Buying a modular home is one of the most important decisions someone can make. What are the qualifications to buy such a home? What kind of credit score do you need to buy a modular home?
What about income, location, and down payment requirements? This post will answer all these questions and more so that you have an easier time understanding what it takes to purchase a modular home.
What’s the Minimum Credit Score To Get a Manufactured Home Loan?
You’ll need a credit score of at least 620 to get a manufactured home loan if you are putting 3% to 5% down. If you’re applying for an FHA loan, meant for first-time homebuyers, it’s possible that you may be able to get approved with a 500 credit score, if you’re willing to pay a 10% to 20% down payment.
A lender may approve someone with a lower credit score if they are co-signing on the loan and agreeing to be responsible for paying it back in case of default or foreclosure. What’s more, some states have laws that set a higher requirement for credit scores to get manufactured home loans.
Is It Easier To Get Approved for a Modular Home?
Yes, it can be easier to get approved for a modular home since the loan process is shorter and the credit requirements are less stringent.
What’s more, some lenders may be willing to work with you if your financial situation has changed or if circumstances have led to a lower score over time. But modular home loans are also riskier in that they typically come with higher interest rates than traditional manufactured homes, which means you could
What is the Modular Home Process Like?
The modular home process starts with a consultation. It’s a way for the lender to get an understanding of what you want and need in terms of a modular home.
This is also a chance for the borrower to ask any questions they may have about the loan process, such as how long it will take and how much it will cost upfront. The pre-approval process can be done at this meeting stage to set your expectations.
If everything works out, then you’ll move on to the application stage. This is where the lender will request more documentation from you, like your bank statements, pay stubs, W-2 copies, and more.
They will also perform a credit inquiry, which is usually not considered when taking out loans for traditional homes.
Once the lender reviews all of your paperwork, they will decide whether or not to approve you for a modular home loan based on certain criteria that is outlined in their lending policies and procedures.
If approved, then congratulations! You’re one step closer to getting your new home. But if denied- don’t give up hope because there are plenty of other lenders out there who may be willing to work with you.
What Are Some Alternatives if I Don’t Have Enough Money for a Downpayment?
If you don’t have enough money for a down payment, you can:
1. Ask a family member or friend to co-sign on the loan with you. However, they will be responsible for paying back the loan if it is not repaid by you.
2. Apply for an FHA loan and make a low down payment. However, this requires meeting certain guidelines in order to qualify as a first-time home buyer, such as credit score requirements.
3. Apply for a commercial mortgage and get approved with lower credit score requirements. What’s more, these loans are typically longer than traditional manufactured home loans, so they may be better suited if your financial situation is unstable over the next few years or if circumstances are leading to changes in your credit score.
How Can I Improve My Credit So I Can Get Approved for a Loan?
There are many ways to improve your credit score. Your score is made up of five factors. The first is the amount of debt you owe. The higher your ratio, the better it will be for your score.
Next, look at how often you use your credit and whether or not you pay off that balance every month. It’s also wise to keep an eye on what type of accounts are in good standing, like a student loan account with payments on time and not a lot of debt. It’s also important to take all the negative accounts off your credit report, like an unpaid bill or bankruptcy filing.
It’s also important to take all the negative accounts off your credit report, like an unpaid bill or bankruptcy filing.
The next factor is how long you’ve had credit. The better your length of time, the higher it will be for your score. Make sure not to close your credit accounts, even (or especially) if you’re not using them. It’s also wise to keep your oldest credit accounts open.
Finally, you need to look at new inquiries in your report. It’s generally not a good idea to open a new line of financing or credit card within six months of applying for modular home financing.
Frequently Asked Questions
How Long Is The Modular Home Process?
It could take up to 8 months.
What Is the Length of a Modular Home Loan?
20 years is the maximum for a loan on a modular home.
What Is the Minimum Down Payment for a Modular Home?
The minimum amount of money you can put towards your purchase upfront will vary based on how much the mortgage company feels they are at risk and what kind of loan program you use, but 0% to 20% is common.
Does A Higher Down Payment Mean The Interest Rate Will Be Lower?
Yes, it will mean you have less of a risk factor, and the bank or mortgage company feels they are taking on less risk.
How Much Income Do I Need To Get Approved for a Modular Home?
You’ll need a gross income of at least $3,000 per month to be approved for a modular home. You’ll also need an income that is stable and will remain the same over the next year as well.
Can I Get A Modular Home Loan If I Make Minimum Wage?
It is possible to get approved for a modular home loan if you make minimum wage, but having a higher income will help your ability to qualify, which is why it’s good to work on increasing that income as much as possible.
What kind of credit score do you need to buy a modular home? In general, a score above 600 plays a major role in your ability to purchase a modular home. However, there are many ways to get approved for a loan if you have less than perfect credit. You can take some time to improve your current credit score, find a co-signer, or contribute a larger down payment to get more leverage.
A modular home is obtainable and flexible for most with careful planning and a good support system. Take your time to make an intentional, well-calculated plan and you’ll be on your way to homeownership in no time!