How mobile home refinancing works
If you own a mobile home or manufactured home, you probably already know that mortgage requirements are different for these kinds of properties.
Likewise, mobile home refinancing rules aren’t straightforward either.
Your loan options depend on when the home was built, how big it is, and whether it’s fixed to its foundation, to name a few factors. If you can refinance your mobile home or manufactured home, you might stand to save big on your monthly payments. Here’s what you should know.Check your eligibility for a mobile home refinance. Start here
In this article (Skip to…)
A note on terminology: Today’s “mobile homes” are really manufactured homes. This is true for any mobile/manufactured home built after June 15, 1976. The terms “mobile home” and “manufactured home” are often used interchangeably when referring to today’s manufactured home financing. We use both terms in this article.
Can you refinance a mobile home?
Yes, you can refinance a mobile or manufactured home, but it’s important to note that the process can be different from refinancing a traditional, stick-built home.
Mobile homes are generally considered personal property unless they’re affixed to a permanent foundation and you own the land it’s on. This distinction plays a big role in both your eligibility for refinancing and the types of loans available to you.
Mobile home refinance requirements
Want to refinance your mobile home into a mortgage loan? If so, the first step is to determine whether your home needs to meet certain guidelines to qualify for financing.Check your eligibility for a mobile home refinance. Start here
To refinance your mobile or manufactured home, it must be:
- On land that you own (and that is not located in a mobile home park)
- Affixed to a permanent foundation that conforms to HUD standards
- Titled as real property (real estate)
- Built after June 15, 1976
- Without axles, wheels, or a towing hitch
- A minimum of 12 feet wide and 400 square feet in size
Your mobile home must also comply with building standards set by the U.S. Department of Housing and Urban Development (HUD). The home should have a HUD tag, which is a metal plate certification label found outside the home (pictured below). It should also have a data plate, which is a paper label found inside the home.
A mobile or manufactured home cannot be financed or refinanced without this HUD label, which should be found on the outside of the home.
To get approved for a mobile home refinance, borrowers must also meet certain financial criteria. The required minimum credit score typically ranges from 580 to 620 for most loan types. Additionally, a qualifying debt-to-income ratio (DTI) is necessary. Although the acceptable DTI can vary, aiming for a ratio lower than 43% is generally a good benchmark.
How to refinance your mobile home
Mobile home refinancing is possible, but you need to be ready to jump through some hoops before you close. Here’s a general outline of the process.
1. Find out what kind of mobile home you have
Today, mobile homes are more often called “manufactured homes” or “modular homes.” In fact, the terms are often used interchangeably in the industry. But there are some key differences, and they can affect financing and refinancing options for your mobile home.Check your eligibility for a mobile home refinance. Start here
Raymond Brousseau, Partner with River City Mortgage, explains:
- A mobile home is a residence that has or used to have axles and wheels. It’s titled as a motor vehicle. “True” mobile homes were built prior to June 15, 1976
- A manufactured home is constructed entirely in a factory. It’s brought to the home site in one or more pieces. These come in both single-wide and double-wide varieties
- A modular home is mostly constructed in a factory, but it’s brought to the home site in multiple pieces to finish construction. Once built, you can’t move a modular home. These also come in both single-wide and double-wide homes
2. Determine if your home is real property
If you have it, look at the title to determine if your mobile home is classified as real property. Alternatively, contact your county assessor’s office. This is frequently possible online.
As a rule of thumb, if your home is still technically “mobile,” it cannot be financed or refinanced with a mortgage loan. But if it’s fixed to a foundation and considered real property, it can likely be financed or refinanced.
If your home is fixed to its foundation and considered real property, it can likely be financed or refinanced with a mortgage loan.
Technically, any manufactured home built prior to June 15, 1976, is considered a bona fide mobile home. Those built after that date are considered manufactured homes.
