How To Buy A Manufactured Home With Land
The biggest cost, of course, will be buying and financing a mobile or manufactured home. Mobile home financing is different than for a standard home loan, but various programs can make it easier to qualify.
how to buy a manufactured home with land
Manufactured homes are factory-built after June 15, 1976, and subject to federal safety standards set in 1974. Manufactured homes are built on a permanent metal chassis and can be moved after installation, but that can interfere with financing.
A manufactured home meets federal safety standards established in 1974. These homes are built in a factory and can be set up on blocks, metal piers or a permanent foundation. A mobile home can be moved after it is set up; a manufactured home is not intended to be moved.
Manufactured homes must meet local building standards for the communities where they are located. Companies that build these homes must have their design approved by a HUD-approved agency, which ensures the plan is safe and complies with the law.
Modular homes are built in a factory but assembled at the site where the home will be located. These homes can be delivered in two or more modules (thus the name), and assembled on site by local contractors. Modules could consist of rooms, or complete sections with walls and roofs. Plumbing and electrical systems are installed before the modules are shipped.
Modular home design has come a long way. Some are two stories, some have basements. All have features of traditional homes, including optimal energy efficiency. Buyers can even design the home to their liking. The homes must be placed on flat land, or land that has been prepared to accept the modules.
While 80% of manufactured homes are owned by their inhabitants, only 14% of those people also own the lot on which their unit is placed, according to Housing Assistance Control, a nonprofit organization that tracks affordable housing.
Fannie Mae loans are obtained through the MD Advantage Program, which offers loans at lower rates than traditional manufactured homes loans. Qualifications include installing the home with a driveway. The home must meet certain construction, design and efficiency standards.
The biggest attraction is the cost. The average national price of a new manufactured home is $81,700, while the average national price of a new site-built home sold in 2020 was $287,465, according to the HomeAdvisor.com.
To see what financing terms you may get to buy a manufactured home, the first thing you should do is review your credit report. The better your credit score is, the more likely you are to qualify for better loan terms.
Previously known as mobile homes, manufactured homes are an important source of affordable housing buyers can customize to fit their needs and financial situations. Although more affordable compared to traditional homes, you can still score fireplaces, walk-in closets and stainless steel appliances. However, there are several rules and regulations associated with them.
Unlike traditional stick- or site-built homes, which are built piece-by-piece directly on the site where it will stand, manufactured homes are built in a factory before being moved to the location where the homeowner plans to live.
The term manufactured home refers specifically to any factory-built home that was built after June 15, 1976. This is when the U.S. Department of Housing and Urban Development (HUD) instituted stricter guidelines around how mobile homes and other factory-produced homes could be constructed.
Unlike conventional building codes, the HUD code requires manufactured homes to be constructed on a permanent chassis (a base frame with wheels) and be at least 320 square feet. Once delivered to the final location, the wheels are removed and the chassis is placed on piers, masonry crawl spaces or a concrete foundation.
Thanks to the lower cost of materials, faster build timeline and greater energy efficiency than stick-built homes, manufactured homes are cost-effective and can be a great option for buyers on a budget. In fact, they are priced between 10% and 35% less per square foot than traditional homes. Plus, despite some of the old, negative stereotypes that still exist for manufactured homes, studies show that they generally retain or appreciate in value over time.
You can also work with a real estate agent to find manufactured homes for sale, or browse real estate listings on manufactured home marketplaces. In some states, you can also buy directly from an owner.
The cost of your manufactured home will depend on a few things. For one, the actual home cost can range depending on the size of the home. For example, you can select a single-, double- or triple-wide floor plan and up to several rooms if you wish.
According to April 2020 data, the average cost of a new single-wide manufactured home (approximately 500 to 1,200 square feet) was $64,500, while the average cost of a new double-wide (approximately 1,000 to 2,200 square feet) was $120,300.
If you need financing for the purchase, you have a couple of options. One is to take out a loan for the land and a separate loan for the manufactured home. However, this could be less convenient, as you have to qualify for two different loans and manage two payments. The other option is to take out a loan that includes both the land and the property.
Unless you have a significant amount of cash on hand to purchase a manufactured home outright, you will need a loan to cover the full cost. Manufactured home loans can be tricky depending on a few factors, but you do have several options to choose from.
The U.S. Department of Agriculture (USDA) also offers manufactured home loans. The home must be considered real property, at least 400 square feet and permanently fixed to a foundation to qualify. To qualify for a USDA loan, site must also be considered rural according to USDA guidelines, and the home must be less than a year old.
The main difference between manufactured and mobile homes is that manufactured homes follow the new safety regulations set in place by HUD while mobile homes were built prior to their implementation. Mobile homes were also often intended to be easily movable, whereas many manufactured homes are not built to move after they are assembled.
Financing a mobile or manufactured home is a little different from financing a house because most lenders do not consider these homes eligible for most types of mortgages. However, some lenders will give you a loan for a manufactured home if it meets their specific requirements and rests on a permanent foundation.
Most lenders will not give you a conventional loan for a mobile or manufactured home because these structures are not considered real property. Rocket Mortgage offers conventional loan financing on manufactured homes that have been permanently attached to land and converted to real property. If you have a manufactured home that meets some very specific criteria, however, conventional mortgage sources Freddie Mac and Fannie Mae do actually offer specialized loans.
The Federal Housing Administration (FHA) offers home loans with fixed interest rates and lower credit, debt-to-income ratio and down payment requirements. These are popular with first-time home buyers. They also offer manufactured home loans called Title I and Title II loans.
Title I loans can be used to purchase manufactured homes but not the land on which they sit. There are a few stipulations, such as that the property must be your primary residence, it has to meet FHA guidelines before being placed on a rental site and must be connected to utilities. These loans tend to have short terms (typically up to 20 years) and low loan limits.
Title II loans can be used to purchase both a manufactured home and the land it sits on jointly. These loans cannot be used in mobile home parks or on leased land. Mobile homes built before 1976 do not qualify. Only manufactured homes built after 1976 can qualify for this type of financing. These loans also require that the manufactured home in question counts as real property.
If you want to buy a manufactured home and the land it sits on, you can also get a VA loan. VA loans are only available to veterans and qualifying active duty service members through the Department of Veterans Affairs. There are many benefits that come with a VA loan, including the ability to put no money down and avoid paying mortgage insurance.
To qualify for a VA loan for a manufactured home, your home must be on a permanent foundation, meet HUD guidelines and must be purchased with the land underneath it; mobile homes or manufactured homes not on permanent foundations do not qualify.
Sidney Richardson is a professional writer for Rocket Companies in Detroit, Michigan who specializes in real estate, homeownership and personal finance content. She holds a bachelor's degree in journalism with a minor in advertising from Oakland University.
The estimated installation cost includes the following*: Setting the home that you selected onto your foundation or building pad (This assumes normal lot conditions and does not include any extra costs to maneuver the home to your building site or any crane rental fees)
Installing blocking or piers under the home and levelling the home with shims
Anchoring the home to your foundation with tornado and/or hurricane proof anchors
Insulating the marriage line and bolting the various sections of your home together at both the floor and roof lines (if there is more than one section)
Finishing roof venting and ridge cap shingles
Installing siding on the ends with house wrap (if you selected the house wrap option with your home order)
Installing soffit and fascia on the ends of the home for the complete exterior finish
Estimates to hook up to existing utilities (you will have to add the cost of a new septic, well, electrical service, and also driveway and etc as needed on your site)
Estimate to complete the inside trim and finish work