Maxmodularhomes can establish a connection with multiple qualified lenders that provide a wide range of possible loans for your modular home. These loans include financing programs for applicants with an excellent credit history as well as applicants that may have had credit challenges in the past. The following information will help you get a better understanding of modular home financing.
When it comes to loans, modular homes are classified the same as traditional site-built homes. Due to this, they qualify for the traditional loan options like FHA, VA or USDA loans. A construction loan may be required when buying a modular prefabricated house. There are several factors to consider when applying for your new modular home loan, but you can be sure that your lender will explain and walk you through the whole process.

modular homes financing options
modular homes financing options

FHA LOANS

Insured by FHA, they are the best choice for an applicant that doesn’t have a large down payment or a less than perfect credit. If you have a higher debt to income ratio, we can help you find a lender capable of assisting you with financing. If you have strong compensating factors to help justify your application to a higher percentage of your monthly income for housing payment this could be the case. Your modular home must have been built after June 15, 1976 and be permanently fixed to a foundation for you to qualify for an FHA financing. If the modular house you’re buying isn’t permanently fixed to a foundation, your lender could structure a loan that would allow the foundation to be according to the FHA standards. A low 3.5% down payment, low-interest rates and 30-year loan terms are some of the perks of an FHA loan.

VA LOANS

These are loans designed for veterans. They are often offered to veterans, with a credit score equal or higher than 620, that qualify for a loan. With some VA loans, the cost of the loan will be 100% covered, which means a $0 down payment. With some VA loans, a VA funding fee (that can be financed) may be required. Some lenders may offer VA loans exempt from monthly mortgage insurance fees.

CONSTRUCTION TO PERM LOANS

Construction loans are combined with either an FHA or a conventional loan. During the construction period, which usually takes 4-6 months, the terms in place are the ones in the construction term. Once the construction is done, these change to the terms of the FHA or conventional loan. Because of that, lenders will either do a one or two time close. One time close requires only one closing, and the terms are modified to the permanent loan as soon as the construction is done. With a two-time close loan, closing is required both on the construction loan and the permanent two-time close loan. With multiple closing, higher costs may be associated. As the project progresses, the proceeds of the construction loan are paid out in draws to the contractor/builder. Usually the borrower pays interest-only payments on the draws that the contractor/builder took.

USDA LOANS

The USDA loan is provided by the US Department of Agriculture (USDA) and is a loan similar to the FHA loan. This loan allows lenders to offer more favorable terms and is meant for rural development. These loans do not require a down payment and can loan 102% of the home’s value. The rural development project’s goal is to improve the quality of life in the communities of rural areas. The modular home must be located within the boundary area of a rural community, to be qualified for a USDA loan.