Many mobile homes are permanently affixed to a foundation. These are much easier to refinance if you qualify. That’s because they’re titled as real property. But mobile homes not permanently affixed to a foundation are usually titled and financed as “personal property” and cannot be refinanced with a mortgage loan.
3. If your home is currently titled as personal property, it must be converted to real property before you can refinance
For some homeowners, one of the biggest steps involved with mobile home refinancing is converting their personal property title to a real estate title. That’s because to be eligible for a mobile or manufactured home loan, your home needs to be considered “real property” rather than personal property.Check your eligibility for a mobile home refinance. Start here
Mobile or manufactured homes that don’t meet the requirements listed above are considered personal property. So you might need to make some changes to the home before you can be eligible for a mortgage refinance.
Converting your mobile home title into real property requires:
- Certificate of title to your mobile home
- Copy of your mobile home’s certificate of origin
- Deed to the land on which your mobile home’s permanent foundation is fixed
“In addition, you’ll need a foundation certification performed by a licensed structural engineer,” explains Brousseau. “Plus, the home needs sufficient homeowners insurance coverage to qualify for a mortgage loan.”
This process is easier today in some states, including Virginia, Maryland, Tennessee, Nebraska, Illinois, Missouri, Alaska, Iowa, and North Dakota.
4. Check with a mortgage lender to see if you qualify for a refinance
If you do qualify for a refinance, it’s important to consider the different types of refinancing options, such as a cash-out refinance or a streamline refinance, to determine which one is best for your financial situation.
Before you decide, you should also look at the terms of a new loan. This includes the interest rate, the monthly payment, and any fees that come with the refinance. You should also think about how long you plan to live in your home and if the savings from refinancing will be worth the costs.
5. Shop around for the best mobile home refinance loan rate and terms
When seeking a mobile home refinance, it’s crucial to compare offers from multiple lenders to find the most favorable mortgage interest rate and terms.
Aim to get rate quotes from at least three to five lenders, and ensure that you specify that the property type is a “manufactured home” when using online comparison tools. Mobile home refinance rates are often a bit higher than for traditional homes, and some lenders may not offer such financing options at all.
After choosing a lender, maintain regular communication with your loan officer and have all necessary documents about your manufactured home readily available, especially for the appraiser. If the goal of your refinance is to transition your manufactured home to real property, be sure to lock in your mortgage rate for a duration that accounts for the time needed to affix your home to its permanent foundation.
Mobile home refinance loans
Eligible mobile homes can be refinanced with a variety of mortgage programs. Assuming the home is permanently affixed to land you own and meets property requirements, you may be able to refinance using any of the major loan programs.Check your eligibility for a mobile home refinance. Start here
|Loan type||Credit score minimum||Maximum LTV (%)||Maximum DTI (%)||Unique features or requirements|
|Conventional loan||620||80||43 to 50||Must be on permanent foundation, Real property status|
|Cash-out refinance||620-640||75||43 to 50||Usually higher interest rates|
|FHA refinance loan||580||97.75||43 to 50||Upfront and annual mortgage insurance|
|FHA Streamline Refinance||No minimum||NA||No DTI Check||Must already have an FHA loan. No appraisal required|
|FHA Title 1||No minimum||NA||45||Property can rest on leased land. No appraisal needed|
|VA refinance loan||No minimum||90||41 to 50||Must be a veteran. No mortgage insurance|
|VA IRRRL||No minimum||NA||No DTI Check||Must already have a VA loan, No appraisal required|
|USDA refinance loan||640||100||41 to 50||Rural areas only. Income limitations|
|USDA Streamline Refinance||No minimum||100||No DTI Check||Must already have a USDA loan. Simplified paperwork|
Credit score minimums, debt-to-income ratios, and maximum loan-to-value percentages are not set in stone and can differ significantly among various lenders. These variations often stem from a lender’s own risk assessment criteria, their specialization in certain types of loans, or fluctuating market conditions.
Here’s a little more information about each mobile home refinance loan program and how to qualify.
