Manufactured, or “mobile” homes are still considered to be “low-cost housing” as the average mobile home costs well below $100,000, and rental can be up to $1,000/month less than a condo or apartment. On top of that, there are financing options available, although they are not as easy to obtain as for a stick-built home.
In this article, we will cover the factors surrounding eligibility, what you can do with the VA loan, as well as the average rates and payments that are needed. To make sure you leave with some useful information, if you are not eligible for a VA loan, we will include other financing options that are available too.
Mobile home VA Loans
Are you eligible for a VA loan?
The first step in establishing your eligibility for a VA loan is a Certificate of Eligibility (or CoE). It’s not as simple as just having served at some point in time. There are many different criteria depending on the period during which you served. We will highlight the most important ones that will cover the vast majority of readers. There are also provisions under which spouses and other beneficiaries can apply.
For a full list of eligibility factors including dates, read more about it on the U.S. Department of Veteran Affairs site. A dishonorable discharge automatically makes eligibility impossible for the certificate.
Service during wartime:
- World War 2, Korean War, Vietnam War
- 90 days active duty.
- Less than 90 days in case of a service-related disability.
- Gulf War
- 24 months continuous active duty.
- At least 90 days, after which you were honorably discharged for a disability or reduction in force, etc.
- Less than 90 days in the case of service-related disability.
Service during peacetime
- At least 181 days active duty.
- Less than 181 days in the case of service-related disability.
Separation from service and enlisted after 1980/81
- 24 months continuous active duty.
- At least 181 days or the full term they were ordered to active duty.
- At least 181 days, after which you were honorably discharged for a disability or reduction in force, etc.
- Less than 181 days in the case of service-related disability.
Other eligible persons
- Currently enlisted – Eligibility gained after 90 days of active duty.
- Selected reserve or national guard – Unless there is a good reason you become eligible after six years of duty.
- Spouses of servicemembers – Usually if you are have not remarried, the servicemember is missing in action or a prisoner of war, or a recipient of DIC (Dependency and Indemnity Compensation).
- Served under allies – If you are a US citizen but have served under certain allied countries.
- Other organizations – Service with a wide range of other organizations like Public Health Service, cadets with the US Military, and other military-related organizations.
Here is also a list of evidence you will need. It is different depending on which basis you are applying for the CoE.
Can I re-apply for a VA loan?
Yes! It’s surprisingly simple to get a second, or even third, VA loan. All caveats are that you must repay the previous loan in full and sell the property. If you have not sold the property, you can be eligible once a qualified Veteran-transferee assumes the VA loan.
Other requirements and caveats
Your Certificate of Eligibility is not the only thing that is required. In the end, you still apply for a VA loan through a lender that also has to approve your request. Lenders often have their own exact criteria when it comes to approving or denying a request for a loan. However, there are some general guidelines almost all lenders follow, such as:
- A stable and reliable income that is sufficient to cover expenses and monthly payments.
- Residual income left per month for other family expenses.
- The available money to make the initial down payment (if applicable).
- Credit score. Lenders will have their own requirements. Usually, 620 is the minimum score.
- A reasonable debt-to-income ratio.
How do I apply for VA loans for manufactured homes?
The steps on how to apply for a VA loan are pretty simple and not that different from any other loan.
- Collect all documents related to your finances as well as proof of service for the CoE.
- Find a VA-approved lender and apply for a VA loan through them.
- Obtain your Certificate of Eligibility, either through
- the VA-approved lender,
- online at the VA’s eBenefits portal,
- or by mail with a VA Form 26-1880
- After you have provided your lender with all the necessary documents, you are on your way to a brand new home at a rate you can afford.
What can I do with a VA loan?
A VA loan is not only for when you want to buy a new home. We are focusing on buying a manufactured home with a VA loan, but you can also use the loan for a range of other situations where you need a significant inflow of cash. Here are other situations where you can apply for a VA loan:
- Building a home. This is not likely as a potential mobile home owner.
- Buying and improving the home. The VA loan amount should then cover the home as well as the estimated costs of improvements.
- Installing energy-related appliances. Especially those that improve energy efficiency.
- Purchasing land or a lot and/or the mobile home.
- Refinancing an existing loan, whether it is VA-guaranteed as well or not.
- Or refinancing another mortgage or lien if it is your primary residence.
Refinancing with a VA loan
Except for the first instance, these are all situations you will likely encounter as a manufactured home owner. Of particular interest is the refinancing. It often happens when someone goes with a financing option and something unexpected happens, or they just realize they made a bad deal. If you fit one of these, you should look at refinancing.
