Can You Get a Mortgage For a Manufactured Home? FAQs About Financing Manufactured Homes

Posted by on Monday, April 3rd, 2023 at 10:32am.

Can You Get a Mortgage For a Mobile Home?Purchasing manufactured homes is a popular choice among people looking for housing flexibility. What is a manufactured home, though? They're also known by a variety of other names, such as modular homes, RTM (Ready-to-Move) homes, and mobile homes. Can you get a loan on a mobile home? In almost every instance, getting a mortgage on a manufactured home is impossible. However, the longer answer requires us to dive into the nuances of mortgages, land titles, and they types of manufactured homes.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

What Are the Different Types of Manufactured Homes?

Modular Homes

These types of structures are built in sections indoors, in a building centre or factory. The sections are then transported to the building site and put together on a permanent foundation. Once permanently assembled and anchored in place, the exterior is completed. Once a modular home is put in place, you can't honestly tell that it was assembled on-site as opposed to constructed on-site from the ground up. It's considered one of the most sustainable construction techniques because it reduces resources spent on shipping.

Ready-to-Move Home (RTM)

This type of structure is also constructed in a building centre or factory and is hauled to the home site where it is anchored to the foundation. It's similar to the modular home, but it is built in one piece. Once the home is firmly set on the foundation, it's completed with the addition of a heating and cooling system and stairs.

Mobile or Manufactured Home

This type of home is not permanent and isn't put on a foundation. It's a one-storey home constructed on a street frame. One is referred to as a single-wide home but you can put two structures together so it looks less like a trailer, and is referred to as double-wide. It has a serial number just like a VIN on a motor vehicle. It's taken to the home site and placed on a non-permanent type of foundation, such as blocked wood, a concrete pedestal, or steel piles. On one level on the temporary foundation, a skirt is put around the home's perimeter for insulation purposes and visual appeal.

What's The Difference Between a Manufactured Home & a Modular Home?

Modular homes and mobile homes are often confused with each other, but they are actually quite different. While both are built in a factory, modular homes are constructed in sections or "modules" that are transported to a building site and assembled on a foundation.

Mobile homes, on the other hand, are built on a steel chassis with wheels and can be moved from one location to another. One significant difference between the two is that modular homes can be purchased with a traditional mortgage, just like a site-built home. Mobile homes, on the other hand, are classified as personal property and are often financed with a chattel loan, which is more similar to a car loan than a mortgage.

You cannot get a mortgage on a mobile home. The only way one can mortgage a home such as this is if the home is if you're buying vacant land on which the home will sit.

How to Purchase Manufactured Home & Land at the Same Time

Buying a manufactured home and a plot of land at the same time requires careful planning and research. When using this strategy, it's important to note that the mortgage will be tied to the land, not the manufactured home. The home itself will be a separate purchase made at approximately the same time.

The first step is to determine your budget and financing options. You may be able to obtain a land-home package loan, which combines the purchase of the land and the manufactured home into one mortgage.

Next, you'll need to find a suitable piece of land that meets your needs and budget. Consider factors such as location, zoning regulations, and utility availability. Once you've found a suitable piece of land, work with a reputable manufactured home dealer to choose a home that fits your needs and budget.

The dealer can help coordinate the delivery and installation of your new home on the purchased land. Working with professionals with experience with land-home packages is important to ensure a smooth and successful transaction.

Considerations for Financing a Manufactured Home

When you are purchasing the land as well as the home, you have many different financing options. These often depend on:

  • The type of foundation you have, i.e., cement basement, concrete footing, wooden blocks. You may find that lenders are leery of homes that can easily be moved away under the cover of night.
  • The age of the home. What is the life left in this home? The newer it is the more likely you will get financing. The lender will want their money back before the house wears out.
  • The way it was constructed. As per the definitions above, the lender will want to know the materials and methods used to construct the home.
  • The down payment is critical. If you put less than 20% down your home will be under more scrutiny by Canada Mortgage and Housing. The higher your down payment, the better.
  • Inspection results. Your lender will most certainly insist on a home inspection and a professional appraisal to ensure your home is worth what you have offered (in the case of a resale home).

Find the Right Financing for Your Manufactured Home Purchase

Purchasing a manufactured or mobile home can be a viable and cost-effective option for those looking to become homeowners. It's essential to understand the differences between these types of homes and carefully consider your financing and land options before purchasing. Working with experienced professionals, such as reputable manufactured home dealers and lenders, can help ensure a successful and stress-free buying process. By doing your research and making informed decisions, you can find the perfect home and land combination that meets your needs and budget.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

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