1. Conventional loans
Borrowers with a credit score of at least 620 are best suited for conventional loans, which have the backing of Fannie Mae and Freddie Mac. Manufactured homeowners typically need at least 5% equity in the home for a conventional refinance.
Fixed-rate mortgages and adjustable-rate mortgages are both available. Cash-out refinancing may be an option if you own a “multi-width manufactured home (single-width are not permitted),” according to Fannie Mae.
“Typically, and this applies with all loan programs, manufactured homes have slightly higher rates regardless of other qualifying factors,” according to Jon Meyer, The Mortgage Reports loan expert and licensed MLO.
2. FHA loans
Manufactured homes that meet HUD guidelines can be refinanced via the FHA loan program. The Federal Housing Administration guarantees FHA loans. They offer flexible credit guidelines and low-down-payment options for both existing homeowners and first-time home buyers alike.
The FHA program requires a credit score of 580 or higher and allows loan terms of up to 20–25 years for mobile or manufactured homes.
FHA streamline refinance
If you have an existing FHA loan, you may qualify for an FHA streamline refinance, which is a simplified, cheaper, and quicker refinance process.
FHA Title 1 loans for mobile homes
To qualify for mortgage financing, you typically must own the land on which your manufactured home is located. But if you rent the land your mobile home is on, you might still have refinance options. You may qualify for an FHA Title 1 mortgage loan.
To qualify for FHA Title 1, you must:
- Lease your lot from an FHA-compliant community or site
- Have an FHA-eligible lease in effect
- Live in the mobile home as your primary residence
- Have your mobile home set on a permanent foundation
Keep in mind that many landlords and mobile home communities don’t comply with FHA mortgage standards. Also, it may be difficult to find a Title 1 mortgage lender.Check your eligibility for mobile home refinancing. Start here
2. VA loans
The U.S. Department of Veterans Affairs backs VA loans, which have low interest rates for veterans and service members. To qualify for a VA manufactured home loan, you typically need a credit score of 620 or higher. And there’s a maximum loan term of 25 years.
VA streamline refinance
If you currently have a VA loan, you may be eligible for the quicker and easier VA Streamline Refinance, or IRRRL.
3. USDA loans
Mobile/manufactured homes may also be eligible for financing with a USDA loan. These mortgages are backed by the U.S. Department of Agriculture and are meant to promote homeownership in underdeveloped regions. USDA loans are only available in designated rural areas, and the mobile home must be less than one year old to qualify.
USDA streamline refinance
A USDA streamline refinance is like an FHA or VA streamline refinance in that it lets you refinance your USDA loan for a better rate and a simpler process.
Pros and cons of mobile home refinancing
Refinancing a mobile home can be a good way to improve your finances, but it also comes with challenges and costs that you need to think about carefully.
Moreover, the process itself has its upsides and downsides, and it’s crucial to know what you’re getting into before making such a significant financial move.Check your eligibility for mobile home refinancing. Start here
- Lower monthly payments: The most obvious plus is that you can often lower your monthly payments. If you can secure a lower interest rate or stretch out your loan term, you’re looking at keeping more cash in your pocket each month.
- Access to quick cash: Opting for a cash-out refinance means you can use your home’s equity to pay for anything urgent. From medical expenses to student loan debt, it’s an option worth considering.
- Potentially better interest rates: If you got your original loan when interest rates were through the roof, now might be the time for a change. A lower rate can save you a good chunk of change over the life of the loan.
Qualifying for a mobile home refinance can be costly, Brousseau cautions. Some of the disadvantages of obtaining a mobile home refinance loan include:
- Closing costs: Few financial transactions are free, and refinancing is no exception. You’ll have to pay closing costs, and if you’re changing your title status, there are additional fees to consider.
- Legal fees: Depending on your situation, you might need a real estate lawyer or a title company. While their expertise is invaluable, it’s another cost to add to your list.
