The Veterans' Administration (VA) offers VA home loans to buyers of traditional real estate and manufactured and modular homes in San Diego, California. Families seeking the affordability of manufactured housing can take advantage of the benefits offered to veteran home buyers and their families through the VA.

Manufactured housing, built in a factory and sometimes referred to as mobile homes, and modular housing offer a budget-friendly option to become a homeowner and build equity. Manufactured and modular housing can grow in value when maintained well and improved with decks, garages, and other features.

How Does Manufactured Housing Work?

Manufactured housing is built to comply with U.S. Department of Housing and Urban Development building codes, making it a solid housing option and a good investment. Modular housing, which is partially built in a factory, must comply with local building codes, ensuring it will provide many years of comfortable living for families. Both types of prefabricated housing have a variety of financing options.

Mortgages for a manufactured home can be a chattel loan, which covers the house only if installed in a leased lot or land that's already owned. Mortgages can also include a manufactured or modular home plus land and improvements like decks and garages. Qualifying for manufactured or modular housing financing is similar to traditional mortgages but can sometimes be more streamlined with less paperwork. Homebuyers still need to have money down and undergo credit and income checks.

How Do I Know if I'm Eligible for VA Financing?

VA loans offer many benefits like low or zero-down payments, lower interest rates, and easier qualification and closing steps. Applicants for VA loans need to have a Certificate of Eligibility and must live in the home. Service members are eligible after 90 days of service at a time of war, 181 continuous days of service during peacetime, or six years of service in the National Guard. Spouses of those who died in the line of duty are also eligible.

While determining if you're qualified and preparing for the next steps of securing a loan can be complex, the VA website offers assistance. With a Certificate of Eligibility in hand, qualified individuals can apply for a VA home loan for manufactured housing through a lender of their choice.

What Are the Limits for VA Loans for Manufactured Housing?

Financing has some limitations, and VA loans for manufactured housing are no exception. The loans can cover up to 95% of the cost of a manufactured home. 

Which Lenders Provide VA Home Loans?

Private lenders, including banks and mortgage companies, administer VA home loans with lower interest rates and fees because the loans are backed by the government and are at lower risk for the lender. Not all companies offer VA home loans for manufactured housing or loans for manufactured housing at all. The VA guarantees a portion of the loan, letting lenders offer better terms such as lower interest rates while eliminating the need for mortgage insurance payments for those under a 20% down payment.

What Are the Pros and Cons of VA Loans?

It's best to consider all aspects of this financing option before making a decision. Advantages include lower fees, low-interest rates, and low down payments compared to other financing options for manufactured or modular housing. Borrowers don't have to worry about private mortgage insurance (PMI) or mortgage insurance premium (MIP) if they don't have a 20% down payment. PMI is required for traditional mortgages that finance over 80% of a home, while MIP is necessary for Federal Housing Administration (FHA) loans. VA loans do not charge these monthly mortgage insurance premiums.

VA loans may be used more than once for qualified homeowners who pay off their mortgage, sell their home, and buy another home. VA loans also may be eligible for refinancing, such as an Interest Rate Reduction Refinance Loan (IRRRL) and other options. Applications are less restrictive, and homebuyers may have options like fixed-rate or adjustable-rate VA ARMs. Another qualified buyer may also assume the loans. One more advantage is incorporating closing costs called funding fees into the loan, reducing the down payment required.

There are a few disadvantages to consider with VA loans. The funding fees, ranging from 1.4 to 3.6% of the home's purchase price, can add up. Funding fees help offset the low down payment and lack of mortgage insurance. Loans may exceed the value of the home when the funding fee is factored in. Homeowners with VA financing cannot rent out their houses, which restricts future property use.

A VA loan may likely be the best option when the pros and cons are considered. Other funding options include traditional financing or other government-backed options like FHA and U.S. Department of Agriculture (USDA) loans. First-time homebuyer programs may be offered by San Diego area counties or cities, as well.

What Are the Steps to Securing a VA Loan?

The steps to VA financing are similar to the steps in obtaining other types of financing. The first step is to get a Certificate of Eligibility. Then, the next steps are:

• Reviewing finances and credit, including income, expenses, and credit rating.
• Familiarizing yourself with the terms of VA loans to ensure you qualify and the loan is a good fit.
• Finding a lender that meets your needs.
• Selecting a sales representative or real estate agent.

VA home loans for manufactured or modular housing have many options that will save homeowners money in the long run. Cascade Financial Services specializes in financing manufactured and modular homes and has the experience of obtaining the best VA financing option. Review your eligibility and become prequalified through Cascade Financial Services today.