VA loans for manufactured & modular homes: Everything you need to know
VA loans are an amazing option for service members who are looking to purchase a home with little to zero money down. The requirements are more flexible than some other types of loans, encouraging many first-time homebuyers to take the leap into home ownership. But did you know that there are specifications on what type of home you can use a VA loan on? Let’s talk about an eligible VA loan manufactured home and a VA loan modular home.
What is a manufactured home?
You might recognize a manufactured home by a different name: a mobile home. They’re a more affordable alternative to housing built on-site. These types of homes are built in a factory and typically towed to the home lot upon completion. These homes need to meet HUD building codes. HUD is the U.S. Department of Housing and Urban Development and maintains safe and affordable housing for American residents.
While the most recognizable manufactured homes are single and double-wide trailers, there are other options available that can appear similar to single-family homes.
Manufactured homes will have a “red tag” which is a metal ID plate on the outside of the home. There will also be a sticker inside the home with information about the house. This is called a “data plate”. Mobile homes also have axles, wheels and a steel chassis for towing purposes.
Can you buy a manufactured home with a VA loan?
The short answer? Yes, and Guaranteed Rate is one of the few lenders to offer VA loans for manufactured homes. You might be able to guess that the longer answer is "it depends on the lender."
VA loans are only guaranteed by the Department of Veterans Affairs, meaning the VA doesn’t lend money itself. This means it’s up to private lenders to set any VA manufactured home guidelines by which they loan money. They still have to follow the requirements set by the VA, but they can set additional rules called “overlays.” Ginnie Mae is the only investor for VA loans used for manufactured housing.
These rules can sometimes mean that certain lenders are unwilling to extend loans for manufactured homes. In fact, many lenders refuse to offer VA loans for manufactured homes. This is common for many reasons, including
- Shorter life expectancy of a mobile home. They’re more likely to be damaged by a storm, and mobile homes don’t appreciate in value as often as single-family homes.
- The default rate for manufactured homes is higher than traditional single-family homes. As such, lenders may view manufactured home loans as riskier investments
Guaranteed Rate’s VA loan terms for manufactured homes
Guaranteed Rate is one of the few lenders that offers VA loans for manufactured homes. Below are some of the VA manufactured home guidelines:
- 15-, 20- or 30-year fixed rate mortgage options only (no adjustable rate mortgages)
- One unit only
- Loan is ≤ $970,800
- Credit score of 580-599 for a DTI of 45% (Debt to Income Ratio is the percentage of a person's monthly earnings used to pay off all debt obligations. Lenders consider two ratios, constructed in slightly different ways: the back-end ratio and the front-end ratio.)
- Credit score of 600-619 for DTI of 55% (with some exceptions)
- Credit score ≥ 620 for DTI above 55%
- LTV options up to 100% (Loan-to-Value (LTV) Ratio is the ratio of the mortgage loan amount to the property's appraised value or selling price, whichever is less.)
One of the biggest requirements that differs from modular homes is the structural certification. This is a certificate that certifies that all VA manufactured home foundation requirements are met and have been inspected and approved by a licensed professional or local/state/federal authority. All foundation requirements are based on the PFGMH (Permanent Foundations Guide for Manufactured Housing).
Guaranteed Rate also now offers cash-out refinances for VA loan manufactured homes. Some guidelines for this service are:
- Doublewide or greater
- Max loan amount $970,800
- FICO 580
- Must be titled as real estate prior to closing
What is a modular home?
Most commonly, modular homes are built in sections in factories, shipped to the home lot and assembled like a traditional residential stick-built house. Stick-built means that a home is constructed on-site using traditional home-building techniques. Modular homes come in three or more pieces (as opposed to a manufactured home, which comes in two).
While the pieces are constructed individually in factories, they are combined by contractors to form the completed modular home. Even more so than a modern mobile home, modular homes can be indistinguishable from single-family homes in appearance.
These types of houses must meet state or local guidelines, freeing them up from the federal guidelines of HUD that manufactured homes have to follow.
Can you buy a modular home with a VA loan?
While it can be difficult to get a VA loan for a mobile home, getting a VA loan for a modular home is more common. In fact, Guaranteed Rate has no additional requirements for a modular home, unlike the overlays for a manufactured home.
Guaranteed Rate’s VA loan terms for a modular home
Guaranteed Rate considers a modular home the same as a single-family, stick-built house if a home is built in accordance to requirements of local building codes and is assembled on a foundation. The main difference being a modular home is made out of three or more pieces.
If, instead of buying an existing modular home, you purchase a new modular home to be assembled on a lot, this would be considered a new construction. Any requirements for this situation would be based on the VA’s new construction qualifications. It is important to note that these types of loans can be difficult to acquire. Some of these qualifications are:
- DTI is below 41%
- No bankruptcy in the past two years
- Income requirements based on family size
- Finished home is used as primary residence
- Total loan amount is ≤ $647,200
- Property must reside in VA-approved area and must be inspected by an approved professional
VA loans are a great help to many service members and their families. They make buying a home much more affordable. Manufactured homes and modular homes are also a great option for those looking to spend less money on a home. With less money than you’d spend on a traditional single-family home, you can get a surprisingly luxurious manufactured home.
However, not all lenders will offer VA loans for mobile/manufactured homes. It can be easier to find a lender for a modular home. Luckily, Guaranteed Rate lends VA loans for both of these types of housing. While there are specific requirements you’ll need to meet for a manufactured home, a modular home has no extra qualifications (unless it’s a new construction). If you’re interested in getting a VA loan for a manufactured home or a modular home, visit us here.
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply, contact Guaranteed Rate for current rates and for more information.
Guaranteed Rate, Inc. is a private corporation organized under the laws of the State of Delaware. It has no affiliation with the US Department of Housing and Urban Development, the US Department of Veterans Affairs, the US Department of Agriculture or any other government agency.
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