Are you a veteran looking to buy a manufactured home? VA loans for manufactured homes might be the perfect solution for you. It’s important to understand the benefits, requirements, and application process before diving in.
All loans through the VA are designed to help veterans purchase affordable housing. In this blog, we will walk you through everything you need to know about using a VA loan to purchase a manufactured home. We will discuss what is considered an acceptable manufactured home for a VA loan, how to qualify, and the specific requirements needed to get approved. Additionally, we will cover topics such as credit score and down payment requirements, property appraisal requirements, and more.
The Veterans Administration loan program was created to help veterans purchase a quality home, even if they had little or no credit history and could not afford a down payment. The VA guarantees a portion of the loan, which makes it less risky for lenders to approve these loans.
What is the difference between mobile homes, manufactured homes, and modular housing?
While mobile homes, manufactured homes, and modular housing are all types of prefabricated housing that are not built at the home site, there are some key differences between them.
Mobile homes are the oldest type of prefabricated housing and were originally built to be easily moved from one location to another. A mobile home unit is typically built on a steel chassis and is not subject to the same building requirements as a traditional stick-built home. A mobile home also typically has a lower resale value making it a less reliable investment. Service members may not use a VA loan to buy a home in this property classification.
Manufactured homes are similar to mobile homes, but they are built to more stringent building codes. Manufactured homes are required to meet the Federal Manufactured Home Construction and Safety Standards (HUD Code), which are administered by the U.S. Department of Housing and Urban Development (HUD). A manufactured home can be moved, but it is more difficult and expensive than moving a mobile home. A manufactured home also has a higher resale value than a mobile home, though it is typically lower than site-built homes.
Modular homes are the most similar to traditional site-built homes. Modular homes are built in sections in a factory and then transported to the site of use, where they are assembled on a permanent foundation. Modular homes are built to the same building codes as traditionally built homes. Unlike a manufactured or mobile home, modular housing can not be moved after being assembled on its foundation. Also, unlike a manufactured or mobile home, modular housing typically has a similar resale value as a traditional home making it the most stable investment of the three for lenders who offer VA loans.
Can You Use A VA Loan To Buy A Mobile Or Manufactured Home?
VA loans differentiate between mobile and manufactured homes. It is important to know when choosing between a mobile or manufactured home which are eligible homes for a loan through the VA.
- Mobile home: The VA will not finance a mobile home. A mobile home is not considered to be permanent housing and does not meet the VA’s minimum requirements.
- Manufactured home: The VA can be used to finance a manufactured home, but only if it meets certain requirements. First, the manufactured home must be affixed to a permanent foundation and classified as real property. Second, the manufactured home must meet the VA’s minimum requirements, which include requirements for the home’s construction, age, and condition.
- Modular home: VA loans can be used to finance a modular home, just like any other type of permanent single-family home. Modular homes are considered to be permanent housing, and they meet the VA’s minimum requirements.
VA Loan Requirements for Manufactured Houses
The VA sets many requirements to qualify for any VA mortgage loan. These home loans require similar qualifications to all home loans insured by the VA. The only difference for a manufactured home can be found in the specific requirements for the property evaluation. Most lenders who offer VA loans add additional requirements to those set by the VA.
Most importantly, before you look for a VA lender, you must contact the VA to apply for and receive your Proof of Eligibility. Active Duty service requirements of 90 continuous days of service for active duty service members and the minimum requirements for your time of service for veterans, National Guard, and Reserves members. Surviving spouses of military service members may also receive eligibility.
Once you receive your Certificate of Eligibility (COE) your VA-approved lenders can tell you exactly what their requirements are to approve a manufactured home purchase and how they differ from Federal Housing Administration (FHA) or traditional mortgage options. Always speak with your loan officer to determine the best option for your personal property loan.
What are the property requirements for using a VA loan to purchase a manufactured or modular home?
The Veterans Affairs office has specific requirements your property must meet before beginning the loan process for a manufactured or modular home. In addition to the usual minimum VA property requirements, manufactured homes and property must meet the following eligibility requirements:
- Classification of Property: The home must be titled as real property. If the home you wish to purchase is currently classified as chattel you will need to have it redesignated.
- Permanent foundation: Manufactured homes are considered personal property in most states unless they are permanently attached to land and categorized as real property. Since the VA does not offer a personal loan or chattel loan, the VA usually requires that manufactured homes be attached to a permanent HUD-approved foundation before becoming eligible for a loan.
- Space: Single-wide homes must have at least 400 square feet. Double-wide homes require a floor plan of at least 700 square feet.
- Construction standards: The home must be HUD-approved and have a HUD tag certifying that it has been inspected and meets construction standards.
Credit Score Requirements for VA Loan Manufactured Home
VA loans offer flexible credit score requirements, allowing borrowers with lower scores to still be eligible. The interest rate and loan terms can be impacted by credit scores, making it important to build a strong credit history. Surprisingly, the VA does not set a minimum credit score requirement for these loans. Veterans can take advantage of this type of loan to achieve homeownership for various types of manufactured homes, both existing and new construction. This provides a unique opportunity for veterans to secure financing for their dream manufactured homes.
Down Payment Requirements for VA Loans
VA loans offer the flexibility of no down payment, allowing borrowers to finance 100% of the home’s purchase price. However, borrowers have the option to make a down payment to reduce the loan amount and lower their monthly mortgage payment. These down payments can come from various sources, including gift funds. It’s important to note that, unlike most traditional mortgage loans, a VA mortgage loan does not require private mortgage insurance, regardless of the down payment amount, which can save borrowers substantial costs over time. By understanding the down payment requirements, borrowers can make informed decisions about their personal finance options for purchasing a manufactured home with the VA.
