Understanding Mobile Home Loans with Land

Champion home exterior mobile home loans with land
Photo courtesy of Champion Homes.

Real property, or the permanent ownership of land and buildings, is one of the keys to building lasting generational wealth for you and your family. Owning a home is the most common method for Americans to enter the world of real property, and a buyer purchasing a site-built house almost always also purchases the land that the home sits on as part of the deal.

Manufactured home ownership is a great way for families to become homeowners, but getting a mobile home loan with land sometimes can be complicated. That’s because manufactured homes often don’t come with the land under them, as standard site-built homes do. That changes the approach to secure financing. This quick guide will help you understand the situations that a manufactured home buyer can face in buying land for their home, as well as offer some tips for getting the loan you need.

How Are Mobile Homes Most Often Purchased?

At first glance, buying a manufactured home may not seem much different from buying a standard stick-built home. Most home buyers will use a database of manufactured homes for sale or work with a mobile home dealer, or they may contact a manufactured home builder and have a new home custom-built. 

However, the question of land ownership is important when it comes to getting a loan for your manufactured home. Some manufactured homeowners have both their homes and the land that they sit on, but some only own the home and are seeking to purchase land, while others are looking for a manufactured home to put on a lot they already own. These scenarios all create different requirements for manufactured home borrowers.

NXT homes by Clayton mobile home loans with land
Photo courtesy of Clayton Homes.

Scenario A: Have a Home, Need Land

Unless a manufactured home is situated on a piece of land that the homeowner owns and is attached to a permanent foundation, the home is in the legal category of “personal property” like a car, rather than “real property” like a standard site-built house. And, without land ownership, the homeowner likely will pay rent on the lot every month, unless the home is on family property or something similar.

If the homeowner wants to buy land for the home, they’ll typically look for a lot either outside of a community or in a resident-owned community where homeowners have co-ownership of the community. Even in the latter scenario, a mobile home loan with land can be difficult to get, and many buyers opt for a chattel loan borrowed against their home or a loan such as an FHA-insured loan that offers government incentives to the lender.

Scenario B: Have Land, Need a Home

A buyer may already own a plot of land but needs a mobile home to place on it. Since the buyer is already a real property owner, they will usually have more options for finding mobile home financing.

Scenario C: Need Both Home and Land

Buyers interested in getting both a manufactured home and a plot of land simultaneously will typically find plenty of options since mobile home dealers and retailers are in a great position to help a buyer interested in purchasing land with their mobile home. Buyers may also find it easier to get a traditional mortgage from a bank if they are buying their land and mobile home as a package deal; this is known as a “land-home mortgage” and rolls the loans for both the land and the home into a single payment.

Getting Your Loan and Your Land

mobile home loans with land selling a mobile home well litGetting a mobile home loan with land isn’t always easy. So, how can you increase your odds of getting a land loan for a manufactured home you love?

First, it’s important to know what you can expect. You can start by using the financing pre-qualification tools that many dealers offer. This will help you get an idea of what you may qualify to borrow. With that in mind, check the price of manufactured homes similar to what you’re looking for. Take stock of your situation and familiarize yourself with the different types of mobile home loans.

Another important step is to check your credit score regularly and continually work to improve it (or maintain it, if you have a good score already). Actions, like paying down debt and keeping card utilization low, will always help your ability to get a loan, no matter what kind. Finally, it’s crucial to ensure that the mobile home and/or land you borrow against is well-maintained and HUD compliant, as lenders want to see a commitment to maintaining your investment’s value and following the law.

The process of obtaining a mobile home loan with land may involve a few extra steps compared with conventional home financing, but don’t let it keep you from your dream home. For more in-depth information on the process of choosing and financing a manufactured home, keep our MHVillage Mobile Home Buyer’s Survival Kit handy—it’s full of useful tips, the information you need to know, and more.