VA Home Loans are guaranteed loan benefits that service members, veterans, and their eligible surviving spouses can take advantage of to become homeowners. With VA loans, you can build, buy, repair, or renovate a home.
Even with favorable loan terms, you may still want to be frugal about your spending, especially if you already retired from military service. Whether you’re cash-strapped or penny-pinching, getting a manufactured home has probably crossed your mind. Can you get a VA loan on a manufactured home?
A manufactured home is a housing unit produced at an assembly line offsite before it’s transported to a piece of property. You’ve probably also heard the terms modular and mobile homes.
In this article, when we talk about manufactured homes, it’s also applicable to modular and mobile homes. They look almost the same as a traditional house constructed on-site, but they’re much more affordable.
VA Requirements For A Property To Be Considered A Manufactured Home
Does the VA finance manufactured homes? The short answer is yes, and you might be wondering how a manufactured home qualifies for a VA home loan.
1. It has to fall within the VA’s definition of a manufactured home. It’s a unit constructed in permanent frames that can be moved and assembled and must have a bedroom, a dining area, a kitchen, and a bathroom.
2. To qualify for a VA loan for manufactured homes, it should be suitable as a permanent residence, meaning that it’s permanently affixed to the land.
3. It must be classified and taxed as real property. It’s important to note that a manufactured home can be classified as personal property, like cars. So, it has to be attached to a permanent foundation to become real property.
4. Other VA loan requirements also indicate the following:
- Single-wide: at least 10 feet wide and 400 square feet floor area
- Double-wide: at least 20 feet wide and 700 square feet floor area
Am I Eligible For A Va Manufactured Home Loan?
There are a few things you need to expect when you apply for a VA loan for a manufactured home.
- You have to pay at least a 5% down payment compared to 0% for a traditional home.
- Manufactured homes are considered risky investments so VA-approved lenders may have set in place stricter credit score guidelines.
- The house must meet the VA manufactured home loan guidelines.
How To Apply For VA Loan For Manufactured or Mobile Homes
Does the VA finance manufactured homes? The short answer is yes, and you might be wondering how a manufactured home qualifies for a VA loan manufactured home.
Step 1: Prequalification Process
Like other loans, there are certain requirements that you need to meet to qualify for a VA loan for a manufactured home. In this step, you look for lenders and request a prequalification and preapproval assessment to check if you are eligible for a loan for VA manufactured homes.
The VA doesn’t provide a list of lenders, so you can check out private lenders on your own. Since VA manufactured homes lenders offer different rates, you should shop around to find the best deal for you.
It will also allow you to know the potential issues that could hinder your success in getting approved for VA manufactured home loans. For instance, you may need to improve your credit or provide particular documents as proof of self-employment income.
This process will involve answering a couple of questions from the lender, covering the following:
- Employment history
- Monthly income and expenses
- Assets
- Debt records
- Desired loan amount
- Previous homeownership
Lenders may have different processes and coverage of questions, but the above is the general information that you may be asked to provide. You can seek prequalification assessments from as many lenders as you want so that you can compare their rates and terms.
Home loan approval for a manufactured home is more stringent than site-built homes. For one, it’s because borrowers of VA loans for manufactured homes tend to default more than those with traditional houses. That’s why borrowers need to have higher credit ratings and lower debt-to-income (DTI) ratios.
Lenders usually look for a 620 FICO Score or higher for VA loans. Meanwhile, lenders don’t have a standard DTI ratio, but the VA prefers borrowers with a DTI ratio of 41 percent or lower. Depending on your financial health, you may still qualify for a VA loan for manufactured homes even with a high DTI ratio.
Likewise, a lower credit score doesn’t automatically disqualify you from securing a VA home loan.
Since the VA doesn’t set a standard for credit scores, some lenders are willing to consider those who have lower than 620. They will also review your credit history and check if you’re paying your regular bills, such as monthly electricity bills, credit cards, and other loans. You may also want to improve your credit score before applying for a VA home loan by ensuring that you pay your bills online and paying off some of your debts.
Step 2: Pre-Approval Process
Once you’re done with the prequalification process, you’ll have a better idea of your purchasing power. The next step is to get pre-approval, which will give you and the lender a more accurate picture of your financial capacity.
You’ll need to provide copies of several documents so that lenders can verify your financial information. These include a valid government ID, payslips, W-2 statements, and federal tax returns.
Again, they will look at your credit score, income, employment, and DTI. Ideally, you have full-time employment over the past two years, which is proof of a steady source of income. Self-employment and part-time employment are also accepted but require more assessment.
Other sources, such as disability pay, Social Security, housing allowance, and annuities can also be considered in the VA home loan application. Getting a co-borrower can also help you.
You should also get a Certificate of Eligibility (COE) from the VA, which you need to show to your lender.
