Can You Finance Land and a Mobile Home Together?

It is possible to finance a manufactured home and the land it occupies together, though this process involves specific considerations that differ from traditional home mortgages. This integrated approach can simplify the financial aspects by consolidating two major purchases into a single loan, making the process more manageable for prospective homeowners.

Combining Mobile Home and Land for Financing

Financing a manufactured home and land together relies on treating the home as “real property” rather than “personal property.” Initially, manufactured homes are considered personal property, similar to a vehicle, as they are factory-built. To qualify for combined financing, the home must be permanently affixed to the land, transforming its legal status to real estate. This allows the home and land to be considered a single collateral unit for a mortgage.

A permanent foundation is a key requirement for this conversion. The foundation must be durable and affixed to the property to resist movement, frost heave, and wind uplift. Acceptable types include concrete footings, piers, or slabs, often requiring steel anchoring systems. The home’s title must also be formally converted from a personal property title to a real estate title, a process called “de-titling” or “affixation.” This involves surrendering the original certificate of title and filing an affidavit of affixture with local county land records, legally attaching the home to the land.

Specific Financing Programs

Several loan programs are available for individuals seeking to finance a manufactured home and land together. These programs typically require the manufactured home to be permanently affixed to the land to qualify for a single mortgage loan.

FHA Title II Manufactured Home Loans

FHA Title II Manufactured Home Loans are insured by the Federal Housing Administration for manufactured homes permanently affixed to land. These loans often feature lower down payment requirements, potentially as low as 3.5% for borrowers with a credit score of 580 or higher. The home must have been built on or after June 15, 1976, display a HUD Certification Label, and meet minimum property standards, including being at least 400 square feet and serving as the borrower’s primary residence.

VA Loans

VA Loans offer benefits for eligible veterans, service members, and their surviving spouses, including the potential for no down payment, though a minimum 5% down payment may be required for manufactured homes. To qualify, the home must be permanently affixed to a foundation, meet VA minimum property requirements, and be at least 700 square feet. It must also be classified and taxed as real property and serve as the borrower’s primary residence.

USDA Rural Development Loans

USDA Rural Development Loans are available for low-to-moderate-income borrowers purchasing homes in designated rural areas. These loans can offer 100% financing, meaning no down payment is required, and often come with competitive interest rates. The manufactured home must be on a permanent foundation and meet property eligibility criteria for the specific rural area.

Conventional Loans

Conventional Loans are offered by traditional lenders for manufactured homes and land. These loans often require a minimum credit score, typically 620 or higher, and generally have stricter requirements for the property and borrower compared to government-backed options. Fannie Mae and Freddie Mac, through programs like MH Advantage and CHOICEHome, support financing for manufactured homes permanently affixed to the land and titled as real property.

Preparing for Your Combined Loan Application

Prospective borrowers must gather specific information and documents for a combined loan application. Lenders assess both borrower qualifications and property requirements to determine eligibility.

Borrower qualifications

Borrower qualifications include a review of credit history, with lenders looking for suitable credit scores. For FHA loans, a credit score of 580 or above may qualify for a 3.5% down payment, while conventional loans often require a minimum score of 620. Lenders also evaluate debt-to-income (DTI) ratios, stable income, and employment history to ensure repayment capacity.

For the manufactured home itself

Specific criteria apply to the manufactured home. It must have been built after June 15, 1976, and bear a HUD Certification Label. Proof of a permanent foundation is required, often necessitating an engineer’s certification. Evidence of title conversion, or de-titling, to real property is necessary, typically through an Affidavit of Affixture. Lenders may also impose age and size limitations, such as 400 square feet for FHA loans or 700 square feet for VA loans.

Land requirements

Land requirements are considered. The land must comply with zoning regulations that permit manufactured homes and have access to essential utilities like water, sewer, and electricity. Appraisal considerations assess the value of the combined property, factoring in the land’s characteristics and market trends. Required documentation includes recent pay stubs, W-2 forms or tax returns for the past two years, and bank statements for the last three to six months to verify income and assets. A valid photo identification is needed.

Navigating the Loan Application and Closing

Once preparations are complete, the next phase involves submitting the loan application and proceeding through the lending process. Submitting the application entails providing compiled financial and property documents to the chosen lender. This initiates the lender’s review of the borrower’s and property’s eligibility.

The underwriting process

The underwriting process involves a thorough review of financial information, including credit checks, income verification, and a comprehensive property evaluation. The lender verifies the manufactured home meets all necessary standards, such as a permanent foundation, often confirmed through documentation or appraisal. An appraisal and inspections are ordered to determine the combined property’s market value and condition. Appraisers evaluate manufactured homes using the 1004C Manufactured Home Appraisal Report, confirming adherence to HUD standards and permanent foundation requirements.

Upon successful completion of underwriting

After successful underwriting, appraisal, and inspections, the loan may proceed to approval. This signifies the lender’s decision to extend financing based on assessed risk and program guideline compliance. The final step is the closing process, where all parties sign loan documents, ownership transfer for the combined property is finalized, and funds are disbursed. Borrowers receive the deed to the land and official documentation confirming the manufactured home’s classification as real property. After closing, homeowners should retain copies of all signed loan documents, the deed, and any certifications related to the home’s permanent affixation.