Can You Get a HELOC on a Manufactured Home?

A Home Equity Line of Credit (HELOC) functions as a revolving credit line, much like a credit card, but it is secured by the equity you have accumulated in your home. This financial tool allows homeowners to borrow funds as needed, up to a predetermined limit, repaying the amount borrowed, and then drawing on the line again during a specified draw period. A manufactured home is a dwelling constructed in a factory and then transported to a specific site for installation. These homes are built to federal standards set by the U.S. Department of Housing and Urban Development (HUD Code). The ability to obtain a HELOC on such a dwelling depends significantly on its legal classification and how it is affixed to the land.

Manufactured Home Classification for Lending

The classification of a manufactured home as either real property or personal property is a primary determinant for HELOC eligibility. Traditional HELOCs are secured by real estate, meaning the home must be legally recognized as part of the land it occupies. If a manufactured home is considered personal property, akin to a vehicle, it generally does not qualify for a traditional HELOC. This distinction is crucial because personal property loans typically have different terms and are not based on home equity.

For a manufactured home to be eligible for a HELOC, it must typically be permanently affixed to land that is also owned by the homeowner. This permanent affixation usually involves specific structural modifications, such as the removal of the wheels, axles, and towing hitch. The home must then be placed on a permanent foundation, engineered to meet local building codes and prevent easy movement.

Beyond the physical affixation, the home’s title must be officially converted from personal property to real property with the appropriate state or local authorities. This legal process, often referred to as “de-titling,” integrates the manufactured home into the real estate records, ensuring the home and land are treated as a single parcel for lending and taxation purposes. Without this conversion and a permanent foundation, lenders typically cannot offer a HELOC.

Key Lender Criteria and Required Documentation

Even after a manufactured home is legally classified as real property, lenders apply specific criteria to assess HELOC applications. A strong credit score, generally in the mid-600s or higher, is a baseline requirement. Lenders also scrutinize the applicant’s debt-to-income (DTI) ratio, preferring it below 43%. The available home equity, typically expressed as a loan-to-value (LTV) ratio, is also a significant factor. Most lenders require an LTV of 80% to 85% or less, meaning the combined balance of your mortgage and the proposed HELOC should not exceed 80-85% of the home’s appraised value.

Lenders often impose additional requirements specific to manufactured homes, such as age and condition limitations. Some lenders may decline to offer HELOCs on homes older than 20-30 years, or those that show significant wear. The location of the home is also important; homes situated on privately owned land are generally viewed more favorably than those in leased lots within manufactured home parks, due to more secure collateral. These stricter requirements reflect the perceived higher risk associated with manufactured homes compared to traditional site-built properties.

Applicants must compile required documents to support their HELOC application. Proof of income, such as recent pay stubs and federal tax returns for the past two years, is essential. Bank statements for the most recent two to three months are also typically required. Property title documentation demonstrating the real property conversion is necessary. Lenders will also require proof of homeowner’s insurance and an independent appraisal or inspection report to determine the home’s current market value and structural integrity.

Steps in the HELOC Application Process

Once a manufactured home is classified as real property and documentation is prepared, the HELOC application process can begin. The initial step involves identifying lenders willing to provide HELOCs on manufactured homes, as not all financial institutions offer this product. Credit unions and specialized manufactured home lenders might be more accommodating than large banks. Research and compare offerings from multiple lenders to find suitable terms and rates.

After selecting a potential lender, the applicant submits a formal application. This application will request personal, financial, and property information. Following submission, the application enters the underwriting phase, where the lender reviews provided documentation. This includes a credit check, analysis of income and debt, and a title search to confirm property ownership and identify any existing liens.

A property appraisal is a standard part of underwriting to determine the home’s current market value. The appraisal helps the lender calculate available equity and ensures the LTV ratio meets their criteria. If conditionally approved, the lender may request additional information. The final stage is the closing process, which involves signing loan documents. The typical timeline from initial application to funding can range from four to eight weeks.