When buying a mobile home with financing, the credit score is one of the most important aspects to consider. For this reason, we will probably want to know the credit score needed to buy a mobile home to obtain the financing to make our purchase.
In the case of most lenders, they will require a minimum credit score of 580 to 620 to approve the purchase of our mobile home. However, if we have a lower credit score, we will be able to obtain financing, but we will have to provide a larger down payment and pay a higher interest rate.
Even if our credit is less than perfect, there is likely a loan program that we can qualify for to purchase our mobile home.
How do you qualify for a mobile home loan?
If we want to qualify for a mobile home loan, there is a fairly simple process to follow:
- We will have to meet with our housing counselor and express the type of home we want to buy.
- The counselor will help us determine our budget with data on our gross monthly income and current debt obligations to determine our debt-to-income ratio.
- We will be shown homes that fit our payment range, increasing the chances of loan approval.
- At this point, the counselor can assist us with the loan application and allow us to choose the mobile home that best suits our needs.
Financing companies to consider
There are different types of financing that we can choose for our mobile home, and among the main ones to consider are:
- FHA Loan: in these cases, you will be able to get even if you have a score as low as 500, and we can use the loan to buy different types of manufactured homes. In this case, we will have to prove that we will use this house as our primary home.
- Dealer Financing: this is a common form of financing, and they can work with people who do not have perfect credit.
- VA Loans: This special option for the U.S. military allows you to get a manufactured home loan through the Veterans Administration.
- Chattel Mortgage: if our mobile home is registered as a vehicle and is not tied to a foundation, this may be an option. However, this type of loan may have a high-interest rate.
- Personal loan: one option would be to request a loan from a friend or relative, but always have the loan terms in writing to avoid confusion or legal problems.
Getting a loan with a bad credit score
If we have a low credit score, all is not lost because we will be able to find loan programs for almost all buyers. We may have to meet some conditions and pay a higher rate, but we will have different options to achieve this.
Our score is not the only thing that will determine our eligibility for a loan because they will examine our income, assets, current debt load, and loan history. A key factor for approval will be how the payment amount compares to our monthly income.
Ideally, no more than 31% of our monthly income should be spent on house payments. The process may become easier with a higher credit score, but a low score will not directly disqualify you from getting approved for a mortgage loan.
What does the credit score represent?
For the credit score calculation, our payment history will normally represent 40% of our score, while our credit utilization will represent 20%. On the other hand, the age of our credit history contributes 21%.
The amount of recently reported balances will be 11%; finally, new liabilities will represent 5% and available credit 3%. All these factors are considered to calculate our credit score, and it is important to check it regularly to improve it as much as possible.
What to consider before buying a manufactured home?
Buying a manufactured home can be a very effective way to build a good credit life. However, to make a good investment, we will have to look at the following factors:
- Good cosmetic and structural condition.
- It should be a house that fits our community and our lifestyle.
- The home must have enough space for our daily activities.
- It should have an appraisal from a reputable firm.
Once we have chosen the ideal house, it will be time to start the loan application process to begin financing our home. It is a process that will be simple and very fast, especially if we have a good credit score.