Your Complete Guide to VA Loans for Mobile Homes and Manufactured Properties

By Bill Lyons | Published on October 3, 2023

Veterans and active duty service members may be eligible for a special type of mortgage known as the VA loan, which is backed by the U.S. Department of Veterans Affairs (VA). VA loans are designed to support those who have served our country, offering them significant advantages like no down payments, limited closing costs, and more favorable terms than conventional loans.

However, a common misconception is that borrowers can’t use a VA loan for mobile home purchases. Many types of properties qualify for VA loans, including manufactured homes. Unfortunately, not all lenders allow you to purchase a manufactured home with their VA loan programs, but many do, including Griffin Funding.

Keep reading to learn more about using a VA loan for mobile home purchases to help you determine if you’re eligible for the benefits of this unique financing option.

Can a VA Loan be Used to Purchase a Mobile Home?

VA loans are known for their versatility. However, we must clarify that VA loans for mobile homes are possible. Today’s modern “mobile home” is actually manufactured or modular and permanently affixed to a foundation. A traditional mobile home is “mobile,” so it doesn’t have a permanent foundation, making it easy to move. So, while VA loans can’t be used for traditional mobile homes built before June 15, 1976, they can be used for manufactured homes.

Manufactured homes are those built after that date and adhere to specific construction and safety standards. Therefore, getting a VA loan for a manufactured home is possible if you find a lender who offers them.

Pros and Cons of Financing a Manufactured Home with a VA Loan

VA manufactured home loans aren’t offered by every VA loan lender. However, you can still use a VA manufactured home loan. What you can’t do, though, is use VA loans for mobile homes built before June 15, 1976, so keep that in mind.

Just like every type of home loan, VA manufactured home loans have pros and cons. Understanding these benefits and drawbacks will ensure you make the right decision for you and your family.

Pros of manufactured home VA loans

The pros of manufactured home VA loans are the same benefits you get when you use a VA loan for any other type of primary residence and include the following:

• No down payment requirement: VA loans generally don’t require down payments unless you’ve already used your VA loan entitlement on another property and haven’t sold it. This can make homeownership more accessible for veterans and active duty service members.
• Limited closing costs: VA manufactured home loans come with limited closing costs. The costs not permitted by the VA are paid by the seller, making this loan more affordable for borrowers.
• Competitive interest rates: VA loans offer competitive rates compared to traditional financing options, which can lead to lower monthly payments and savings over the life of the loan.
• No PMI required: Unlike conventional loans, where borrowers might have to pay private mortgage insurance if they don’t make a certain down payment amount, VA loans don’t require PMI, which can result in further savings.

Cons of manufactured home VA loans

While VA loans for manufactured homes come with many benefits for eligible borrowers, they also have potential drawbacks, such as:

• Depreciation: Unlike traditional homes, manufactured homes are similar to vehicles and can depreciate in value over time. This could make selling or refinancing them more challenging in the future.
• Loan limits: How much you can borrow depends on where the home is located and how much of your entitlement you’ve already used. You can use a VA loan calculator to determine how much you can borrow based on whether you’ve used a VA loan before or are a military first-time home buyer.
• Land restrictions: If the manufactured home isn’t permanently affixed, it may not qualify for a VA loan. This is because VA loans for mobile homes are secured by the home and land where it stands. If the home isn’t attached to the ground, it’s considered personal property rather than real estate. Additionally, you may need to own the land to secure a VA loan from a lender.
• Resale challenges: While getting a VA loan for a manufactured home is possible, these homes are typically harder to sell than site-built homes because of the social stigma around manufactured homes and the perceived depreciation.

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How to Get a Manufactured Home VA Loan

While VA mobile home loans don’t technically exist because true mobile homes aren’t affixed to a permanent foundation, you may still qualify for a VA loan for a manufactured home if you and the property meet specific lending criteria.

Lending requirements vary by lender, so it’s important you understand the criteria before applying.

