There are many things you can do with a VA loan, including buying a manufactured home. Many loan programs do not allow the purchase of this type of home because it is not the same as a “stick built home.” The VA does allow it, but you have to find a lender willing to fund the loan for this purchase. The VA does not provide the funds, the bank does – this leaves the final say in the hands of your chosen lender.
Take the Right Steps
In order to purchase a manufactured home with a VA loan, you have to do some legwork. As we stated before, not every lender will provide a loan for this type of housing. There are several reasons for this, but the largest is the risk of default. As history shows, mobile homes (same as manufactured homes) depreciate over time, rather than appreciate like a fixed home. This makes it much easier for borrowers to walk away from their home, especially when they are upside down (owe more than the house is worth).
In order to get started, you must first find a lender willing to loan you money on a mobile home. You may have to look outside of your general area because the lenders are so few and far between. Once you find a lender or two, secure a pre-approval. You might find that you have a slightly harder time qualifying for this type of loan despite the lower cost of the home. The VA only allows a maximum loan term of 25 years, rather than the standard 30-years for any other type of home. This means your monthly payment will be higher. This has a compound effect on your debt ratio, making it harder to qualify for the loan. Once you have your approvals, you can compare the offers from a few lenders in order to make your decision.
Make Sure Your Manufactured Home Meets the Guidelines
The VA does not have a lot of guidelines, but they do for manufactured homes. You have to make sure your home and the land meet the following guidelines in order to qualify for VA financing:
- The property must be recognized by the local taxing agency as real property
- The mobile home must be permanently affixed to the land
- Must meet the VA’s minimum property requirements (classified as safe and sanitary)
- Meet all zoning requirements for your city and/or county
If your property does not meet any of the above requirements, the lender cannot approve it as a VA loan.
The Different Ways to Use VA Financing on a Mobile Home
There are many ways you can use VA financing to purchase your mobile home, which may differ from any other home purchase. They include:
- You can purchase strictly the mobile home and have it permanently placed on land you already own
- Purchase a mobile home and the land it will get affixed to at the same time
- Purchase only the land the home will get affixed to while refinancing a loan on the manufacture home
As you can see, the common denominators are that you have land for the home to get permanently affixed. The home cannot be mobile in the literal sense – it has to have a permanent place a standard home would have.
Make Sure it is Real Property
Mobile homes have the distinct ability to have title held as a vehicle. This is not recognized in the eyes of the VA, though. If you cannot have the title changed to “ real property,” you cannot secure VA financing. You may have the title changed after you move the home to its permanent place, however. You need the title to be held as a vehicle as you transport the home to the land you will affix it to. Once you get there, though, you can and should have the title changed to property. This way the county/city recognizes the mobile home as real property and taxes it as such.
If you purchase an existing manufactured home, you have to make sure the title was already changed. Your attorney or real estate agent can check this for you. If the title was not changed, you have to see if it is capable of being changed or if it is ineligible. If you cannot have the proper title on the property, the VA will not allow VA financing on it.
Own Your Own Property
Last, but not least, the VA requires that you own the property the mobile home is located on. What this means is you cannot share lend with other mobile homeowners. In this case, you likely rent the land, but own the home – the VA does not recognize this type of transaction. You must place the home on land you purchased and own all on your own.
There are many factors which you must consider before deciding if a manufactured home is for you. The good news is that you can secure VA financing as long as all of the requirements are met. The bad news is that it might take you longer to secure financing. Just like any other property with VA financing, the home must meet the minimum requirements of the city and/or county as well as the VA. You must abide by all zoning requirements and not have the home located in a commercial zone.
If you find a lender willing to provide financing on your manufactured home, make sure to secure a preapproval and follow their requirements to the “t.” This way you can purchase your mobile home, property, or both with 100% financing, just as you would for any other type of home. The benefit of purchasing a mobile home is the lower price you will likely pay. With the 100% loan program the VA offers, you can purchase your home with very little money while securing a safe and sanitary place for you and your family to live.