- Property tax implications: If you’re changing your mobile home’s status from personal to real property, be prepared for your property taxes to potentially increase.
- Foundation costs: Sometimes the terms of the refinancing require that you place your mobile home on a permanent foundation. This isn’t a minor expense, so be ready for it.
A mobile home refinance can either improve your financial situation or, if you’re not careful, result in the addition of new debt. Take your time, look at your current mortgage and financial situation, and weigh your long-term goals. When in doubt, it’s always a good idea to talk to a mortgage professional to get a clear understanding of your options.
Mortgage vs. personal property loan: What’s best for a mobile home refinance?
If your manufactured home is titled as real property, you may currently have a mortgage loan.
If your manufactured home is titled as personal property, however, you likely have a personal property loan. These are also called “chattel loans,” and they often come with higher interest rates than mortgage loans.Check your eligibility for mobile home refinancing. Start here
The Consumer Financial Protection Bureau reported that, a few years ago, around two in three purchase loans for mobile homes were higher-priced than mortgage loans. Many of these are chattel loans.
“If you rent the site your mobile home is on, often the only financing option is a personal property loan,” Brousseau says.
If you currently have a personal property loan, you’ll have to convert the title and the loan to a mortgage loan, if possible, in order to refinance at today’s mortgage rates.
The good news? If you meet the requirements, you can refinance either type of loan and likely take advantage of today’s lower interest rates.
However, if you currently have a personal property loan, you’ll want to convert the title and the loan to a mortgage loan if possible. That way, you can refinance into today’s mortgage rates, which are likely to be much lower than your current personal property loan rate.
That requires owning the land you’re on and setting the home permanently on a foundation.
FAQ: Mobile home refinance
Because most lenders require the home to be classified as real property, refinancing options for mobile homes that are not permanently affixed to a foundation (and are considered personal property or chattel) are limited. However, some lenders provide chattel loans, which are designed specifically for mobile homes that do not have a permanent foundation.
Mobile home refinancing costs can include origination fees, appraisal fees, credit report fees, title search and insurance fees, recording fees, and other closing costs. When considering refinancing your mobile or manufactured home, make sure to include these costs in your decision-making process.
While having a good credit score is important for refinancing, some loan programs cater to borrowers with lower credit scores. Investigate FHA, USDA, or VA loans, as they may have more lenient credit requirements. Additionally, consider taking steps to improve your credit score before applying for refinancing.
Not all lenders offer manufactured or mobile home loans. So even if your property meets the guidelines for mortgage financing, you may need to do some digging to find a lender that will work with you. One good option could be to contact a mortgage broker to help with your search. Brokers work with multiple mortgage lenders and may be able to direct you toward a lender that offers manufactured home refinancing in your area. Also note that mortgage lenders enforce minimum loan amounts, which could potentially restrict financing options for lower-priced mobile or manufactured homes.
Although today’s mortgage rates have risen from the record lows seen during the pandemic, mobile home refinancing could be worth it for homeowners who have personal property loans with interest rates that are far higher than mortgage rates. That means refinancing into a mobile home mortgage loan could still create worthwhile savings. For example, chattel loans have interest rates typically exceeding 7%. Refinance a mortgage loan, and you may get a rate closer to 5%, according to recent Freddie Mac data. Lowering your interest rate can save you thousands over the life of the loan. Plus, if you pay private mortgage insurance (PMI), you could refinance and eliminate the monthly PMI fee if you’ve earned enough equity in your mobile home.
Today’s mobile home refinance rates
Crunch the numbers and determine how much longer you’ll stay in your mobile home. Provided you qualify for a lower interest rate, there’s a good chance you could save by refinancing your mobile or manufactured home—even when the upfront costs are considered.
Not sure whether you’d qualify? You can contact a mortgage lender to check your mobile home refinance eligibility.
Loan officers are able to look at your unique situation to tell you whether you’re eligible to refinance and how much you might save.Time to make a move? Let us find the right mortgage for you