Can You Finance the Purchase of a Manufactured Home? YES!

Purchasing a home is an exciting endeavor. Having your own place, choosing the inside and outside design, adds to the excitement of having a home. Manufactured homes are cheaper than traditional homes, but most buyers can’t afford to pay for them upfront.

If you need help paying for your new home, you can get financing. This will allow you to split the cost into smaller monthly payments. These payments will be more affordable for you.

However, financing a manufactured home can be a bit unique. So, we’ve laid out the important details to ensure you’re in the know.

What are Manufactured Homes?

A factory builds a manufactured home as a stick-built home and then transports it to its final location. Unlike traditional houses constructed on-site, manufactured homes provide the advantage of a simplified construction process.

Building a manufactured home can take as few as 6 weeks. Palm Harbor’s build schedule is dependable once the engineering is approved for the build. The real construction schedule variables depend on the construction team in the field like the foundation schedule or waiting for the engineering from the local electricity provider. Utilities take planning and the process to bring in utilities to be installed at your property is important to the schedule.

ECM Homes is the exclusive dealer of Palm Harbor Homes, the leading manufacturer of manufactured homes in the nation. We take pride in this partnership. Palm Harbor Homes is known for their high-quality homes. Palm Harbor Homes has the highest commitment to quality and innovation. Each home is built in a controlled environment to ensure nothing but the best in the process.

This means that every homeowner gets more value for their investment. Thanks to Palm Harbor’s efficient construction techniques, we can offer homes that combine affordability with style and a long-lasting outcome, typically associated with traditional homes.

The Challenge of Financing Manufactured Homes

Banks have a different perspective on manufactured homes compared to more traditional homes because they do not consider them as stick-built homes. This difference comes from the fact that manufactured homes are movable property.

Unlike traditional homes that builders construct on-site and consider affixed to a plot of land, one can disassemble manufactured homes and therefore move them. Not all lenders have the capability to finance a home that someone can take apart, split into two halves, and then move. Because of this unique ability to be disassembled, a manufactured home falls under the category of personal property.

Additionally, this further complicates the security of the loan for the lender because the owner often separately owns the home and the land it occupies.

In a scenario where the loan goes into default, the lender’s ability to recoup their investment is not as clear as with a traditional home. This distinction makes financing manufactured homes a niche. A niche where not all mortgage lenders have a team to lend on a manufactured home.

Despite these challenges, at ECM Homes, we understand the value and appeal of manufactured housing. We are dedicated to helping our clients navigate the complexities of mortgage lenders for manufactured homes, ensuring that the dream of homeownership is accessible and achievable for all.

How to Finance a Manufactured Home

Now that we have explained why financing with a traditional mortgage lender might not be an option, let’s discuss how you can successfully get the loan you need to purchase your new manufactured home. Whether you are buying a home in one of our existing communities such as Lavender Meadows in Sequim, WA or Crystal Mountain MHC in Enumclaw, WA, these options are reliable and highly recommended.

FHA Loans

The Federal Housing Administration (FHA) offers two main types of loans suitable for financing manufactured homes: Title I and Title II. Title I loans are for buying the manufactured home and the land it will sit on. Or, they are for buying the home if it sits on a rented site. These loans are ideal for those who might not qualify for traditional mortgages due to lower credit scores or smaller down payments.

On the other hand, Title II loans are used for financing the purchase of a manufactured home along with the land and require the home to be placed on a permanent foundation. Both loan types offer the benefit of low down payments and flexible credit requirements, making them accessible financing options for many buyers.

Freddie Mac and Fannie May Loans

Freddie Mac and Fannie Mae have developed loan programs specifically tailored to manufactured home buyers. These programs aim to provide affordable financing options while encouraging lenders to offer conventional mortgage loans for manufactured homes. Freddie Mac’s program focuses on homes that meet certain construction, foundation, and energy efficiency standards, ensuring the quality and durability of the property.

Fannie Mae’s MH Advantage program offers similarly favorable terms for homes that meet specific standards, including lower down payment requirements and reduced mortgage insurance premiums compared to standard manufactured homes. Both programs make homeownership more attainable for buyers of high-quality manufactured homes.

Personal Loans

Depending on your credit score and current debt to income ratio, a personal loan may be an option, particularly when other types of financing may not be available or suitable. Unlike secured loans like mortgages, personal loans are unsecured, meaning they don’t require the home as collateral. This can be advantageous for buyers who plan to place their homes on leased land or are purchasing a home that doesn’t qualify for more traditional financing options.

Personal loans have higher interest rates and shorter repayment terms than mortgages, leading to higher monthly payments. Even with challenges, personal loans can help pay for a manufactured home, especially for buyers with good credit.

Introduction to Chattel Mortgages

A chattel mortgage differs from a traditional mortgage in several key ways. A chattel mortgage is a loan secured by a movable piece of property. This property, known as “chattel,” can include vehicles, machinery, and manufactured homes. Real estate secures traditional mortgages. In contrast, a chattel mortgage lets the lender hold an interest in movable property. They keep this interest until the borrower repays the loan.

This type of financing is particularly relevant for buyers of manufactured homes.

Many jurisdictions consider manufactured homes as personal property rather than real estate, so individuals can finance them through chattel mortgages.

You need a chattel mortgage when buying a manufactured home that will not be permanently attached to land. You also need one if you do not own the land where you will place the home. Chattel mortgages are important in these situations.

Need Help Determining Financing Options for Your New Manufactured Home?

If you’re buying a manufactured home in Washington with financing, we can guide you in the right direction. We will give you the information you need for your lender. You can choose to finance just the home or both the home and land together.

Where to begin? Start by looking at the floor plans we have available. Then, contact us to discuss the next steps.

Once you have chosen a floor plan that suits your needs and preferences, our team can assist you in exploring financing options. We understand that navigating the world of loans and mortgages can be overwhelming, especially when it comes to purchasing a manufactured home. That’s why we are here to provide guidance and support throughout the process.

Whether you are a first-time homebuyer or have experience in purchasing homes, we will work with you to ensure that you have all the necessary information to make informed decisions. Our goal is to make the financing process as smooth and stress-free as possible, so you can focus on turning your dream of homeownership into a reality.

Don’t hesitate to reach out to us for assistance with determining the best financing options for your new manufactured home in Washington state. We are here to help you every step of the way.