Can You Buy a Manufactured Home With a VA Loan?

Eligible veterans can use their Veterans Affairs (VA) loan to purchase a manufactured home. If you’re dreaming of home ownership, this can present a less expensive route, as manufactured homes typically cost much less than traditional homes.  

Pair those lower purchase costs with the savings from your VA loan benefit, and you may find homeownership is more accessible than you thought.  

But before you dive into your double-wide dreams, make sure you have a clear understanding of how the VA loan process works (and doesn’t work) with manufactured or mobile homes.

What Counts as a Manufactured or Mobile Home?

Though it may seem like semantics, there are important legal differences between manufactured and mobile homes. A mobile home is a manufactured home built before June 15, 1976.  

The mobile homes built prior to that date were not constructed in accordance with The National Manufactured Housing Construction and Safety Standards Act of 1974. Once those rules went into effect in 1976, the Department of Housing and Urban Development (HUD) had enforceable guidelines for manufactured homes. This created more consistency in the safety, energy efficiency and durability of these homes. 

Most manufactured homes fall into one of two categories: Single-wide and double-wide. A single-wide is built in one long section while a double-wide is comprised of two conjoined sections. Double-wides are generally more spacious.

Are Manufactured Homes Eligible for VA Loans?

Eligible veterans can use a VA loan to buy a manufactured home and/or its lot, but not a mobile home (as defined above). Though there are some unique factors to account for when purchasing a manufactured home with a VA loan.  

Foundation & Appraisal Requirements

As with any VA loan home purchase, the Department of Veteran Affairs has requirements that must be met by the property. Note that lenders may have other requirements, but for our purposes, we will focus on the VA here. To be eligible for a VA loan, the manufactured home:  

• Must be attached to a permanent foundation. In certain circumstances, the VA might approve an unattached home, but those are rare exceptions. 

• Must be classified as real property, meaning you must also own the land the home is built on. 

• Must feature a HUD tag signifying that the home has been inspected, and it meets HUD’s construction standards for manufactured homes. 

• Must meet the VA’s Minimum Property Requirements (MPRs). These standards ensure that homes bought with VA loans are safe, sanitary, and of sound structural integrity.  

• Must meet the VA’s space requirements. For a single-wide, the VA’s minimum is 400 square feet. Double-wide manufactured homes must be at least 700 square feet. The Federal Savings Bank will only accept applications for double-wide manufactured homes. 

• Must be purchased with the intention of making it your permanent residence. 

Maximum Terms and Loan Amounts

A common maximum term for VA home loans would be the 30-year fixed mortgage. For manufactured homes, a fixed mortgage is the only allowable term.  

The maximum allowable VA loan amount depends on some of the following factors:  

• Are you buying both the manufactured home and the land?  

• Do you already own the land but not the home?  

• Are you refinancing an existing loan on a manufactured home and purchasing the land to which it’s attached?  

Of course, these loan terms may vary depending on your VA-approved lender, your credit profile, and whether you’re buying the land and home. For example, a lower credit score may affect the favorability of your loan terms.

Pros and Cons of Using a VA Loan for These Homes

There are several benefits and drawbacks associated with purchasing a manufactured home with a VA loan.  

Pros

• Generally, you will not have to provide a down payment (though you always have the option to if you’d like).  

• You may find lower interest rates compared to conventional loan options. 

• You don’t need private mortgage insurance (PMI). 

• Usually, there will be fewer closing costs. 

Cons

• Not every VA-approved lender will finance manufactured homes. They are regularly viewed as riskier investments because manufactured homes tend to depreciate faster than site-built homes. 

• In the same vein, you may not see the same appreciation as you would with a site-built home, which could affect your long-term finances.  

• There may be fewer homes that meet the VA’s requirements.  

• You cannot move the house once it’s affixed to the property.

Alternatives & Workarounds

If using your VA loan does not seem like the best choice for your manufactured home purchase, work with your lender to determine the ideal alternative. Some other options may include:  

• Conventional loans: This is the most common type of home loan. However, like a VA loan, these generally require that the manufactured home be permanently attached and classifiable as real property. You may also find stricter eligibility criteria depending on your finances and the lender with whom you work.  

• Chattel loans: These are designed specifically for manufactured homes and other movable properties. Chattel loans usually will finance the property, but not the land it sits on. Although this loan type can potentially be easier to qualify for, it has some drawbacks including: lower loan limits, shorter terms, and the lender will technically own the property until the loan is paid off.  

• Federal Housing Administration (FHA) manufactured home loans 

• Title I: The Title I FHA loan is best for borrowers who intend to lease the lot to which their manufactured home will be affixed. The FHA may require the borrower to have at least a three-year lease, and the mortgage will likely be a fixed rate with up to a 20-year term. 

• Title II: If you intend to buy both the manufactured home and the lot, the Title II FHA loan could be the better option for you. 

FAQs

Will the VA Approve a Manufactured Home That Has Been Moved?

In most cases, lenders will not finance a manufactured home that has been moved. The VA is unlikely to approve it, as the home would no longer meet its requirements for permanent installation and structural integrity. 

Can I Buy a Modular Home with a VA Loan?

The VA loan process is relatively similar to a normal home when buying an existing modular home. Modular homes differ from manufactured homes in that parts of them are built in a factory then shipped to the home site to be built.  

Now, if you want to build a modular home, the process gets more complicated, as you will likely need to seek out a construction loan.  

Can I Buy a Manufactured Home as an Investment Property with a VA Loan?

No. If you purchase any property with your VA loan, you must intend to use it as your personal residence. However, eventually, should you move out of that home, you might be able to convert it into a rental property.

Final Thoughts

If you’re a veteran exploring homeownership, manufactured homes may be worth your consideration, whether you use your VA loan or not. With the right lender and a clear understanding of the VA guidelines, your path to owning a home could be closer than you think.