Eligibility

Before securing a VA manufactured home loan, you’ll need to determine if you’re eligible by obtaining your Certificate of Eligibility (COE) from the VA. This document confirms your entitlement to the VA home loan benefit. You’ll also need to meet your lender’s criteria, which means proving income and creditworthiness.

Additionally, the VA requires the property to meet specific standards to qualify for this loan. Generally, a manufactured home must be affixed to a foundation; thus, it can’t be a true mobile home.

Requirements

As mentioned, both the borrower and property must meet certain requirements to qualify for a VA loan for a manufactured home.

The VA sets minimum property requirements (MPRs) for all properties purchased with a VA loan to ensure it’s safe, sanitary, and structurally sound. The VA requires that manufactured homes be affixed to a permanent foundation.

In addition to the VA’s requirements, the home must be classified as real estate to qualify for a home loan and meet construction standards legally mandated for manufactured homes.

The borrower must meet the VA’s and lenders’ requirements to qualify for the loan. The VA doesn’t set minimum credit score provisions, so they vary by lender, but most like to see a score of at least 620.

One of the benefits of VA loans for manufactured homes is that down payments aren’t necessary. However, if you’ve already used your entitlement and it hasn’t been restored, you may owe a down payment to cover the difference between the loan amount and what the VA will guarantee.

While the VA limits closing costs for borrowers, you’ll still be required to pay the VA funding fee. If this is your first time using the VA loan, your funding fee will be 2.15% of the loan amount. However, if you’re already using your entitlement, you’ll pay a funding fee of 3.3%.

Financing Alternatives for Mobile and Manufactured Homes

While the VA manufactured home loan is a viable option for financing your home, they’re not the only form of financing available. If you want to purchase a mobile or manufactured home, there are other financing options available through Griffin Funding, such as:

• Conventional loans: With conventional mortgages, you can expect competitive interest rates and terms, but they require higher credit scores and a larger down payment than VA loans.
• FHA loans: The Federal Housing Administration guarantees loans for manufactured homes and lots. FHA loans come with lower credit score requirements and smaller down payments compared to conventional mortgages. However, borrowers must pay an upfront mortgage insurance premium (MIP) and an annual MIP, adding to the cost of the loan.
• Chattel loans: Chattel loans are personal property loans that can be used for mobile homes that aren’t considered manufactured homes and don’t qualify for home loans because they’re not permanently attached to land or a foundation. These loans offer a faster and easier approval process and require a smaller down payment. However, interest rates on these loans are higher than most mortgages since the loan isn’t secured by real estate.
• In-park financing: Many mobile home parks offer financing options for homes located within the park. With this option, you can expect a smoother approval process and faster closing. However, interest rates and terms may not be as favorable as other financing options.

Secure a Manufactured Home with Griffin Funding

VA loans for mobile homes—those not affixed to a permanent foundation—aren’t available. However, you can use a VA loan to purchase a manufactured home. Whether this option is right for you depends on your personal needs, financial situation, and long-term housing goals.

Unlike many other VA loan lenders, Griffin Funding offers VA loans for manufactured homes. We simplify the process of securing a VA loan, from obtaining your COE to closing the deal. Apply for your first VA loan with Griffin Funding today.

Bill Lyons

Bill Lyons is the Founder, CEO & President of Griffin Funding. Founded in 2013, Griffin Funding is a national boutique mortgage lender focusing on delivering 5-star service to its clients. Mr. Lyons has 22 years of experience in the mortgage business. Lyons is seen as an industry leader and expert in real estate finance. Lyons has been featured in Forbes, Inc., Wall Street Journal, HousingWire, and more. As a member of the Mortgage Bankers Association, Lyons is able to keep up with important changes in the industry to deliver the most value to Griffin's clients. Under Lyons' leadership, Griffin Funding has made the Inc. 5000 fastest-growing companies list five times in its 10 years in business.