Manufactured homes have come a long way from their “trailer” and “mobile home” past. Today’s manufactured homes are designed to meet safety and quality standards, and many are indistinguishable from traditional site built homes. These improvements have led to the availability of mortgages, and today service members and veterans can get special VA loans for manufactured homes.
VA manufactured home loans are not as straight forward as financing for site built homes. This article will help you navigate the process of finding and financing a manufactured home with a VA loan.
Understanding the Process of VA Manufactured Home Loans
Like any home financing venture, there is a specific process involved for securing VA loans for manufactured homes. The basic steps and requirements include:
- Get a Certificate of Eligibility
To qualify for VA manufactured home loans, you need a Certificate of Eligibility to prove your VA status. If you have not already obtained a Certificate of Eligibility, you can get one at your nearest VA office.
- Choose a Loan Scenario
VA loans for manufactured homes are available for a number of scenarios including any of the following.
- For purchasing a manufactured home and a lot at the same time, where the home is already affixed to the lot.
- For purchasing a manufactured home to be placed on a lot you already own.
- To purchase a manufactured home and lot at the same time, where the home is not affixed yet but will be.
- To refinance your current manufactured home loan and bundle it with the purchase of a new lot.
- To refinance your current manufactured home loan to lower your interest rate or payment.
As you can see, loans are available for a number of scenarios, but it depends on (a) whether you currently own the home (refinance) or are purchasing it new/used for the first time and (b) whether you currently own the lot or will be bundling it with your home purchase/refinance. Each financer of VA loans for manufactured homes will differ in the types of scenarios they will fund, so make sure your lender can work with your unique situation before moving forward.
- Get Preapproved
Before shopping for a manufactured home, it’s always a good idea to get preapproved so you know what your lending limits are. VA loans for manufactured homes are funded by private lenders, but then guaranteed by the VA. That means you’ll have to demonstrate your ability to repay according to the private lender’s standards. Many lenders offering VA manufactured home loans look for a satisfactory credit score, an acceptable debt to income ratio and a stable income.
- Find a Qualifying Manufactured Home
Now that you’ve found a lender for your loan scenario and gotten pre-approval, it’s time to shop for a manufactured home. The VA has several requirements that the home must meet before it can qualify for VA manufactured home loans.
- The home must be classified as real property, not titled as a vehicle.
- The home must be affixed to a permanent foundation on land you own or land you are purchasing.
- The home must meet minimum property requirements in terms of size, space, heating, electricity, water, roof, and other safety requirements.
- The home must adhere to all local building codes, just like a site-built home.
- Know Your Loan Terms
After finding a nice manufactured home to purchase, but before moving forward with any VA manufactured home loans, make sure you review the terms and know what you are signing up for. Your lender should assign you to a specific loan officer who will process the loan and communicate the details. Some general things to keep in mind:
- VA loans for manufactured homes can potentially cover 100% of the loan, so you may not have a down payment.
- VA loans require a VA funding fee that helps to defray the cost of the VA Home Loan program (although disabled veterans can get this fee waived).
- VA manufactured home loans do not require a monthly mortgage insurance fee.
- VA loans for manufactured homes are shorter terms than traditional mortgages. The maximum term of a manufactured home with land is 25 years and that term can be shorter if it is for a single-wide home or a home without a lot purchase.
- Interest rates are determined by the private lender and will vary based on your credit, although many lenders of VA loans for manufactured homes offer excellent interest rates to qualified buyers.
- Since VA manufactured home loans are split into a smaller term than traditional home loans (25 years or less as compared to 30 years) your monthly payment may be slightly higher.
Once again, your manufactured home lender can fill you in on all the details for your specific loan terms. As you can see though, VA loans for manufactured homes are quite similar to loans for traditional site built homes with a few important differences. Understanding how VA financing works will make the process of buying a home and finding VA manufactured home loans easier. To get more information, visit the VA benefits website or speak to your lender.