Hey friend! If you’re a veteran exploring your homebuying options, you may be wondering if VA loans can be used to purchase a mobile or manufactured home. With their lenient credit requirements, low or no down payment, and overall great rates, VA loans are an excellent financing tool for qualifying borrowers. But can these benefits extend to alternative housing like factory-built manufactured homes? Let’s dig in and find out!
According to the U.S. Census Bureau, around 6.5% of occupied housing units are manufactured homes. With housing affordability a major issue these days, this option is appealing to many buyers.
Key Differences Between Mobile Homes and Manufactured Housing
First, it’s important to understand the distinction between a mobile home and a manufactured home, as the terminology is often used interchangeably.
A mobile home is any factory-built housing produced before June 15, 1976, when HUD started enforcing stricter construction and safety standards. These units are built on a steel chassis and meant to be transported to different locations.
Manufactured homes are factory-built units produced after 1976 that adhere to HUD’s safety guidelines. While also constructed off-site, manufactured housing is designed for permanent installation and must be affixed to a foundation.
In summary:
- Mobile home – pre-1976 factory housing, no HUD standards, movable
- Manufactured home – post-1976 factory housing, meets HUD standards, installed permanently
This difference in regulation is key for VA loan eligibility.
VA Loan Requirements for Manufactured Housing
VA loans can only be used to purchase manufactured homes built after 1976 that meet HUD standards. Loans cannot be issued for true mobile homes. Here are the typical requirements your manufactured home must meet:
Property Criteria
- Permanent foundation – The home must be permanently affixed to a foundation on the land you own. Many buyers choose to purchase the land first.
- Real property – The manufactured home and land must be classified as real estate and titled together.
- HUD certification – The home must have a HUD tag verifying it meets federal standards. Look for this on the exterior.
- VA standards – The property must pass VA appraisal requirements for livability and structural integrity. Ensure no major repairs are needed.
- Minimum size – Single-wides must be 400+ sq. ft. Double-wides must be 700+ sq. ft. Bigger is usually better for resale value.
Borrower Standards
On top of the property specs, you’ll also need to meet typical VA borrower requirements:
- Eligibility – You must have a valid VA home loan Certificate of Eligibility based on your service.
- Credit – No defined minimum score, but most lenders want 620+ FICO. Work on improving your credit before applying.
- Down payment – None generally required. You can finance 100% of the purchase in most cases.
- Debt-to-income – Your total debt obligations should be below 41% of income. Reduce debts if possible.
- Funding fee – Applies unless exempt. Can be financed into loan amount.
If you meet these criteria, a manufactured home VA loan could be within reach!
Why VA Loans Are Advantageous
Beyond flexible credit and little-to-no down payment, VA loans offer other perks for financing a manufactured property:
- Low rates – VA loans boast very competitive interest rates, saving you money each month.
- No loan limits – Borrow up to the full appraised value, no max cap.
- Refinance ability – Can tap home equity later with a streamline or cash-out VA refi.
- Added value – VA loans may increase the resale value down the road vs. other financing.
Using your hard-earned VA home loan benefit can make owning a quality manufactured dwelling more accessible and affordable!
Potential Hurdles to Overcome
While VA financing for manufactured housing is possible, you may face some challenges:
- Lender availability – Not all lenders do these loans, so shop around. Credit unions or online lenders may be more amenable.
- Lower appraisal – Manufactured homes often appraise for 20-50% less than comparable site-built homes.
- Move restrictions – Properties must stay permanently fixed to maintain VA backing. Moving the home would require refinancing.
- Refinancing issues – Conventional refinancing later may be difficult depending on the property.
Do your homework to ensure your preferred property and loan scenario will work!
Other Options Beyond VA Loans
If you don’t qualify for a VA manufactured home loan, you still have alternatives:
- Conventional 97 – 3% down mortgages for manufactured dwellings if criteria is met.
- FHA – Low down payment government-backed loans with looser credit requirements.
- USDA – 100% financing possible for rural properties.
- Chattel – Personal property loans specifically for mobiles. Higher rates but lower credit scores.
- Personal loans – Unsecured financing but with higher rates and shorter terms.
- Cash purchase – Use savings or inheritance to buy the property outright.
Don’t lose hope! You can still find a financing solution to fit your homeownership dreams.
Tips for Getting Approved
If a manufactured home VA loan interests you, here are some tips to boost your chances of getting approved:
- Improve your credit score and lower your debt-to-income ratio as much as possible. This shows lenders you can handle the loan responsibly.
- Make a larger down payment if you’re able, even if not required. This reduces risk for the lender.
- Find a reputable manufactured housing dealer to work with. They can help guide you on qualifying models and land packages.
- Shop around with multiple lenders to find one comfortable with this type of loan. Ask upfront if they do these loans.
- Consider having co-borrowers or adding a co-signer. Extra income sources give more reassurance.
- Provide strong documentation like tax returns, pay stubs, VA eligibility, etc. Make it easy for underwriters to approve you.
- Be ready to explain why this loan makes sense for you. Share your personal story and homeownership goals.
With proper preparation and persistence, you can get approved for a manufactured home with a VA loan!
Buying a Manufactured Abode With a VA Loan
VA loans can be an amazing resource for purchasing factory-built manufactured housing – with some limitations. Ensure you pick a qualifying property, find a willing VA lender, and meet all the requirements to give yourself the best shot. While it may take some extra effort, VA financing can help you land the affordable home you want!
