Manufactured homes, sometimes also referred to as mobile homes, qualify for government-backed FHA loans that help bring affordable homeownership to residents in the Sacramento, California, area. Federal Housing Administration loans offer low down payments and lower rates when compared to regular loans. They are administered through private lenders, with government backing reducing risk and allowing lenders to lower interest rates and fees. Credit requirements are also more flexible. Here's how FHA loans can open the doors to homeownership as well as the steps to securing financing for economical manufactured and modular housing.
How Does FHA Financing Work?
FHA loans help families finance and refinance homes through private lenders. Down payments are low, typically a minimum of 3.5%. Home loans with under a 20% down payment typically require mortgage insurance to protect the lender from potential losses. FHA loans may require a mortgage insurance premium. This is similar to private mortgage insurance that's required for conventional mortgages.
Manufactured and modular homes offer flexibility in addition to affordability. Loans can be configured to cover the home, land, improvements, or a combination of those elements. FHA loans must finance both the land and the home.
Modular homes, which are factory-built and delivered in segments to be placed on a permanent foundation, offer numerous options. They may be assembled on a slab or full foundation, and financing may or may not include the land and other improvements like a garage or deck. Improvements to the site will help the investment grow in value and build equity over the years.
Since manufactured and modular homes are built to detailed code specifications, they can easily qualify for FHA and other advantageous financing options. FHA loans for manufactured and modular homes can have terms of up to 30 years, much like conventional mortgages.
Is Other Government-Backed Financing Available?
Other types of financing offer government backing that reduces interest rates and fees. Depending on your situation, United States Department of Agriculture and Veterans Affairs loans may offer advantages that make them the right option for purchasing a manufactured or modular home. Local first-time homebuyer programs could also help with the steps to homeownership.
Veterans and eligible family members may qualify for a Veterans Affairs home loan for modular or manufactured housing. VA home loans are available for owner-occupied manufactured and modular homes plus land or other improvements like garages depending on the homeowner's needs. Like other government-backed loans, VA home loans are offered through private lenders. VA loans may cover up to 95% of the cost of a manufactured home, offering lower interest rates and eliminating the need for mortgage insurance. VA loans have a funding fee of 1.43% to 3.6% of the purchase price of the home.
Government-backed loans aren't a perfect fit for all situations. Some applicants may not qualify, and others may not want to comply with restrictions or the inability to rent out the home while it's under financing.
How Do Manufactured Housing Mortgages Work?
Manufactured housing, which is built to comply with federal building codes administered by the Department of Housing and Urban Development, qualifies for a wide variety of financing options.
Mortgages are available for purchase or refinancing a manufactured or modular home, as well as improvements like garages and decks. Qualifying for a mortgage is similar to traditional mortgages, with credit and income checks as well as paperwork. For manufactured housing, mortgage applications are often streamlined and closing costs are lower; interest rates may be higher, but that can be offset by lower closing costs and smaller loan sizes when compared to site-built homes.
What Are the Steps to Securing Financing?
Once you've determined the best type of manufactured or modular housing financing to seek, there are steps you can take to save time in the application process:
- Review your credit reports, household income, monthly expenses, and other financial factors to confirm a new home loan fits into your budget.
- Become familiar with the terms and restrictions of FHA loans, including loan limits, funding fees, closing costs, interest rates, and credit score requirements.
- Choose a lender that handles FHA loans for manufactured or modular housing. Ask questions and gather information about the details about the application process, lender fees, and timelines for approval and closing.
- Select a real estate agent or sales representative who can help you find the manufactured or modular home (and possibly land and other improvements) that meets your needs.
FHA home loans for modular and manufactured housing have many benefits for Californians that will save home buyers money in the long run, such as lower interest rates and low mortgage insurance costs. If you would like to learn more Contact us at (877) 869-7082 to learn more about our FHA modular and manufactured home loan programs. Cascade specializes in financing modular and manufactured housing and is experienced in handling FHA home loans. Explore which financing option works best for you, review your finances, and become prequalified through Cascade.