There are many people who are thinking of moving into a modular home, which is built in a factory and assembled on a permanent lot. Modular homes are popular among many homeowners because of the high-quality materials, energy-efficient features, and shorter construction time.
However, many homeowners may wonder how much they are going to spend to have their new home built. They may also wonder how they are going to pay for their modular home and the credit score they’ll need.
A modular home is different from a traditional home, but homeowners still have several options for paying for their new living arrangement. Some homeowners may even think about going through the bank for assistance.
Do Banks Finance Modular Homes?
Homeowners have the opportunity to work with their bank to finance their modular homes. The options of financing a modular home with a bank range from obtaining a mortgage to taking out a loan. It is best for homeowners to learn about their options to choose the best one for them.
Mortgage For Modular Homes
One option is for a homeowner to obtain a mortgage for their modular home. A modular home is treated as a traditional home once it is assembled on its permanent lot. This means a modular home can be financed through a regular mortgage.
Homeowners are going to need to gather the following information to obtain a mortgage for their modular home:
- Personal Financial Statement
- Recent Bank Statements
- Recent Pay Stubs
- Credit Report
- Recent Tax Returns
Some documents may vary per bank, such as personal and work references. Homeowners are usually given the list of documents they need to gather to obtain a modular home mortgage.
Loans For Modular Homes
If a mortgage is not preferable or obtainable at the moment, homeowners can look into a loan for their modular home. Similar to other home loans, the homeowner is going to pay a modular home loan back in a certain amount of time.
Homeowners can look into the following types of loans for their modular homes:
- Construction Financing Loan
- FHA Loan
- VA Loan
- USDA Loan
Homeowners do need to gather a lot of information to obtain a loan for their modular home. Here are some of the documents required for a modular home loan:
- Recent W-2s
- IRS Form 4506-T
- 1040 Federal Tax Returns
- Recent Pay Stubs
- Proof of Employment
- Work History
- Modular Home Manufacturer Contract
Homeowners also need a certified bank check, notarized copy of the deed, and blueprints of the modular home for appraisal. Just like with a mortgage, they are usually given a list of documents they need to submit when they contact their bank for a loan.
Frequently Asked Questions
In addition to the question of “do banks finance modular homes,” homeowners may have other questions about how to finance their modular homes. Homeowners who are wondering about financing their modular home may find the answer to their question in this section.
Is It Hard To Get Financing On A Modular Home?
It may be more difficult to finance a modular home, but financing a modular home is not impossible. Homeowners most likely need to obtain a construction loan for their modular home, but this depends on the requirement of their home builder.
A builder may require homeowners to pay at certain stages or in full for their modular home.
What Is A Construction Loan On Modular Homes?
A construction loan is a temporary loan as the modular home is being manufactured. It is also known as a construction-to-permanent loan.
A construction loan pays for the cost to build a modular home, and it becomes a mortgage after the modular home has been built, inspected, appraised, and approved.
What Is The Process For Applying For A Modular Home Loan?
The process for applying for a loan for a modular home is similar to applying for other home loans. Homeowners need to apply for the loan, submit the required documents, and get approval from a lender.
Once they are approved, homeowners need to set up a payment schedule, receive their building permit, and close on their loan.
What Credit Score Is Needed To Buy A Modular Home?
Credit score plays a big part in how much a homeowner is going to pay for a modular home. A higher credit score tells lenders they can trust the homeowner to pay back the loan.
Homeowners need a credit score of at least 700 to qualify for low modular home rates. A credit score of 750 or higher is essential to qualifying for better modular home rates. Some lenders require a credit score of at least 640 to qualify for a modular home loan.
How Much Is A Down Payment For A Modular Home Loan?
Homeowners usually need to put a down payment on their modular home loan, but this is not much different from putting a down payment on a regular home loan. The down payment for a modular home loan may vary per type of loan and per lender.
However, the usual amount of a down payment can go up to 20 percent of the cost of the modular home project.
How Long Can Homeowners Get A Mortgage On A Modular Home?
The length of a modular home mortgage is going to depend on the size of the modular home and whether it includes the lot. For example, the maximum mortgage length on a modular home lot is 15 years.
The maximum length of a mortgage on just a modular home or on a single-section modular home and lot is 20 years. A multi-section modular home and lot can receive a maximum mortgage length of 25 years.
The straightforward answer to the question of “do banks finance modular homes,” is yes. However, there is still a lot to consider when financing a modular home through a loan or mortgage.
Homeowners should consider the requirements, qualifications, and benefits of each financing option. This way, they can look into the finance option that works for them.