With home prices on the rise, more affordable options such as manufactured or even mobile homes may seem appealing. While using your VA loan benefit for manufactured homes is possible, there are specific eligibility requirements and restrictions you need to be aware of.
It’s also important to know the difference between mobile, manufactured, and modular homes because the VA treats each type differently.
Modular vs. Manufactured vs. Mobile Home
People often use the terms modular, manufactured, and mobile home interchangeably, with varying images in mind. However, these terms refer to different types of homes and specifically describe how they are constructed.
- Modular Home: The name “modular” describes how these homes are built in “modules” or pre-built sections. They are usually installed on a foundation or above a basement or crawlspace and are considered “real property” within the real estate sector. They’re built to look indistinguishable from traditionally built homes and have to meet the same local building codes.
- Manufactured Home: Manufactured homes are factory-built homes constructed on or after June 15, 1976, that comply with Department of Housing and Urban Development (HUD) safety standards. They’re often referred to as “mobile homes”, although this name isn’t technically correct. Similar to modular homes, manufactured homes are pre-built away from the installation site. However, they are entirely put together and transported in their final form to where they will be installed.
- Mobile home: Mobile homes are basically manufactured homes produced before June 15, 1976, meaning they were built without standardized construction and safety regulations.
Does the VA loan cover modular homes?
Yes, VA loans cover modular homes, treating them like traditional homes. These homes must meet the VA’s Minimum Property Requirements (MPRs) and adhere to local and state regulations.
Manufactured homes must also meet the VA’s MPRs but are primarily required to comply with federal HUD guidelines rather than local and state regulations.
Does the VA loan cover manufactured homes?
Yes, VA loans cover manufactured homes, provided they meet the VA’s Minimum Property Requirements (MPRs) and other specific conditions:
- The home must be installed and permanently affixed to a foundation, not resting on a temporary chassis or metal base.
- It must be classified as “real property,” not “personal property.”
- The home must have a HUD certification tag, which is required for manufactured homes built after 1976.
- The home must be set up on its original site; you cannot move a manufactured home to a new property and finance it with a VA loan.
However, it’s important to note that while the VA loan program allows for financing manufactured homes, not all lenders offer VA loans for these types of properties.
Does the VA Loan cover mobile homes?
Mobile homes are not covered by VA mortgage lending. “Mobile homes” were built before June 15, 1976, when the Department of Housing and Urban Development (HUD) was established. Because mobile homes were created before HUD standardized building guidelines, they do not meet current building standards required for VA loan eligibility.
In fact, no matter the loan type, it is difficult to find a lender who will approve funding for a mobile home constructed before HUD was established.
Modular Home VA Loan Requirements
If you’re interested in purchasing a modular home with a VA loan, you’re in luck. Outside of a few unique property requirements, the process for buying a modular home with VA lending is the same as if you were going to purchase a traditional house.
Here are some of the general requirements you’ll need to meet to secure VA lending:
- Lender Approval: Your chosen lender must be approved by the VA in order to process your VA loan. See our list of top VA-approved lenders here.
- Lender Requirements: To be approved for VA funding, you must meet lender financial requirements. These typically include a credit score above 620, a DTI ratio of 41% or lower, and stable income and employment.
- VA Appraisal: In addition to local and state building standards, the home must meet the minimum VA property requirements. This is determined through a VA appraisal.
- Primary Residence: The home must be used as the veteran’s main home and not a vacation home or investment property.
New Construction Modular Home
If you’re looking to buy a new modular home (one that isn’t already fixed to a permanent foundation) and install it on a piece of land, you’ll likely have a tough time finding willing lenders. Lenders view new modular homes as similar to “new construction,” and while a VA Construction Loan exists, it can be hard to find lenders willing to approve one with a 0% down payment.
A common solution is to get a non-VA construction loan and then refinance it into a VA loan, but you should check with lenders beforehand to make sure this is an option they offer.
VA Guidelines for Manufactured Homes
If you want to buy a manufactured home with a VA loan, it will need to meet the following guidelines to pass lender approval:
- Permanent Foundation: The VA requires a home to be “real property,” which means that it is attached to a permanent foundation. Oftentimes, manufactured homes are placed on temporary foundations, which would not make them real property.
- HUD Tag: Modular homes must have an official HUD tag—a red metal plate that identifies them as HUD-certified manufactured homes–to qualify for a VA loan. It is typically located on the back right exterior of the manufactured home.
- Minimum Square Footage: Single-wide manufactured homes must have a minimum of 400 interior square feet, while double-wide manufactured homes must have a minimum of 700 interior square feet.
Similar to borrowers who want to purchase land for a new modular home, a manufactured home is typically considered “new construction” for lenders, and it is typically difficult to find lenders who are willing.
If you are able to find a lender to fund your manufactured home purchase, your purchase will similarly follow the process of a VA construction loan.
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