Can You Get a VA Loan for a Manufactured Home?
Unlock the potential of VA loans for manufactured homes. Learn the specific eligibility and process to secure your financing.
A VA loan provides a significant benefit for eligible service members, veterans, and surviving spouses, facilitating homeownership with favorable terms. The primary purpose of these loans, guaranteed by the U.S. Department of Veterans Affairs, is to make buying a home more accessible. This benefit extends to manufactured homes, though it involves specific conditions that ensure the property meets certain standards.
VA Loan Eligibility for Manufactured Homes
To obtain a VA loan for a manufactured home, the borrower must first meet specific service requirements. Active-duty service members qualify with 90 consecutive days of service during wartime or 181 days during peacetime. Members of the National Guard and Reserves need six years of service or 90 days of active duty. Surviving spouses of service members who died while serving or from a service-connected disability may also be eligible.
A Certificate of Eligibility (COE) is a document confirming that an individual meets these service requirements for a VA loan. This certificate is required by lenders to verify eligibility for VA loan benefits. Borrowers can obtain a COE through the VA’s eBenefits portal, by mail using VA Form 26-1880, or through their VA-approved lender.
Beyond service, financial qualifications are assessed, similar to other mortgage types. While the VA does not set a minimum credit score, most lenders require a FICO score of at least 620. The DTI ratio should not exceed 41%, although some flexibility may exist with compensating factors like high residual income or stable employment.
Qualifying a Manufactured Home for a VA Loan
A manufactured home must meet specific criteria to be eligible for VA financing. The home must be built after June 15, 1976, when national construction and safety standards for manufactured homes, defined by the U.S. Department of Housing and Urban Development (HUD), were established. These homes must display a HUD certificate and tags, typically a metal identification plate on the exterior and a data plate inside.
The manufactured home must be affixed to a permanent foundation that complies with state laws regarding load-bearing capacity and wind resistance. The home must also be classified as real property under state law, rather than personal property or a chattel, involving a “title elimination” process to ensure it is taxed as real estate.
Borrowers must own or be simultaneously purchasing the land on which the manufactured home is located. VA loans do not permit financing for manufactured homes in communities where the land is rented. The home must meet the VA’s Minimum Property Requirements (MPRs), which ensure the property is safe, sanitary, and structurally sound. These requirements cover aspects like proper drainage, functioning utilities, and sound structural integrity. An appraisal process, conducted by a VA-approved appraiser, determines the home’s market value and verifies compliance with MPRs and HUD codes.
The VA Manufactured Home Loan Process
Once eligibility criteria are met, the loan process for a manufactured home begins. The initial step involves finding a VA-approved lender that specifically offers loans for manufactured homes, as not all lenders do.
After selecting a lender, the borrower submits a loan application with necessary documentation, including the Certificate of Eligibility (COE) and financial documents like income statements and credit history. Lenders conduct a pre-approval process, which provides an estimate of the loan amount for which the borrower may qualify.
The application then moves into underwriting, where the lender reviews all submitted documents to assess risk and ensure compliance with VA and lender guidelines. Underwriters verify income, creditworthiness, and property adherence to standards. During this phase, the VA appraisal and any required inspections, such as for a permanent foundation or HUD code compliance, are scheduled. The appraiser confirms the home’s value and adherence to VA Minimum Property Requirements.
The final stage is the closing process, where all parties sign documents. Closing costs for VA loans range from 1% to 6% of the loan amount, which can include the VA funding fee, appraisal fees, and title insurance. While the VA loan program offers benefits like no down payment for traditional homes, manufactured home loans may involve a down payment. Borrowers can negotiate for seller concessions, which can cover up to 4% of the loan amount in closing costs.