Does a VA Loan Cover Modular Homes?

The VA loan program offers a significant benefit to eligible service members, veterans, and surviving spouses, primarily known for enabling home purchases with no down payment. Concurrently, modular homes present an increasingly popular housing option, characterized by their factory-built components assembled on-site.

Understanding Modular Home Eligibility

VA loans can indeed cover modular homes. Modular homes are built in sections in a factory and then transported to a building site where they are assembled on a permanent foundation, much like a traditional stick-built home. These homes must adhere to local or state building codes and undergo local inspections.

Manufactured homes are entirely constructed in a factory and must comply with federal building codes set by the U.S. Department of Housing and Urban Development (HUD), not local codes. They are typically built on a permanent chassis with wheels and axles, even if those are later removed. While VA loans can also finance manufactured homes, the requirements are often more stringent, and fewer lenders may offer financing for them compared to modular homes. Mobile homes built before HUD’s national construction standards are generally not eligible for VA loan financing due to a lack of standardized building guidelines. Modular homes, by meeting local building codes and being affixed to permanent foundations, are often treated similarly to traditionally built homes for VA loan purposes.

Property Standards for VA Loan Approval

For a modular home to be eligible for VA loan approval, it must meet specific physical and structural requirements. The home must be permanently affixed to a foundation. This permanent attachment to the land is a core requirement, as the VA does not provide loans for personal property. The foundation must meet state and local requirements, and often includes features like a crawl space covered by a vapor barrier with vented masonry skirting and an access hatch.

Beyond the foundation, the modular home must comply with all local building codes and zoning regulations. Local building inspectors typically sign off on the structure meeting these local requirements. The home must also be classified as real property, not personal property, which involves legal titling processes to ensure it is considered part of the real estate. This classification is essential for the home to serve as collateral for the mortgage. The VA’s Minimum Property Requirements (MPRs) also apply, ensuring the home is safe, structurally sound, and sanitary, with functional utility systems and no serious defects that would impair its habitability or value.

Navigating the VA Loan Application

Securing a VA loan for a modular home involves several procedural steps once the property and borrower eligibility criteria are met. The initial step is to find a VA-approved lender experienced with modular homes, as not all lenders offer this specific type of financing. Borrowers will need to provide their Certificate of Eligibility (COE), which confirms their VA loan benefits.

The appraisal process for a modular home is a key stage. A VA-assigned appraiser will assess the property’s value and ensure it meets the VA’s Minimum Property Requirements (MPRs). This includes verifying the permanent foundation and compliance with local building codes. Appraisers will use comparable sales, which may include other modular homes or conventionally built homes, to determine market value. A separate home inspection is recommended to identify any potential issues that the appraisal might not cover, such as detailed operational checks of systems.

Required documentation for the loan application typically includes proof of income, a credit report, and the purchase agreement. For new modular home construction, additional documents like the builder’s construction plans and specifications may be required. Builders are generally required to provide a one-year warranty for new construction, covering defects in workmanship and materials, with longer coverage for structural defects. The process moves from pre-approval, through property selection and appraisal, to underwriting and finally, closing, where all necessary paperwork is signed and the loan is finalized.