What are the financing options available for purchasing a modular home?

What are the financing options available for purchasing a modular home?

There are about as many financing options for building a modular home with a construction loan as there are building a site-built home. That said, our homes have better cost controls in place and there is less risk for the bank.

Yes — you usually have several good options when it comes to financing a modular home. If the home will sit on a permanent foundation and be treated as real property, you can often use the same types of loans people use for traditional site-built homes. Here’s a simple, easy-to-follow look at the most common choices and what they’re best for.

·         Conventional mortgage — If your modular home will be permanently attached to a foundation and classified as real property, there’s a good chance you can finance it with a standard 15- or 30-year mortgage, just like a traditional home. For many buyers, this is the most straightforward and familiar option.

·         FHA, VA, and USDA loans — These government-backed loans may also work for modular homes if the property meets program requirements. They can be especially worth exploring if you want a lower down payment, qualify through military service, or are buying in an eligible rural area.

·         Construction-to-permanent (single-close) loan — This option can cover the factory build, site work, and the finished home all in one loan. When construction is complete, it turns into a regular mortgage, which can make the whole process feel simpler and cut down on extra closings and paperwork.

·         Two-close construction loan — With this setup, you use one loan for the construction phase and then a second loan for the permanent mortgage once the home is finished. It can be a good fit if you want more flexibility or expect your financing terms to improve by the time construction wraps up.

·         Other ways to cover the extra costs — Depending on your situation, you might also use home equity, a HELOC, a personal loan, or seller financing to help pay for land, site work, or other parts of the project. These can be helpful if your main loan doesn’t cover every expense.

A few helpful tips:

·         When you talk to lenders, ask whether they offer construction-to-permanent, single-close loans. In some cases, that can save you time, reduce paperwork, and help you avoid paying for two separate closings.

·         It’s also smart to compare lenders who already have experience with modular or prefab homes, since not every lender handles construction financing or modular appraisals the same way.

The process does vary on whether or not you own land, need to get a “Lot Loan” or if you have the land and need a construction loan, where you are on your plans and permits, etc. For an ADU, most people either get a home equity line of credit or pay cash. Then, probably half of our clients building a new single family residence are either paying cash or from insurance funds, the other half gets a Construction Loan once the permits are about to be issued.

Here are a few lenders that you can talk to: 

Rajesh Bhavnani

VP of Originations

NMLS # 2513002

Direct: (424) 484-9978

Office: (877) 885-0111

rajesh.b@equitablelending.com

2824 So. Robertson Blvd.

Los Angeles, CA 90034

Specializing in vacant land “Lot Loans” and Modular “Construction Loans”.

or

Randall Lee Nixon

Mortgage Loan Originator

NMLS # 256946

Mobile: (619) 954-7816

Office: (858) 429-4654

rnixon@onetrusthomeloans.com

3838 Camino Del Rio North, Suite 305,

San Diego, CA 92108

 or

Ricardo Ramos

NMLS 259643

Non producing Branch Manager

Supreme Lending

2936 Hilltop Mall Rd Richmond Ca

(510) 501-5185

(800) 600-6326