Refinancing essentially means that the new loan immediately pays off whatever you owe on your old loan. This means you will pay a different loan amount with a different (usually lower) monthly payment, a (hopefully lower) interest rate, and a (usually shorter) term.
You can also opt for cash-out refinancing. In this instance, you take out a larger loan than what is left to settle on your old loan. This extra amount is paid out to you in cash and can also be used however you see fit.
How much can I borrow?
Technically, there is no limit to how much you can borrow through VA loans for manufactured homes. However, there is a maximum amount that the VA will guarantee. But what does this mean?
As we have explained, the VA assures the lender that they will pay the loan should you become unable to do so. This maximum guarantee amount is the most that the VA will risk paying on your behalf. If you want to get a loan for an amount more than this guarantee, the lender will have to consider the chances of you being unable to pay before you reach this amount.
Thankfully, this amount is enormous relative to average mobile home prices. It is also dependant on the county you live in and their maximum loan amounts as well as the average living costs. The maximum amount is $636,150 in high-cost counties and $425,000 is the maximum in the lowest cost counties. The average mobile home costs well under $100,000 for a double wide family home.
For a full list of counties and their VA loan limits, have a look at this table.
Rates and initials
If you are dreading that first huge down payment, you may be in luck! Depending on your lender and your own credit score, income, and debt-to-income ratio, you could get the loan for the entire amount, meaning you won’t have to make any initial payment. This is the power of having someone like the VA back you up.
For VA loans for manufactured homes where you do have to make a minimum down payment, it’s usually less than 5%.
That means if you buy a home for $72,000 (if you were to get a higher-end double wide) you should only have to make a down payment of $3,600. Not bad at all, right?
The same goes for your interest rate. Because the VA guarantees the loan, there is less risk involved for the lender, and they can afford to give you a better interest rate. This depends mostly on the individual lender and your reputability. Interest rates are usually around 3.5%.
If we take the same $72,000 mobile home, the total interest would be $2,520. Which, over a 15 year period, is only $14 extra per month. This is on top of a $400 monthly payment.
Lastly, you will need to pay the VA a funding fee. This is a small payment in exchange for their guarantee of your loan. It might seem unfair that they charge this funding fee, but if you look at the rates on loans for mobile homes without the VA guarantee, you will find it’s more than decent. This is usually around 2%.
In our example, this translates to $1440 or $8 per month.So, in total, you would end up paying $422 per month for your new home with a minimal initial.
Advantages of a VA loan
- A huge benefit for those with an uncertain financial future is that if you can no longer make the payments, the VA will negotiate with the lender on your behalf. This includes repayment plans or loan modifications as an example. Anything to avoid a foreclosure.
- The fact that for many people no down payment would be necessary. If you didn’t have to worry about the money you would not be looking at financing options. A big initial down payment means less money in your pocket.
- It’s much easier to convince a lender to give you a loan if it is guaranteed by the VA.
Other Mobile home financing options
FHA Loan
These loans are basically identical to VA loans for manufactured homes. The only difference is that it’s the FHA (Federal Housing Administration) that makes assurances on your behalf to potential lenders. The FHA has stricter maximum loan amounts and will guarantee a loan to the maximum value of $92,904 if it includes the land.
Interest rates are also usually fairly low at below 5%. The same goes for the initial down payment. They also have some caveats in terms of the lease agreement, mainly imposing a minimum lease term and eviction notice period, to protect all the parties involved.
Conventional loan
It is possible to receive a conventional loan without a guarantee from the FHA or the VA. However, it is much harder for a manufactured home than it is for a stick-built piece of real estate. Having your home permanently affixed to a foundation helps a lot.
As you can imagine the kind of rates you will get are very dependant on your credit score and other finances as there is no other guarantee. You also don’t have the backing of the VA or FHA when it comes to negotiations.
Chattel mortgage
Chattel mortgages are not exactly loans. A chattel mortgage is like taking a loan out on a car or other piece of property. The worst downsides to chattel loans are that they have higher interest rates, larger down payments, and you can lose your property if you cannot pay up any longer. They aren’t protected by the same consumer protection legislation as loans.
Upsides are shorter terms and less expensive closing costs.
For more ideas about getting your home at a more affordable cost, read How to Buy a Mobile Home Without Breaking the Bank.
Is it time for you to apply for a VA loan for a mobile home?
Well, that’s all you need to know about getting a loan guaranteed by the Department of Veteran Affairs for your manufactured home. We hope you have found this guide to VA loans informative and that it will help you approach the process with confidence! Everyone deserves a home to be proud of, especially our servicemen. So what are you waiting for? Look into VA loans for manufactured homes and get your home at a rate you can afford.
