More Accessible Loans for Manufactured Homes

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Like the cars off Henry Ford’s assembly line, manufactured homes are produced more efficiently to be priced more affordably.

That’s why these factory-built and transported-to-site homes comprised 10 percent of all single-family home starts in 2017, and their numbers are expected to keep growing, according to the Manufactured Housing Institute.

These homes are sometimes the only option for rural buyers who want new, affordable construction, and they’re also popular in retirement communities. Increasingly, manufactured homes produced today look a lot like traditional homes. Some are priced in the low six figures, featuring amenities like kitchen islands and mudrooms, although the average cost is still under $200,000, reports MHI.

But with few rare exceptions, only manufactured homes on owned lots and meeting other requirements — such as, having a foundation — can be financed with a mortgage loan, explains Doug Ryan of the nonprofit Prosperity Now.

While all manufactured homes aim to be an alternative to on-site, traditionally-built homes, financing is more expensive for owners who aren’t eligible for a mortgage — such as, those whose homes will sit on leased land. Purchases are made “with cash, a personal loan, or a ‘chattel’ loan, which is secured by the home,” says Ryan. Rates are in the upper single digits to the lower double digits, he adds.

But for those buying mortgage-eligible manufactured homes, a loan just introduced by Fannie Mae called the “MH Advantage” carries similar costs to any mortgage. The loan is becoming widely available, says Marc Summers of Advantage Mortgage in Clarkson, Minnesota.

Whether or not a manufactured home buyer can qualify for the MH Advantage depends on factors like credit history and how much a borrower has in savings, says Summers.

The FHA-backed mortgage has long been available to purchasers of qualifying manufactured homes, and that allows for a low down payment. But the monthly payment can be higher, Summers explains.

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