling their home is one of the most important and most stressful times of their lives. Having an advocate and an agent who has experienced years of corporate marketing, managing teams through challenging projects with tight deadlines, and negotiating complex deals - will aid in the home buying or selling process.

If you or anyone you know is interested in real estate investment, a personal real estate search, or property management, please reach out to me directly - I would love to provide my services to help find your goal property as soon as possible.

Bo Hardegree, NC Real Estate Broker
Espin Realty
[email protected] 
704-748-0958