For many people, mobile homes—more commonly referred to nowadays as manufactured homes—are an affordable housing option. However, financing one is not as straightforward as taking out a mortgage for a traditional, single-family house. The government and lenders have rules about which homes qualify for a loan.
The same is true for refinancing. There are special considerations when it comes to refinancing manufactured homes, and not all properties are eligible. Even if you can refinance, you may not be able to tap into equity in the same way you can with a site-built home.
Real Property vs. Personal Property
Before you can refinance your home, you need to determine whether it is real property or personal property.
Real property refers to land plus anything permanently affixed to it. Personal property can be moved, such as a car, boat or furniture.
As their name suggests, mobile homes are built in a way that allows them to move, but it’s a misnomer for today’s manufactured homes. “Typically now, they are not moved once they are set up,” says Jason Huffman, senior director of manufactured housing for Silverton Mortgage.
Still, many mobile homes, particularly older ones, may be titled as personal property, which can make refinancing tricky.
Mobile Homes vs. Manufactured Homes
It’s also worth understanding the different terms that may be used to describe homes that aren’t traditionally built.
- Mobile home: These homes can be transported and prior to July 15, 1976, they were not inspected by the U.S. Department of Housing and Urban Development (HUD). If you have a home that predates 1976, it’s unlikely any mortgage lender will refinance it.
- Manufactured home: These homes can also be transported, but they are built to HUD specifications and affixed to a permanent chassis. “Mobile homes are the more derogatory term for them,” Huffman says.
- Modular home: Like a manufactured home, a modular home is built off-site. However, rather than following HUD specifications, a modular home must follow the same state and local building regulations as site-built homes.
How Lenders Determine If You Qualify for a Refinance Loan
Through the Federal Housing Administration (FHA), the government will insure loans made by private lenders for manufactured homes. Only certain properties will qualify for these FHA loans, though, and even if a property meets government requirements, the final decision regarding whether to approve a loan falls to the lender.
Property Considerations
The government’s Manufactured Home Loan Insurance program doesn’t require a house to be real property, but most lenders won’t refinance homes that are titled as personal property.
“If they are not converted to real property, the lender won’t refinance it,” Huffman says. That can pose a challenge to those who own older homes. “It’s hard to research that title,” he explains.
Fannie Mae and Freddie Mac, which also insure mortgages, have their own rules for mobile home mortgages and refinances. For instance, the Fannie Mae MH Advantage program won’t approve a cash-out refinance on a single-wide home. Most lenders, too, will not refinance a manufactured home if it’s older than 20 years.
Income
The Manufactured Home Loan Insurance program doesn’t have any income limits, but a lender will want to be able to see that you can pay back what you borrow.
How much you need depends on how much you want to borrow. Talk to your lender to learn more about their specific income requirements.
Credit History
Mortgage lenders will also want to see that you have a history of timely payments on other debt. If you are behind on payments or have delinquent accounts, focus on bringing those current before applying to refinance.
Credit Score
As with income, no specific credit score is required by all lenders.
The Manufactured Home Loan Insurance program limits those with credit scores lower than 500 to a 90% loan-to-value ratio. In other words, these applicants can’t be approved for a loan worth more than 90% of their home’s value. Those with scores above 500 can be approved for loans up to 95% of their home’s value.
Other organizations have different requirements. Fannie Mae requires a credit score of 620 for its MH Advantage program, and those with credit scores of at least 680 may qualify for better rates.
Should I Get a Loan When I Don’t Have a Job?
While you need verifiable income to refinance a mobile home, that money can come from various sources:
- Military income
- Social Security benefits
- Rental income
- Business revenue
- Interest and dividends
If you don’t have a job, you may still qualify for a loan if you have enough money coming from these other sources. However, if this income is irregular, carefully consider whether it makes sense financially to take on new or expanded debt.
Risks of Getting a Loan While Unemployed
If you refinance a mobile home and your source of income dries up, you could find yourself facing the following consequences if you are no longer able to make payments:
- Collections activity including calls and mailings
- Reduced credit score
- Repossession or foreclosure on your home
To avoid these outcomes, wait until you have a job or other reliable source of money before taking out a loan for a manufactured home.
Using Personal Loans as an Alternative
Even if your income and credit are sufficient, you may not be able to refinance if your home is considered personal property and you are unable to convert it to real property. Some banks may be willing to refinance a personal property loan for a mobile home in the same way they would refinance a car loan, but you are not likely to get the best rates in this situation.
You may also find it difficult to tap into your equity as lenders don’t like to do cash-out refinances on manufactured homes.
In that case, if you need extra cash, taking out a personal loan might be a better option. Many online lenders have simplified application processes and are willing to extend loans of up to $50,000 or more to qualified borrowers.
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