Are you considering building a modular home, but you are worried it will be difficult to secure financing? Modular homes offer an affordable and convenient housing option, particularly for first-time homebuyers. Securing financing for these homes is the same as any new construction home loan. You can secure financing for your dream modular home with the right information and resources. Let’s delve into the nuances of modular homes and understanding the distinctions between mobile homes, manufactured homes, and modular homes. We will also explore various financing options available to prospective buyers and shed light on the benefits of each.

Understanding the Terminology:

To navigate the financing landscape for factory-made homes, it’s essential to understand the differences between mobile homes, manufactured homes, and modular homes. Mobile homes, now known as manufactured homes, are built in factories and constructed on a permanent chassis. On the other hand, modular homes are also factory-built but adhere to state and local building codes, similar to site-built houses.

Mobile homes have a vin number and are not affixed to a permanent structured foundation. Loans for these home are generally classified as personal loans, similar to vehicle loans. They usually incur higher interest rates and are often more costly overtime as mobile homes depreciate significantly. Also consider that mobile home quality is often sub par, so overall lifetime maintenance costs are much higher than a traditional built home. 

Modular home construction offer an alternative that maintains all the best parts of conventional construction, quality, appreciation, energy efficiency, while also bringing together speed and affordability. Modular home financing is exactly like traditional construction loans. 

Financing Options for Modular Homes:

1. Fannie Mae: The Fannie Mae MH Advantage Program offers fixed-rate mortgages with lower interest rates for modular homes. With a minimum 3% down payment and a credit score of at least 620, this program provides favorable terms for eligible buyers.

2. Freddie Mac: Like Fannie Mae, Freddie Mac offers loans for modular homes, including fixed-rate and adjustable-rate options. Meeting specific criteria, such as a minimum width of 12 feet and 400 square feet of living space, is necessary.

3. FHA Loans: The Federal Housing Administration provides FHA loans for manufactured and modular homes. Title I loans cover the purchase of the home without the land, while Title II loans encompass both the home and the land. These loans offer flexibility and have relatively low borrowing limits.

4. VA Loans: Eligible military members, veterans, and their families can benefit from VA loans to purchase manufactured or modular homes. With no down payment requirement and varying credit score thresholds depending on the lender, this option provides excellent support for those who have served.

5. USDA Loans: Backed by the US Department of Agriculture, USDA loans are available for manufactured or modular homes. Meeting certain criteria, such as a minimum living space of 400 square feet, buyers can take advantage of no down payment requirements.

Choosing the Right Financing Option:

To determine the ideal financing option for your modular home, consider the type of home you wish to purchase and assess the eligibility criteria for each program. Factors such as down payment, credit score, and property standards will play a role in decision-making.

Once you’ve chosen your floorplan, Evolution Modular will provide you a banking packet to take to your preferred lender, inside they will find floorplans, specifications, and information about the process. They will also learn about our national association memberships and qualifications. At Evolution Modular Homes, we will guide you through your home buying process step by step. 

Take the first step toward homeownership and discover the possibilities with Evolution Modular. Contact us today to learn more about our affordable modular home options. Your dream home awaits!