Manufactured Home Financing Guide

So You’re Ready to Buy a Manufactured Home…Congratulations! Purchasing a home is a big deal, and it’s a significant step forward in life. And there’s no better value in housing than a manufactured home. These high-quality homes are well built, full of energy-saving features and appliances, and they look great too. Buying a manufactured home for your family has never been a better option than it is now. If you’re looking for value, quality, and beauty, you’ll find all three in your new home.

If you’re like 95% of home buyers, you’re going to need to get some financing to help with the purchase. We’re here to help. While CoverTree is a manufactured home insurance company, our team has years of experience in the factory-built housing industry, so we’re here to help you with the financing process.

Applying for Financing

It’s an old saying that the first step is the hardest one, and that’s true with financing as well. When you first look at a home financing application, it can seem like a long, daunting process. But don’t worry! All the manufactured home lenders are good at what they do, and they can help you through the process so that it goes quickly and smoothly.

You will need to have a few items together before submitting your application for approval. Some of the more common required items are:

1. Your and any other applicant’s social security number, contact info, and residence history for at least the past 3 years
2. At least 2 years income history
3. The approximate address for your new manufactured home
4. Information about your down payment – whether it’s cash or land

Credit and Down Payment Requirements

What’s the first question most people think of when looking at financing a manufactured home? If you guessed, “How much down and what’s my credit need to be?” you’d be correct. Lenders use a credit score to determine a borrower’s payment history. They also require a downpayment to ensure the borrower has ‘skin in the game.’ These are two of the most essential components of home financing. Fortunately, there are many lending options in the manufactured housing space, so you will likely be able to find a lender that works for you.

Credit scores range from 350 to 850 at most reporting agencies – 350 being the worst, 850 being the best. Most lenders, however, consider anything above720 to be excellent and treat that score with the most favorable lending conditions. Some lenders have options for ALL credit scores in manufactured housing – even those with lower or less than perfect credit. Those loan products will have higher rates and down payment requirements because of the lender’s higher perceived risk.

Down payments for buying manufactured homes will vary based on the borrower’s credit score, home choice, and other factors. Typically, a manufactured home borrower will need to put at least 5% down, and perhaps more if their credit is on the lower end of the scale. Down payments can be cash OR land equity or a combination of the two. For example, if you need $10,000 down and own a piece of property worth $5,000, you can use the land as collateral and make up the remainder with $5,000 cash. If you don’t have enough money or land, you can get a gift from friends/family as a down payment, as long as you are under no obligation to pay that back.

The Process of Buying a Manufactured Home

Once you’ve submitted your application, you’ll need to wait until you receive a decision from the lender. This can take from a few hours or up to a few days. Different lenders have different processing times, so don’t worry if your decision takes a little longer.

Once the loan decision has been reached for your new manufactured home, the lender will reach out to you to let you know you’ve been pre-approved, and they’ll send what further conditions need to be met before closing the loan. This process can take anywhere from two weeks to several months based on the complexity and type of loan. Typical conditions include the following:

• Verification of income
• Social Security Card and driver’s license
• Proof of down payment
• Manufactured Home Specs and information
• Land description and owner information
• And more, depending on the loan product you chose

Once you get all the conditions satisfied and submitted to your lender, you will be ready to close on your new manufactured home. Closing takes place at a title company, attorney’s office, or the retailer who sold you the house. Closing will take thirty minutes to an hour and involve a lot of paperwork and signatures.

After Closing

Once you’ve closed, you’re almost there! If your home is already constructed and on-site, the closing was the last step in the process. You’ll get your keys after closing and be able to move right in.

However, if your home is not complete, there will be additional steps. You will now be in what is called the construction phase, and the retailer still needs to deliver and set up the home. The process can take from a week to several months, depending on whether your home is on the retailer’s lot, construction material availability, weather, and other factors.

Don’t be intimidated if the manufactured home financing process seems long and complicated. Hundreds of thousands of new homeowners go through this process every year, and we have no doubt you can navigate the financing as well. There will be service-oriented professionals throughout the process to help with any questions you have so that you will be in good hands.

And lastly, congratulations on your decision to purchase a new home! We look forward to working with you to help ensure your new purchase.

Click here to apply for manufactured homeowners insurance with CoverTree.