Every year, the United States Department of Agriculture provides billions of dollars in loans that help people purchase their homes. These low-interest lending programs provide a path to homeownership for hundreds of thousands of people—and if you’re thinking about buying a manufactured home, you should know that you might be eligible for one of them.
If you live in a rural area and have been wondering how to get a loan for a mobile home, USDA manufactured housing loans might be exactly what you need. Let’s look at what these loans are, who qualifies for them and how a homebuyer can apply for one.
What Is a USDA Manufactured Home Loan?
USDA loans are low-interest and zero down payment loans that are intended to help people in rural parts of America afford quality housing. There are three major types of USDA manufactured housing loans:
- Guaranteed Loans: Mortgages originated by a private lender and guaranteed by the USDA (much like FHA loans).
- Direct Loans: Mortgages issued directly by the USDA for people who are currently without safe and sanitary housing and ineligible for other sources of financing.
- Home Improvement Loans and Grants: Loans and grants that help people repair and improve existing housing.
Both guaranteed loans and direct loans can be used to buy a manufactured home. (Unfortunately, manufactured homes don’t qualify for USDA home improvement loans.) Next, we’ll find out who’s eligible for these loans.
Am I Eligible for a USDA Loan?
You don’t have to be involved in any agricultural profession to get a USDA loan. However, there are some eligibility requirements, which vary by program.
Anyone thinking about applying for a USDA manufactured home loan should carefully read the eligibility requirements for the specific program they’re applying for. A quick summary of the requirements that these programs have in common includes:
- The applicant must be a U.S. citizen or lawful permanent resident.
- The applicant must live in an eligible rural area as determined by the USDA.
- The applicant must have a household income below a certain threshold which varies by area.
- The applicant must use the property as their primary residence and cannot use it to produce income.
The manufactured home you’re buying must also meet certain USDA requirements, including:
- Must be at least 400 square feet and 12 feet wide (for a single wide mobile home) or 20 feet wide (for a double wide mobile home).
- Must comply with the federal HUD code for manufactured home safety and quality. (All new manufactured homes meet this code.)
- Must be located in a rural area (although some outer suburban areas may qualify).
- Must be covered by a manufacturer’s warranty.
As with any loan, applicants with better credit will typically receive more favorable terms, but people with any credit score can and should apply. Homebuyers with lower credit may be able to use alternative references such as landlords.
The USDA Rural Development Loan Process
- The application process for a USDA manufactured home loan begins with talking to a lender that issues USDA loans. To get started, check the USDA’s approved lenders database for lenders near you.
- Once you’ve found a lender, they’ll guide you through the prequalification process for the specific loan you’re applying for. During prequalification, a loan agent will work with you to determine how much you may be eligible to borrow. If your prequalification is approved, you’ll move to a more intensive step called preapproval.
- During preapproval, the lender will perform a hard credit inquiry and will ask to see forms such as W-2s and tax returns to determine your debt-to-income ratio. They’ll provide you with a contingent offer for how much you qualify for, and you can start house-hunting.
- When you find a great manufactured home for sale, the USDA will send an appraiser to ensure that the home you’re buying meets their standards.
- You’ll sign a purchase agreement, and your loan will move to the processing and underwriting stage. This can take longer with a USDA loan than with a traditional mortgage, as both the lender and the USDA must approve the loan, but buyers with a credit score above 640 can qualify for expedited underwriting.
- You’ll sign the closing paperwork for your new manufactured home and begin construction.
Looking at your options for financing a manufactured home? MHVillage offers expert advice. Read up on the top mobile home financing companies, or explore the different types of mobile home financing available.