Mobile Home Financing Options: Finding the Right Loan for Your Needs

By Nancy Chillag | February 4, 2025

Securing financing for a Sacramento mobile home can be a bit more complex than traditional home loans. Since Sacramento mobile homes are often considered personal property, many standard mortgage options are not applicable. However, there are several loan programs specifically designed for mobile homes that can help make the financing process easier. Here are some key options to consider when financing your mobile home purchase.

FHA Loans for Mobile Homes

The Federal Housing Administration (FHA) offers two primary loan programs for Sacramento mobile home buyers: Title I and Title II. Both have distinct features that make them a good option depending on your circumstances.

Title I Loans

FHA Title I loans are designed for mobile homes that may not include land or are located in a manufactured home park. These loans can be used to:

  • Purchase a new or used mobile home
  • Refinance an existing mobile home
  • Buy the land where the mobile home will be placed (or finance the home and the land together)
  • Fund repairs or improvements to a mobile home

Title I loans do not require the borrower to own land. If the home is situated on rented land, such as in a mobile home park, you’ll need to provide a lease agreement with a term of at least three years.

Title II Loans

FHA Title II loans are more comprehensive and are typically used when the borrower wants to purchase both a mobile home and the land it sits on. This loan type offers benefits like low down payments (as low as 3.5%) and longer terms (up to 30 years). To qualify, the home must be:

  • At least 400 square feet in size
  • Built after June 15, 1976
  • Classified as real estate (although not necessarily for tax purposes)
  • Permanently affixed to a chassis
  • Intended as a primary residence

One drawback of Title II loans is that they cannot be used to finance homes located in mobile home parks or on leased land.

Conventional Financing Options

Some conventional financing options are available for Sacramento mobile homes through private lenders, such as Fannie Mae and Freddie Mac. These options often offer more flexibility, though they may require more stringent qualifications than FHA loans.

Fannie Mae MH Advantage

The MH Advantage program offers financing for buyers of manufactured homes that meet certain construction standards. These homes must be similar in design and quality to site-built homes, with features like a driveway, carport, or sidewalk. MH Advantage loans come with:

  • Low down payments (as little as 3%)
  • Competitive interest rates
  • 30-year terms

The benefits of this program include lower interest rates compared to traditional Sacramento mobile home loans, but it does require the home to meet specific construction and energy efficiency standards.

Freddie Mac CHOICEHome

Freddie Mac also provides a financing option called the CHOICEHome program, which is designed for high-quality manufactured homes. Homes financed through this program must meet specific requirements and be permanently affixed to land. The Home Possible program offers low-down-payment options as well, with terms as low as 3%.

VA Loans for Military Veterans

For military veterans and active-duty service members, the U.S. Department of Veterans Affairs (VA) offers home loan options that can be used to finance a mobile home. VA loans for mobile homes can be used for:

  • Purchasing a mobile home and land
  • Purchasing just a mobile home (if you already own land)
  • Refinancing an existing mobile home loan

VA loans offer 100% financing, meaning no down payment is required. The VA loan also comes with favorable terms, including low-interest rates and no private mortgage insurance (PMI). However, the home must meet certain standards, and the borrower will need to provide an affidavit of affixture proving that the home is permanently attached to land.

Chattel Loans

A chattel loan is another financing option for mobile homes, particularly if the home is not on purchased land. These loans are considered personal property loans and are commonly used to finance mobile homes in parks or communities. Chattel loans are generally easier to secure than traditional mortgages, but they tend to have some trade-offs, such as:

  • Higher interest rates than traditional mortgages
  • Shorter loan terms (usually 15-20 years)
  • The loan is typically secured by the mobile home itself rather than land.

Chattel loans are often insured by the FHA, VA, or the USDA, and their application process is usually faster and less cumbersome than a traditional mortgage.

Personal Loans

In some cases, buyers may choose to use a personal loan to finance a mobile home, especially if the home is relatively inexpensive. Personal loans are flexible and can be used for various purposes, including buying a mobile home. They come with a few distinct advantages:

  • No collateral required (the loan is unsecured)
  • Faster approval and fewer fees than traditional mortgages
  • No need for title, escrow, or appraisal fees

However, personal loans come with some downsides as well, including higher interest rates and shorter repayment periods (usually 3-7 years). Personal loans typically offer smaller loan amounts, ranging from $25,000 to $50,000, and sometimes up to $100,000.

How to Get Mobile Home Financing

Once you’ve decided on the financing option that works best for you, it’s time to prepare for the application process. Here’s how to get started:

  1. Check Your Credit Report Before applying for any loan, it’s a good idea to review your credit report. Lenders will evaluate your credit score when determining your eligibility and interest rates. Clean credit histories can help you secure more favorable loan terms.
  2. Decide Whether You’re Purchasing Land If you’re planning to buy land in addition to the mobile home, the stability of your property may increase your loan options. Homes on rented land typically qualify for fewer financing options than those on owned land.
  3. Define the Home You Want to Buy The type of mobile home you plan to purchase will influence the financing options available to you. Older mobile homes, for example, may not qualify for FHA or VA loans, while newer, larger homes may require a conventional loan.
  4. Compare Financing Offers Take the time to compare interest rates, terms, and fees from various lenders. Each loan option has different requirements and benefits, so it’s important to shop around to find the best deal.
  5. Submit Your Application Once you’ve selected a loan, gather all necessary documentation (proof of income, credit report, down payment, etc.), and submit your application. Be prepared to make a down payment if required.

Conclusion

There are a variety of Sacramento mobile home financing options available, each with its own benefits and requirements. Whether you're looking for an FHA loan, VA loan, or personal loan, it's important to understand your eligibility, financial goals, and the type of home you're purchasing. With the right preparation and research, you can find the financing solution that suits your needs and helps you secure your new mobile home.

Posted in Uncategorized