can you get a usda loan on a manufactured home

Yes, it is possible to get a USDA loan on a manufactured home. However, there are certain criteria and requirements that need to be met in order to qualify for this type of loan. Let’s take a closer look at what you need to know about USDA loans and manufactured homes.

What is a USDA Loan?

A USDA loan, also known as the Rural Development Guaranteed Housing Loan Program, is a mortgage loan offered by the United States Department of Agriculture. It is designed to help low-to-moderate income borrowers finance homes in eligible rural areas.

One key feature of USDA loans is that they offer 100% financing, meaning no down payment is required. This can make them an attractive option for homebuyers who may not have significant savings for a down payment.

Eligibility Requirements for USDA Loans on Manufactured Homes

While USDA loans are typically associated with single-family homes, they can also be used to purchase or refinance a manufactured home. However, there are several eligibility requirements that must be met:

  • The manufactured home must be classified as real estate and permanently affixed to a foundation.
  • The home must be new and purchased from an approved dealer or retailer.
  • The borrower must meet income eligibility requirements, which vary depending on the location of the home and the number of occupants.
  • The home must be located in an eligible rural area as defined by the USDA. You can check the USDA’s website or consult with your lender to determine if your desired property qualifies.
  • The borrower must have a credit score of at least 640, although some lenders may have additional requirements.

The Loan Application Process for Manufactured Homes

Applying for a USDA loan on a manufactured home involves a similar process to that of traditional mortgage loans. Here are the steps typically involved:

  1. Prequalification: The borrower submits their financial information and credit history to a lender for an initial evaluation of their eligibility.
  2. Loan Application: Once prequalified, the borrower completes a formal loan application and provides supporting documentation, such as income verification and bank statements.
  3. Appraisal and Inspection: The lender arranges for an appraisal and inspection of the manufactured home to determine its value and its compliance with USDA standards.
  4. Loan Underwriting: The lender reviews all the submitted documents and makes a final decision on the loan application.
  5. Closing: If the loan is approved, the borrower and seller complete the necessary paperwork, and the funds are disbursed for the purchase of the manufactured home.

Advantages and Considerations of USDA Loans for Manufactured Homes

There are several advantages to obtaining a USDA loan for a manufactured home:

  • No Down Payment: USDA loans offer 100% financing, allowing borrowers to purchase a manufactured home without a down payment.
  • Favorable Interest Rates: USDA loans often have competitive interest rates, which can result in lower monthly mortgage payments.
  • Flexible Credit Requirements: While a minimum credit score of 640 is required, USDA loans may be more lenient when considering factors such as a borrower’s credit history.

However, it’s important to consider the following before pursuing a USDA loan on a manufactured home:

  • Location Restrictions: Manufactured homes must be located in eligible rural areas, which may limit the options for homebuyers seeking properties in more urban or suburban areas.
  • Manufactured Home Requirements: The home must meet certain construction and safety standards set by the USDA, including proper foundation and tie-down requirements.
  • Income Limits: USDA loans have income limits based on the location of the home and the number of occupants, so borrowers must ensure they meet these requirements.

In conclusion, while it is possible to obtain a USDA loan on a manufactured home, there are specific criteria and requirements that must be met. The home must be classified as real estate, meet certain construction standards, and be located in an eligible rural area. Additionally, borrowers need to meet income eligibility requirements and have a minimum credit score of 640. Before pursuing a USDA loan on a manufactured home, it’s important to understand the advantages and considerations associated with this type of financing.