How to get a mobile home with bad credit

You’ve found just the perfect mobile home and total bliss awaits. But your credit isn’t so great, so you figure it’s time to brush up on loan types and credit scores. So we wanted to put together some ideas on how to buy a mobile home with bad credit.

As you begin, pause to remember that bad credit is just a phase, it’s not who you are or what you will become. Keep a smile on your face as you go through the extra work necessary to get a loan with less than perfect credit. The payoff is worth it.

Mobile Homes that Qualify for Real Estate Mortgage Loans

Perhaps just as important as credit scores are the types of loans available to you as a mobile home buyer. Here’s how to tell if your dream mobile home may qualify for a real estate loan (mortgage).

• If the mobile home is a manufactured home built after July 1, 1976, and rests on a permanent foundation and the lot is part of the sale, it is real property and real estate financing may be available.
• If the manufactured home is in a rural area, the lot comes with it, and you are a low-income buyer, the Department of Agriculture has a special lending program tailored just for you. It’s a fantastic program with 100-percent financing available and it’s not limited to first-time buyers. Even those with non-typical credit histories may be considered.

Mobile Homes that May Not Qualify for Real Estate Loans

Since many mobile and manufactured homes will not qualify for real property loans unless they are permanently installed, other means of financing will need to be considered. Homes that don’t qualify for real property loans

• Mobile homes that don’t rest on a permanent foundation.
• Homes situated in a park or lease community.

Sometimes it’s a bit harder to get a real estate loan on a single-wide, but persevere–you will find one. There is still chattel loans, personal loans, owner financing, or rent-to-own options.

Loans Other than Real Estate Loans

• Chattel loan: A fancy word for a loan secured by both the personal property (mobile home) and the creditworthiness of the buyer. Chattel loans are usually for mobile homes on non-permanent foundations. Expect to put 5 – 10% down depending on your credit rating. Chattel loans made by dealers or manufacturers are usually for 20-year terms.
• Personal loans: Expect to put 20% down, more with poor credit. Loan terms are 15 years or less.
• Owner financing: With persistence and a bit of luck you may find a mobile home owner who is not only willing but even eager to extend credit to you.
• A personal or secured loan from a friend or relative.

Rent to Own Contracts

These are available for both real estate and chattel loans. After a period of time specified by the landlord/owner, and at a price agreed to by the landlord/owner and renter, the renter may opt to purchase the mobile home. The renter will then need to secure a loan. If you decide to go this route, be sure to search for and carefully read one or more rent to own agreements.

Make sure to research what your state’s maximum interest rate for rent-to-0wn and owner-financing contracts. Here in WV, it is 8%.

Credit Scores

What is your credit score, and what does it mean? And what’s this FICO stuff all about? Your credit score is an assessment of how likely you are to repay a loan in a timely fashion. Most people seeking a loan will find their credit (FICO) score is between 350 and 800, although the possible range is 0 to 850.  Here’s how lenders view credit scores:

• 720 – 850: Prime. The borrower qualifies for a very good interest rate.
• 675 – 719: Still a good prospect but at a higher interest rate.
• 620 – 674: Sub-prime. Any loan will be at a substantially higher interest rate.

So you’ve got a low score, maybe a really low score, is all hope lost? Of course not.

• You can search for a lender who specializes in making loans to folks with bad credit.
• You can also take steps to improve your credit. It’s easier than you think.

Improving your Credit (FICO) Score

There is a right way and a wrong way to improve your credit score. You’ll want help fixing your credit even if it’s just in the form of information. If some outfit promises things like:

• We can completely and instantly erase your bad credit!
• Let us help you establish a new credit identity!
• We can reduce the amount you owe by 50% or more!

Run away as fast as you can! 

The plain truth is that your credit can be improved, but not instantly, and not without some work on your part. If you want to take a do-it-yourself approach to improve your credit then your first stop should be the Federal Trade Commission’s Credit Repair Help Site here. If you want help,  locate an NFCC approved credit counseling service to guide you through the process.

Now go find your new mobile home and enjoy affordable living!

More resources on buying a mobile home that may be helpful to you:

Caveat Emptor, Let the Buyer Beware

Buying a Mobile Home: They Can and DO Appreciate!

5 Tips for Buying & Moving Into a Mobile Home

Buying A Used Mobile Home

Avoiding Issues During a Manufactured Home Purchase

Buying a Manufactured Home: Warranties and How to Handle Issues After the Sell

15 Tips for Buying and Financing A Manufactured Home

Thank you for reading Mobile Home Living!

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