Mobile homes provide an affordable option for your home purchase. While financing for this type of property can seem more complex, there are plenty of options available.
For California residents who are military veterans, one of the best options is financing through the California Department of Veterans Affairs, commonly known as “CalVet.”
Like the United States Department of Veterans Affairs (VA), this state organization provides support and insurance for home loans (they don’t loan money), increasing the chances of loan approval for numerous veterans in the state of California.
This assistance can be extremely beneficial, especially for California veterans looking to purchase a mobile home, which, for a variety of reasons, can be difficult or complex to finance.
Financing for Mobile Homes: A Look at the Most Important Issues
First of all, we need to establish that loans for mobile homes are available. This might seem needlessly repetitive and obvious, but there is a general myth that mobile homes are not available for financing. This is false.
While it can be more complex, loans are certainly available for the purchase of a mobile home.
For a variety of reasons, these loans tend to have higher levels of risk, which means loans have built in risk-reducers. For example, the loan terms may be shorter, so instead of using the typical 30-year loan, you may have to use a 15 or 20-year loan.
Also, downpayment requirements are often higher. With some properties, you can make the purchase with 5%, 3.5%, or even 0% down. With financing on a mobile home, you may have to bring 15% or more. Fortunately, mobile homes tend to have lower prices, so a 15% downpayment is not as much (in total) as it might be on the purchase of a typical single-family home.
Mobile Home Loan Limits
When you work with our team to secure a CalVet home loan, you will be able to secure up to $175,000 for a mobile home. For some borrowers, this may seem like a small amount, but most mobile homes are more affordable than typical single-family homes, so $175,000 should be enough to cover the majority of purchases.
If you are considering a mobile home above this amount, please contact us. Although CalVet sets a limit at $175,000, we may be able to assist your purchase with other forms of financing.
New Single-Wide Unit
First, let’s start by looking at one of the most common types of mobile homes: the single-wide unit that is brand new. In this case, financing is available for buyers, but there are some general limits and guidelines.
Term Requirements
Single-wide units can actually be financed for a maximum term of 15 years. So if a 15-year mortgage loan is within your needs, you can purchase a single-wide through our team. However, the traditional 30-year loan is not available. There are many reasons for this, but one important factor is depreciation. Mortgage lenders prefer to lend against assets that maintain or gain value, but after 15 or 20 years a mobile home can loose value. Therefore, many lenders prefer to keep loans on mobile homes short.
Downpayment
The downpayment on a single-wide new mobile home must be at least 15%. So if your purchase price is, for example, $175,000, you would need a $26,250. At a purchase price of $100,000, you would need $15,000.
This can seem like a staggering amount, but there are downpayment assistance programs available for certain borrowers in certain situations. Contact our staff and we may be able to guide you towards one of these options.
Used Single-Wide Unit
Unfortunately, if you are purchasing a used single-wide mobile home, financing through CalVet is unavailable. Again, this is connected to the issue of asset value. Because mobile homes generally decline in value (as opposed to typical property that tends to gain value), some lenders and government organizations prefer to avoid lending or supporting loans on used mobile homes.
Again, there are options available for this type of home, so contact us if you are looking to purchase a used single-wide unit. We can’t make any promises, but there could be an option available for you.
New Multi-Wide Unit
If you are purchasing a multi-wide unit (double- or triple-wide), there are more options available, and you may find that financing is more flexible, with lenient options for loan terms and the downpayment.
Loan Term: Up to 20 Years
With a multi-wide mobile home, you can have a longer loan term, which reduces the overall payments, assuming the same loan amount. While a typical 30-year loan is still unavailable, you can work through CalVet to secure a 20-year loan on a new multi-wide mobile home.
Downpayment: At least 10%
The downpayment requirement is also more lenient. In this case, you only need a 10% downpayment, which means if you are making a purchase of $175,000, you only need $17,500. At $100,000, you would only need to bring $10,000. Again, downpayment assistance may be available so contact our staff for more information.
Used Multi-Wide Unit
For a used multi-wide unit, the requirements are slightly different.
Loan Term: 20 Years or Economic Life Expectancy
A 20-year loan is still an option, but there is a catch. Financing for these homes is either a 20-year term or for the remaining economic life expectancy of the mobile home, which ever is less. This means that a shorter loan term may be required depending on the condition of the home and other factors.
Downpayment: 15%
The downpayment requirement is 15%, so the same numbers apply here as are applied to the new single-wide mobile home.
Reliable Assistance for CalVet Loans and
If you are interested in purchasing a mobile home with a loan through the California Department of Veterans Affairs, contact our team today. We’ll help you understand all the best options so you can make the right choice for your home purchase!