Step 3: Home-Buying
Let’s go to the most exciting part of getting a home loan, and that’s the home-buying process. You can use a VA loan for a manufactured home in these three scenarios:
- You already have land and you want to buy a manufactured home
- You want to buy land and manufactured home at the same time
- You need to refinance a manufactured or mobile home on leased land and buy your own land
What Are the Loan Terms for VA Loans for Manufactured Homes?
The following are the maximum VA loan terms for manufactured homes:
- 15 years and 32 days: If you purchase land for a home you already own
- 20 years and 32 days: If you buy a single-family manufactured home and land
- 23 years and 32 days: If you choose a double-wide manufactured home
- 25 years and 32 days: If you buy a double-wide manufactured home and land
Does VA Require A Foundation Inspection On Manufactured Homes?
Manufactured homes are designed to be mobile. Because of that, VA has set standards for the foundation of this type of home. A structural engineer needs to inspect the foundation to make sure that it’s structurally sound and properly attached to the ground.
Other areas that will be checked include the concrete footing, mortar joints, brick or block underpinning, and the vapor barrier on the ground. A foundation certification will be issued after the inspection. It includes details such as the contact information of the structural engineer, property address, and date of inspection.
How to Apply for a VA Home Loan in Another State?
Buying a home in another state using a VA home loan is similar to buying a house using a regular mortgage loan. You just need to make sure that you’re eligible. You need to get a certificate of eligibility and double-check your credit history, credit score, income, and assets if you want to be approved for a loan.
Tips for Finding a VA Loan For Manufactured Homes
Lenders have different guidelines when offering manufactured home loans. If you’re in the market for this kind of loan, here are a few things you need to remember.
- Check the interest rates for manufactured homes
Whether you’re using a comparison tool website, a VA mobile home loan calculator, or talking to a loan officer, you need to make sure that all the quotes you get are for a manufactured home VA financing. Mortgage rates and fees for manufactured homes are different from single-family homes. You need to inform your lenders upfront to make sure that the quote they provide is for a manufactured home.
- Talk to your loan officer
Unlike a regular VA home loan where you can get a 30-year, fixed-rate option, the maximum loan term for a manufactured home or mobile home loan will depend on various factors. That’s why you need to talk to your loan officers.
- Gather quotes on the same day
Interest rates change frequently. So, it’s best to get quotes on the same day for a more accurate comparison.
- Ask for written confirmation of the rate lock
Once you’ve made a choice, the next thing to do is ask your lender for a written confirmation for the rate lock.
VA Loan Lenders That Accept Mobile Homes
Unfortunately, you only have limited options for lenders that offer VA loans for manufactured homes. A few potential lenders are Veterans United, Land Home Financial Services, AFR Wholesale, OnQ Financial, and CMG Financial.
FAQs on Getting VA Manufactured Home Loan
Can I Sign Documents Electronically for My VA Home Loan?
Yes, you can sign your VA loan documents electronically, thanks to the VA with Circular 26-13-13, which was approved in 2013. It’s an excellent option for veterans who can’t go to the lender’s office or those who’d rather file and process their VA loan application online.
Will I have to pay any fees with my loan?
Although you’re not required to give a down payment on a traditional VA loan program, you may have to pay a one-time funding fee, interest rate, and closing costs. The VA funding fee will depend on the type of loan you’ll get and the total amount of loan you receive.
Why Would a Home Not Qualify for VA loans?
There are some factors that may prevent you from getting a VA loan for a certain home. These include having insufficient heating, inadequate electrical systems, roof problems, pest issues, and broken windows.
Can Your VA loan Be Assumed Once the Manufactured Home is Sold?
Yes, the VA loan can be assumed. The loans made after March 1, 1998, will require the approval of the loan holder for the assumption and release from liability. Meanwhile, VA financing made before that date can be assumed with the approval of the VA but the veteran must still apply for a release from liability.
Can a Veteran Get More Than One VA Manufactured Home Loan?
Yes, provided that the veteran qualified for restoration of entitlement. It’s also possible to get another VA manufactured home loan if the veteran has sufficient entitlement left to purchase another one, provided that they have disposed of or sold their previous manufactured home.
Does USAA Do VA loans for manufactured homes?
Unfortunately, the USAA does not offer VA loans for manufactured homes because of the complexity of the state and local laws involved.
Conclusion
Can you get a VA loan on a manufactured home? Yes! A manufactured home is generally cheaper than traditionally built homes. Even with stricter VA manufactured home loan requirements and approval process, it’s still a worthwhile option for veterans, service members, and eligible surviving spouses.
Are you planning to buy a manufactured home? Share with us in the comment box below why you want this type of house!
Aidan has been writing about personal finance for over 6 years. Prior to this, he worked as a Corporate Finance Analyst where he specialized in Due Diligence, Company Valuations and more. He is a CFA charterholder.