Property Appraisal Requirements for Purchasing a Manufactured or Modular Home with a VA Loans
When obtaining a VA loan for your manufactured home, there are specific property appraisal requirements that must be met. A VA-approved appraiser is responsible for determining the value of the property. During the appraisal process, factors such as the condition and location of the manufactured home are taken into consideration. The purpose of the appraisal is to ensure that the manufactured home and intended property both meet the VA’s minimum requirements. The appraised value of the home will ultimately impact the loan amount and terms.
Benefits Of Using A VA Loan For Manufactured Housing
The benefits of VA manufactured home loans are similar to the benefits when using your loan entitlement through the VA for other traditional homes, including low or no down payment options, flexible credit score requirements, closing cost assistance for eligible veterans, no private mortgage insurance, and favorable interest rates compared to other loan options.
Challenges to Obtaining VA Loans for Manufactured Homes
There are a few challenges when obtaining loans for manufactured homes through the VA.
A manufactured home is considered a depreciating asset. This means that they lose value over time, while traditional homes typically appreciate in value. As a result, lenders may be less willing to lend money on a manufactured home or may add a down payment requirement or higher credit score requirement to take the risk on the loan.
The homes cannot be located in rented spaces in mobile home parks. The VA requires that these homes be located on permanent foundations on property you own in order to qualify.
The homes may not meet VA property standards. The VA has a set of standards that all homes must meet in order to be eligible. If the home does not meet these standards, the lender may not be able to make the loan.
What to Expect When Closing on a VA Loan for a Manufactured Home
Closing on a VA loan is similar across the board for all VA approved properties. Keep in mind the normal rules that apply when closing any loan.
Closing Costs for a VA Loans for Manufactured Homes
Your Reichert lending agent will prepare you for all closing costs for your VA loan. A VA funding fee is generally required and your lender will help you decide to roll it into the loan or pay upfront at closing. Other closing costs include appraisal fees, title insurance, and credit report fees. It’s worth noting that some costs, such as the VA appraisal fee, may be paid by the seller or lender. When you work with Reichert Mortgage you have the benefit of working with a knowledgeable VA loan specialist that can help you navigate the process and understand all the costs associated with a VA manufactured home loan.
VA Loan Limits for a Manufactured Homes
When you use your VA entitlement to purchase a manufactured home you may have different loan limits compared to a traditional mortgage. Most lenders do not offer 30-year mortgages for a manufactured home. For these homes most lenders offer a 25-year maximum for larger units and a 20-year maximum for smaller units.
Frequently Asked Questions about the VA Manufactured Home Loan
Am I eligible for a VA loan for manufactured housing?
This type of loan is available to a service member, veteran, or eligible surviving spouse who do not already have an existing loan with the VA. To be eligible, borrowers must meet minimum service requirements which you prove by applying for and receiving a Certificate of Eligibility from the VA.
Can I get a VA loan for a manufactured home that’s been moved?
Yes, you can use a VA loan for a manufactured home that has been moved, but it is more difficult and expensive than getting a VA loan for a manufactured home that has not been moved. Make sure to check your property to make sure moving the home is allowed within the local zoning requirements.
In order to qualify for a VA loan for a manufactured home that has been moved, the home must meet the following requirements:
- The home must be affixed to a permanent foundation and classified as real property.
- The home must have been moved only once after its initial installation.
- The home must meet the VA’s minimum property requirements, which include requirements for the home’s construction, age, and condition.
What is the oldest that a manufactured home can be and still qualify for a VA loan?
The oldest manufactured home that is approved to use a VA loan is one that was built on or after June 15, 1976. This is because on that date, the U.S. Department of Housing and Urban Development (HUD) implemented the Federal Manufactured Home Construction and Safety Standards (HUD Code). Manufactured homes built before this date do not meet the HUD Code and are not eligible for VA purchase.
In addition to being built after June 15, 1976, a manufactured home must also meet the VA’s minimum requirements in order to be eligible for VA financing. These requirements include requirements for the home’s construction, age, and condition.
Does the VA require tie downs for a mobile home?
The VA will not approve any homes classified as mobile homes, even with tie downs.
To be eligible to use a VA loan, a manufactured home must be affixed to a permanent foundation and meet HUD standards for safety and quality. These homes can be single-section or multi-section units and are classified as personal or real property.
Can I use the VA loan to refinance a loan or for a cash out refinance?
Yes, you can!
A VA refinance loan allows you to replace your existing mortgage with a new VA loan. This can be a good option if you want to lower your interest rate, monthly payments, or change the terms of your loan.
A VA cash-out refinance allows you to take cash out of your home equity. This can be a smart option for those needing money for home improvements, debt consolidation, or other expenses.
To be eligible for either VA refinance option, you must meet the following requirements:
- You must be a qualified veteran, active duty service member, or surviving spouse.
- You must have a Certificate of Eligibility (COE).
- You must have sufficient equity in your home.
- You must meet the credit and gross monthly income requirements.
What types of personal property can a VA loan be used for?
A VA-secured loan can be used to purchase a wide variety of property, including:
- Single-family homes
- Manufactured homes
- Modular homes
- Multi-family homes (up to four units, as long as you live in one of the units)
- Land for building a home
- Energy-efficient improvements to your home
VA-secured loans cannot be used to purchase the following types of personal property:
- Mobile homes
- Recreational property, including chattel loans (e.g., vacation homes, RVs, boats)
- Investment property
- Business property
The Veterans Association does not offer any personal loans for any purpose other than the purchase of a home. Loans are not offered through the VA for the purpose of personal expenses, such as debt consolidation, personal loan consolidation, chattel loan purchases, medical bills, or tuition.
For more information contact the loan officers at Reichert Mortgage, your local lender.