If you have less than perfect credit, where can you turn if you want to be a homeowner? You really do have several options available to you right now. Buying a mobile home or manufactured/modular home are excellent choice with very attractive financing programs that are available even if your credit report reflects slow payment, judgments, repossessions, foreclosure or bankruptcy.
Five Traditional Financing Alternatives
1. Borrow money from a friend or relative. (Consider yourself lucky if you can do this).
2. Have at least 20% saved up for the down payment.
3. Hope to find a seller who is willing to financing your loan for you.
4. Obtain financing from the mobile home dealer, but the interest rate may be too high resulting in higher monthly payments.
5. Secure financing through a credit union, which historically are more open to lending on mobile homes and manufactured homes.
FHA Home Loan: A Better Option
FHA home loans work well for people with bad credit especially when buying a mobile home or manufactured home. Just to clarify, you don’t apply for a home loan through the FHA (the Federal Housing Administration). You apply through a financial institution, such as a credit union. Becoming a member of a credit union is as very easy as a phone call to the credit union. Lenders are encouraged to fund FHA home loans.
- With FHA loans, you don’t need to have a large 20% down payment. FHA loans are approved every day with down payments as low as 3.5%
- Interest rates are fixed for the entire term of the loan, generally 20 years for mobile homes and manufactured homes.
- Maximum loan amount for a manufactured home only is $66,678.
- Maximum loan amount for a manufactured home and lot is $92,904.
- Borrowers with scores even lower than 640 may still be able to finance a home, but can expect to pay increased interest rate, higher down payments, and even more for getting qualified.
- At Home Nation, we offer FHA loans to customers looking to buy their first mobile home with credit scores of as low as 580, but these kinds of loans are certainly not easy to come by as most will not be accepted by lenders.
Eligible Borrowers must:
1. Demonstrate that they have sufficient funds to make the minimum required down payment.
2. Be able to demonstrate that they have adequate income to make the proposed monthly payments on the loan and meet their other expenses, such as credit card payments, vehicle loan payments, etc.
3. Intend to occupy the manufactured home as their principal residence.
4. Have a suitable site on which to place the manufactured home.
a. The home may be placed on a rental site in manufactured home park, provided the park and lease agreement meet FHA guidelines.
b. The home may be situated on an individual home site owned or leased by the borrower.
Veterans Assistance Loans
VA loans are available to home buyers who have served in the Armed Forces and to the surviving spouses of those who have served. Buyers can qualify and obtain a VA loan if they meet the specific VA requirements, such as a Certificate of Eligibility, which looks at service history, work history and income. We at Home Nation proudly work with our veterans and their families to make this home buying process very easy.
Requirements for Manufactured Homes
The FHA and VA have specific requirements about mobile homes and manufactured homes. Fortunately, Home Nation has expert staff to make sure your new home meets all FHA and VA requirements. An Eligible Manufactured Home must:
1. Meet the Model Manufactured Home Installation Standards.
2. Carry a one-year manufacturer's warranty if the unit is new.
3. Be installed on a home site that meets established local standards for site suitability and has adequate water supply and sewage disposal facilities available.
4. The proceeds of a Title I manufactured home loan may not be used to finance furniture (for example, beds, chairs, sofas, lamps, rugs, etc.). However, built-in appliances and equipment and wall-to-wall carpeting are eligible for financing.
Your Annual Income
Whether your income is the same month after month or fluctuates throughout the year or comes from the same employer or from different sources, your lender will work with you to calculate a reliable and stabilize monthly income amount that is used to determine the loan amount and monthly payment which you can reasonably repay each month.
Debt-to-Income Ratio
Once the amount of your monthly income is calculated, this ratio is a primary factor to determine how much of a monthly housing payment you can afford. Lenders calculate the minimum payments on your proposed home loan and other obligations and divide this total payment amount by your income. What this means to you is that neither the lender, the FHA, the VA or Home Nation want you to get strapped with a home payment that you cannot afford.
This payment is for your new home and we want you to keep your home.
An FHA loan or a VA loan can be a very attractive option for buyers looking to get their first mobile home, who may not have perfect credit or a large down payment. However, owning a new mobile home or manufactured home really is closer than you think. Home Nation is here for you.
