California residents looking for affordable housing options should consider manufactured and modular housing. Manufactured homes, also known as mobile homes, offer portability and affordability. Modular housing, which is also factory-built, provides the ability to have a budget-friendly home on a foundation.
Financing manufactured and modular housing differs from traditional housing, but many options are available to suit your needs. Chattel loans on a manufactured home by itself are popular and loans that cover a manufactured or modular home, plus land and improvements like garages, depending on the situation. Here's how California residents can benefit from the various financing options available for manufactured and modular housing.
How Is Financing Manufactured Homes Different From Traditional Mortgages?
Manufactured and modular housing loans offer more flexibility than traditional mortgages. Financing can cover the home only or include land and other improvements like garages, basements, and driveways.
Manufactured home loans offer shorter terms and smaller loan sizes. Government-backed manufactured home loan options like FHA and VA offer low down payments and lower rates. FHA and VA loans for manufactured homes may have higher down payment requirements than for traditional site-built homes.
What Options Do I Have?
Manufactured and modular housing financing varies depending on your location and situation. Financing options cover homes that are on leased land as well as homes that will be placed on land you already own or homes plus a parcel of land. Loans also may cover improvements like garages and decks. Loans for homes and land or improvements offer terms of up to 30 years, especially for modular homes assembled on a foundation.
Financing a manufactured home by itself is known as a chattel loan, which provides flexibility and shorter loan terms. If the home is moved to another community, the chattel loan follows it. These loans are most commonly used for homes that sit on leased lots in a manufactured housing community. Chattel loans may be limited to 25 years or less, depending on the value and age of the home. The loans will likely require less paperwork and can close faster than traditional real estate loans depending on the circumstances. Interest rates may be slightly higher, but you can typically expect closing costs will be lower.
Low Money Down Mobile Home Financing Options
If you're looking for a loan on a mobile home in California, several low-money down options are available, including:
California VA Loans: These loans for eligible military veterans offer 100% financing options. These loans are earmarked for veterans specifically, though some active-duty military personnel and surviving spouses of deceased veterans may also qualify.
California FHA Loans: California FHA loan programs are suitable for a variety of home financing needs. These are loans backed by the Federal Housing Administration.
Some of the advantages of the California FHA specialty loan include:
- Favorable pricing: FHA loans have competitive interest rates.
- A low down payment: Qualified buyers can purchase a manufactured home with as little as 3.5% down.
- Easier qualifying: Even if you have issues with your credit history and credit score, you may still qualify for a home loan from Cascade Loans.
California Chattel Loans: Chattel loans are unique in this respect, as most other loans that you can obtain for a manufactured home are also available for site-built homes in one form or another.
How Do Government-Backed Manufactured Home Loans Work?
Manufactured and modular housing loans offer flexibility and affordability through options to finance the home only or land and other improvements. FHA and VA loans are available for financing, offering reduced interest rates and lower fees through private lenders.
Government-backed loans aren't for everybody, though. Some applicants may not qualify, and others may not want to comply with restrictions like the inability to rent out the property while it's under FHA or VA financing.
FHA loans with terms up to 30 years are available for manufactured housing. They require only a 3.5% down payment and are more flexible about credit score.
Veterans and qualified family members may benefit from VA loans, which also offer lower interest rates. Down payments are about 5%, but the VA backing helps lower the interest rate and eliminates the need for mortgage insurance. VA loans do have funding fees of about 1.4% to 3.6% of the purchase price.
What Is the Fastest Financing Option?
Chattel loans that cover the housing only and not the land are easier and quicker to fund, allowing buyers to get into their homes in as little as 30 days. Loans that include land and other improvements require appraisals and site preparation. As with any type of financing, applicants can speed up the process by being prepared. Chattel loans close faster when applicants provide documentation promptly and have addressed any credit-related issues.
Interest may be higher, from about 5% to 13%, on chattel loans. Since there isn't land to back the loan, lenders take on more risk. On the positive side, loans are smaller, have shorter terms, and have lower processing fees. Chattel loan holders may generally still deduct interest from their income taxes.
What Are the Steps to Securing Financing?
Once you've decided on the type of manufactured housing financing that works best for you, as well as what you want to finance — home, land, or improvements — then it's time to go through the approval process.
There are a few key steps in securing financing, including:
- Make sure your credit report doesn't contain any unpleasant surprises. Three main credit bureaus collect and maintain credit history and retain personal information like Social Security numbers, addresses, and employers. These bureaus offer free reports once a year:
- Confirm you have sufficient income to cover your monthly bills and debt, as well as a housing payment and related costs like utilities.
- Look into the details and fine print for the type of loan you are considering. Check the loan limits, funding fees, origination fees, closing costs, interest rates, and credit score requirements. Look into special financing like FHA and VA loans or first-time homebuyer programs for California residents.
- Select a lender that meets your needs for manufactured home loans.
- Choose a real estate agent or sales representative who can help you find the perfect home (and possibly land or improvements) and start house hunting.
Home loans for modular and manufactured housing come in many different forms and sizes in California. Contact Cascade to speak with a manufactured home loan specialist who will help you find the best option. While not all lenders provide loans for manufactured and modular housing, Cascade specializes in financing this affordable and flexible housing type. Our team is experienced in handling numerous types of home loans. Gather your financial information, review your finances, and then become prequalified through Cascade. You'll be on the road toward homeownership. You can reach us at 877-869-7082 or via our secure online messaging service.