The process of shopping for a used mobile home can be exhausting and even a little bit intimidating. To make matters more complicated, for the millions of Americans who have a not-so-great credit score, credit can be a major source of worry when applying for loans.
However, remember that mobile home sellers want to make a deal. “What credit score do I need to buy a mobile home?” is a question with no one right answer. Even if your credit is less than perfect, there are plenty of loan options available for responsible borrowers. And, once you’ve got your manufactured home, you can be well on your way to rebuilding your credit. Let’s take a look at how it’s done.
How Can a Credit Score Affect Your Ability to Buy a Manufactured Home?
When any prospective home buyer applies for a mortgage or another type of manufactured home loan, the lender will look at the applicant’s credit score and credit report through organizations like Equifax and TransUnion. Credit scoring systems vary, but the most common systems break into three tiers:
- Good (700-850)
- Fair (600-700)
- Poor (Below 600)
The bank will also scan your credit report for charge-offs, unpaid bills, high card utilization, or other things that a bank sees as indicators of risk. An applicant with a low credit score may either be denied for a loan or offered a loan at a higher interest rate that may not be affordable.
However, that’s no reason to get discouraged. Remember that there’s no one specific score that you need to get financing on a high-quality mobile home. Someone with bad credit can often still get an affordable manufactured home loan—you just have to know where to look.
Manufactured Home Financing
Many different financing options are often available to manufactured home buyers, even if you don’t have great credit. Make sure to investigate all of the following options when searching for an affordable manufactured home loan:
- FHA Loan: You may be able to get a Federal Housing Administration loan even if your score is as low as 500, and the loan can be used for many different types of manufactured home purchases. Remember that you’ll have to prove that you will use the home as your primary residence, and there are limits on how much you can borrow.
- Dealer Financing: Mobile home dealers are a common source of financing, and they’re often willing to work with buyers who don’t have perfect credit.
- VA Loans: If you served in any branch of the U.S. military, you may be able to get a manufactured home loan through the Veterans’ Administration.
- Chattel Mortgage: If the manufactured home you want is registered as a vehicle rather than as real estate and is not permanently attached to a foundation, a chattel mortgage may be an option available to you. Note that these loans often carry higher interest rates.
- Personal Loan: You may be able to get a loan from a friend or relative. Make sure to put the terms in writing to avoid any confusion or potential legal hassles later.
What to Expect
Here’s what you should be prepared for when applying for a mobile home loan with bad credit
- Your down payment will be higher—usually at least 10 percent of the principal. However, there are resources to help you raise money for a down payment.
- A lender will look at other factors besides your credit score, including your annual income and debt-to-income ratio. If you can, pay down some debt before you apply so that your ratio is more favorable.
- Make sure you have financial records on hand when you apply.
- If you have a good history as a renter, with no evictions or late payments, make sure to mention this to your lender, as it can work in your favor.
Buying a Mobile Home
Your credit history doesn’t have to hold you back from becoming the owner of a great manufactured home. In fact, buying a manufactured home can be a smart way to start building credit. Since manufactured homes (and particularly used mobile homes) are typically more affordable than stick-built homes, they offer a great starting point for repairing your credit.
Of course, you want to make sure that your manufactured home is a good investment. What to look for when buying a mobile home includes many factors, such as:
- Good structural and cosmetic condition
- A manufactured home community that suits your budget and lifestyle
- A size (single wide, double wide, or triple wide) that offers plenty of space
- Valuation from a reputable manufactured home appraiser such as Datacomp
No matter what your credit looks like, MHVillage can help you find a manufactured home that will make a comfortable and attractive home for you and your family. Check out our guide to Buying a Mobile Home for more tips and tricks, as well as our complete mobile home classifieds, featuring tens of thousands of exclusive listings for the best manufactured homes.