Can you get a VA loan for a mobile or manufactured home?

There are several types of loans available for those looking to purchase a manufactured home. If you’re a service member, veteran or eligible surviving spouse, you may wonder if you can use a VA loan to finance a manufactured or mobile home. As you go into the home buying process, knowing your options and any requirements you must meet can help set you up for a more successful experience.

Can you use a VA loan to buy a mobile or manufactured home?

Yes, you can use a VA loan to finance a manufactured home as long as the property meets the minimum requirements set by the U.S. Department of Veterans Affairs (VA). VA loans are designed to help those who have served in our Armed Forces to achieve homeownership affordably. There’s often no required down payment and you can avoid long-term payments for mortgage insurance. It’s also the only loan that can be used to convert up to 100% of your home value into cash.

While it is possible to get a VA loan for a manufactured home, you can’t get a VA loan on a mobile home from any traditional mortgage lender. If you’re confused as to the difference, you aren’t the only one.

How do mobile and manufactured homes differ?

The terms “mobile home” and “manufactured home” are often used interchangeably. However, from a historical and lending perspective, there are big differences between the two.

Legally, anything manufactured before June 15, 1976, is a mobile home. Homes built after that date had to adhere to strict safety standards set out in the Manufactured Home Construction and Safety Standards adopted into law. Homes built under these guidelines, enforced by the Department of Housing and Urban Development (HUD), are considered manufactured homes.

As mentioned, you can’t get a VA loan for a mobile home – one built prior to June 15, 1976. However, it’s possible to find a lender to do a VA loan for a manufactured home built on or after that date.

Requirements to get a VA manufactured home loan

Lenders have their own requirements for borrowers looking to take out a VA loan for a manufactured home. That said, here are some of the minimum standards set by the VA.

Property requirements

When getting a VA loan for a manufactured home, the following requirements apply to the property in construction standards for the manufactured home itself:

• Permanent foundation: VA policy generally requires that the manufactured home is attached to a permanent foundation. It may be possible to get a loan when the property is not permanently attached, but the lender has to get approval from the VA.
• Property classification: The home has to be classified as real property titled with the land. An exception may be provided if the lender gets approval.
• Construction standards: The property has to have a HUD tag. This certifies that it’s been inspected and meets the construction standards legally mandated for manufactured homes.
• VA minimum property requirements: Manufactured homes are subject to the usual VA minimum property requirements regarding sanitation, safety and structural integrity. If the home isn’t move-in ready, repairs will be required.
• Space: If it’s a single-wide home, it has to be at least 400 square feet. Double-wides must have a minimum of 700 square feet of floor space.

Borrower requirements

Beyond property requirements, the VA also requires that clients meet certain qualifications. Here’s a brief list of them:

• Certificate of Eligibility: A Certificate of Eligibility (COE) certifies that you’re eligible to get a VA loan based on your service time. Minimum service requirements may be waived if you’re applying as an eligible surviving spouse or receiving VA disability.
• Credit score: Unlike most mortgage loans, the VA doesn’t impose a minimum credit score However, lenders may set their own standards.
• Down payment: There’s typically no down payment required to get a VA loan. The exception to this is if a client has impacted entitlement, meaning they had another loan that was defaulted on or they’re in the process of paying off an existing VA loan.
• Debt-to-income ratio (DTI): DTI is the amount of your pretax monthly income that goes toward debt payments. Ideally, the VA likes to see that your minimum monthly debt payments encompass no more than 41% of your gross monthly income. It can be higher if the lender can show that you have residual income or other compensating factors.
• VA funding fee: Most people who get a VA loan are required to pay a VA funding fee that’s between 1.25% – 3.3% of the loan amount depending on your down payment (if any) and whether it’s your first or subsequent use of a VA loan. The exceptions include being an eligible surviving spouse, receiving VA disability or returning to active duty after being awarded a Purple Heart.

