Mobile Home Financing in Texas

Mobile Home Mortgage Types

Conventional Mortgage Loan

The Conventional Mortgage “Land & Home” generally offers the lowest interest rate.  A conventional mortgage bundles everything together - the mobile home, the land, and the land improvements.  With this type of mortgage, you normally need a larger down payment. Expect the down payment to be at least 20% for a conventional mortgage. A typical down payment can cost you tens of thousands of dollars depending on the property and home you purchase.  Traditionally a conventional loan is usually better for those who are buying their second or even third home where they can apply the equity in their old home toward the purchase of a new home.

Chattel Mortgage

This is a personal property loan that is most often used for mobile home purchases that are NOT going to be placed on a permenent foundation. A mobile home that isn’t on a fixed foundation is considered personal property, and must be funded as such. Click here to find out more about chattel loans in Texas.

Land - in - Lieu Financing

This is financing for a manufactured home to be located on private property in which the land is used as collateral for the loan. Lenders will allow purchaser to use all or a portion of the land equity instead (in-lieu) thereby reducing the cash down payment requirement. This is a viable option when financing a mobile home with land, and not a home itself.

Home Construction Loan

This is a temporary loan that is used to make funds available to the manufactured home retailer and/or contractors on a scheduled basis as various elements of the construction are completed. At the completion of the building/construction process this loan is paid off from the proceeds of the permanent loan.

FHA Insured Loans For Mobile Homes

FHA insures the originating lender against loss if the borrower defaults. There are numerous requirements and restrictions on a FHA manufactured home loan, including the approval of the home, retailer, and installation. The loan terms on approved FHA manufactured home loans is typically 20 years for a single section home and 25 years on a multi-section home. Down payment requirements and interest rates for FHA loans on mobile homes are much lower than conventional manufactured housing financing.

The minimum home standards to qualify for an FHA-insured mortgage are:

• Must have a floor area of at least 400 square feet

• Must be classified and subject to taxation as real estate

• Must be built after the implementation of the HUD Code (June 15, 1976)

• Must be built on and remain on a permanent chasis

• Property placement must be above the 100-year return frequency flood elevation

Cash Deals

When paying for a mobile home and installation with money already in the bank, it’s referred to as a “cash deal.” Most mobile homes are sold with the buyer using a check for payment. This home financing option is direct between buyer and seller.

Can Current High Interest Rates Affect My Mobile Home Loan Payments?

High Interest Rates Are Affecting Manufactured Home Financing Options.

The impact of high interest rates is significant on mobile home mortgage payments. For instance, an FHA loan typically requires a down payment of 3.5% of the cost, which may seem affordable. However, unless refinanced later on, the remaining amount of your mobile home loan will be subject to the current prevailing interest rates. As of this year, that rate is among the highest in the last 20 years. Additionally, longer-term manufactured home loans accumulate more interest over time, resulting in a larger total borrowed amount compared to shorter-term loans with lower interest rates.

How Can I Reduce The Effect of High Interest Rates On My Home Buying Process?

If you're concerned about the impact of high interest rates on your mobile and manufactured home financing options, there are several things you can do to minimize their effect. One option is to make a higher upfront payment, which allows you to opt for a shorter loan period. By doing so, you'll accrue less interest over time and borrow a smaller total amount for your mobile home loan. Another approach is to keep an eye on interest rate trends and wait for them to decrease to a more favorable level. This means waiting on buying a home, but if you can wait, interest rates may go down in the future. This way, you can ensure that your monthly loan payments remain within your financial means. Lastly, despite the current interest rates, you may choose to proceed with your home purchase plans. In this case, you can keep the possibility open of refinancing in the future, if/when interest rates decline.

If you’re not sure how to navigate current interest rates, go ahead and contact us for help and advice!