Maximum VA loan terms on manufactured homes

When it comes to lending, the phrase “loan terms” can mean a couple of different things. Let’s take a look at some VA loan terms on manufactured homes.

Loan term length

First, there is the loan term that refers to the life of the loan, which is no longer than 30 years, 32 days or the remaining life of the property in the judgment of the appraiser. There is no difference for manufactured homes on a VA loan here.

Maximum allowable loan amount

In addition to the length of the loan, “loan term” can mean any attribute of the mortgage. One term that is different for manufactured homes compared to most properties is the allowable loan amount. Whenever you get a VA loan, you’re allowed the option to finance the VA funding fee into the loan amount if you choose. Beyond that, this is where things get complex.

Factors that impact your maximum allowable loan amount

The maximum loan amount you could qualify for will depend on a few factors:

• Are you refinancing into a traditional mortgage from another type of loan?
• Do you already own the lot where the manufactured home will sit?
• Are you purchasing a lot on which the home will sit?

To be sure what you can expect, talk to your lender.

Benefits of using a VA loan for a manufactured home

There are several benefits of using a VA loan to finance your manufactured home:

• Lower upfront investment: There’s typically no down payment required when you finance a manufactured home with a VA loan. However, there is a funding fee.
• Competitive rates: Because VA loans are a benefit to our nation’s service members and veterans, the interest rates are often competitive or even lower than comparable conventional or FHA rates for the same term length.
• No prescribed loan limit: Unlike conventional and FHA loans, there’s no set loan limit for VA loans. You can get a loan for up to the appraised value.

Do all lenders offer VA loans for manufactured homes?

Some lenders don’t offer VA loans on manufactured homes at this time. Different mortgage investors have different requirements, so lenders have to evaluate whether writing VA loans for manufactured homes is something they can take on as a business. However, you may have alternative options.

Other financing options for mobile and manufactured homes

Your loan options for mobile and manufactured homes will depend on the age of the home itself. You’ll have a wider range of financing options for manufactured homes built after June 15, 1976, than you would for the mobile homes made prior to that date. Here are some options to think about:

• Conventional loan: Home buyers commonly use a conventional loan to finance their manufactured home. To get a primary property, you need 5% down and a 620 credit score. For the best terms, you’ll want to keep your DTI at 40% or lower.
• Chattel loan: This is a loan commonly used for mobile homes. Chattel loans are used for personal property, so rates are a little higher than a traditional mortgage.
• Personal loan: Personal loans are unsecured, meaning there’s no collateral to back them up. Because of that, these typically have the highest rates, but it’s a fairly quick qualification process.

FAQs

Now that we’ve gone over the basics of funding a manufactured home purchase with a VA loan, let’s answer a few of the most common questions.

Can I get a VA loan for a manufactured home that’s been moved?

Most lenders won’t finance a manufactured home that’s been moved. Additionally, moving it would mean it wasn’t attached to a permanent foundation. This would require a special approval from the VA to do the loan.

Can I do a VA cash-out refinance for a manufactured home?

You can do a VA cash-out refinance on a manufactured home. This is commonly used to refinance an existing loan and purchase the lot on which the home sits.

Why can’t I finance a mobile home with a VA loan?

Mobile homes were built before June 15, 1976, when national safety standards enforced by HUD went into effect. For this reason, lenders consider the investment to be too risky to finance a traditional mortgage based on that collateral. You would have to use a chattel loan or an unsecured personal loan.

The bottom line

A VA loan can be used to finance a manufactured home, which was built on or after June 15, 1976. You won’t be able to use a VA loan to finance a mobile home built before that date. Although not impossible, it’s much easier to do this if the home is attached to a permanent foundation titled with the land. There are advantages to using a VA loan for a manufactured home, including that they typically don’t require a down payment and have very competitive rates.

As long as it’s on a permanent foundation, Rocket Mortgage^® offers VA loans for manufactured homes. If you’re ready to begin, start your mortgage application online today.