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Guidelines of VA Loans for Mobile Homes & Manufactured Homes

Joe Wallace

There are VA mortgages for a variety of loan purposes. You can buy a condo unit, townhome, duplex, and multi-unit properties with a VA mortgage. You can also use a VA loan to buy a mobile home and even the land that home is to be placed upon. VA loan rules for manufactured home purchases are a bit different than for buying a typical suburban home, but some of those differences have to do with the unique nature of manufactured housing.

Some don’t realize that VA home loans can be used to purchase mobile homes, manufactured homes, modular housing, and similar properties that meet both VA loan requirements and state/local building code. VA home loans allow buyers to consider homes that are factory-built, transported to a site for installation where they will be put on a permanent foundation.

And what do the VA loan rules say about that foundation? Basically that any manufactured home loan guaranteed by the Department of Veterans Affairs must conform to the guidelines found in the publication titled, HUD Manufactured Home Construction and Safety Standards.

If you want to buy a manufactured home with a VA mortgage, the first thing you’ll need to do is to find a participating VA lender offering these loans.

Not all VA lenders offer VA mobile home loans; the nature of the housing market in your area may or may not include them depending on location. But where they are offered, there are some important things to know about VA loans for mobile homes and manufactured housing.

A Word About Modular Housing

VA loan rules observe a distinction between manufactured homes and modular housing. VA Pamphlet 26-7 Chapter 12 says of modular housing, “The appraiser will typically treat modular housing and on-frame modular housing in the same manner as conventionally built housing.”

The VA appraiser must choose “comparable sales that would be competing properties on the market which may include modular homes, conventionally built homes, or manufactured homes.”

In other words, it pays to know how the property you want to purchase is classified–modular, manufactured, or something else? Some types of modular housing are described as “on-frame” or mounted on a permanent chassis. In order to be approved for a VA mortgage an on-frame modular home must have its running gear stripped from the home and the crawl space must have a vapor barrier installed.

There are VA Loan Requirements for Mobile Homes

VA loan rules in Chapter 12 of VA Pamphlet 26-7 state that the manufactured home and the land where it will be placed, “must be considered a real estate entity in accordance with state law and meet all local zoning requirements for real estate.” That means no VA loan is possible for a houseboat or recreational vehicle or RV.

The real estate entity requirement may also be applicable to how the property is taxed. If the property cannot be taxed as real estate, it may not be eligible for a VA mortgage. This is true even if the state does not tax the property at all.

Some borrowers want to know if it’s possible to buy or build a tiny home using a VA mortgage. In cases where the property is classified as a manufactured home, modular home, or mobile home, there is a square footage requirement, but one reason a tiny home purchase loan may not be possible could have more to do with a lack of comparable properties that can be used in an appraisal to determine the home’s fair market value.

In other words, if you want to buy or build an unusual home that cannot be compared to other, similar properties in that housing market, a VA mortgage may not be possible due to the lack of comparables. This issue may vary depending on the housing market.

Wells, Septic Tanks, And Other Issues

Buying any type of home with a VA mortgage means understanding some loan rules that may apply to the nature of the property.

For example, there are no VA loan appraisal specifics when it comes to determining if well water from a specific source is acceptable fort loan approval. Like other government-backed mortgages, VA loans defer to the standards set by the local authority in these areas. The VA does not have a list of well water safety requirements that must be met outside of being acceptable to the local health authority.

You may find that government-backed mortgages including VA loans require a home (manufactured housing or not) to be hooked up to the local utility “wherever feasible”. Some properties cannot be connected to the local provider and well water or septic tanks may be needed.

VA home loans are not automatically ruled out in cases where a property has a septic tank and/or a well, but they must meet state standards and any applicable VA requirements.

Mobile Homes Purchased With A VA Mortgage Must Have A Permanent Foundation

The foundation issue is non-negotiable. The property must be attached to a permanent foundation that meets federal standards as a condition of loan approval. The mobile home may not start out on a foundation, but it must end up being placed on one that meets VA and other requirements.

Manufactured Homes Have A Size Requirement

A single-wide mobile home cannot have a total floor area of less than 400 feet. A double-wide cannot have floor space smaller than 700 feet.

Manufactured Homes Appraised As Proposed Construction Projects

In cases where the manufactured home is appraised as a proposed construction project the following are required by the VA:

• Foundation plan exhibits
• Floor plan showing room layout and exterior dimensions,
• Elevation plans
• Specifications for flooring, heating, plumbing, electrical equipment, appliances and other items included with the manufactured home.

VA Home Loans For Manufactured Homes And Land

VA home loans allow the borrower to choose between purchasing a mobile or manufactured home without buying land to place it on or buying both house and land. In cases where the borrower wants to buy a mobile home and put it on land they already own, VA loan rules say the loan amount may include:

• The purchase price of the home
• The cost of “all other real property improvements”
• The VA funding fee

In cases where the buyer wants to purchase both home and land, the following may be included in the loan amount:

• Purchase price of the manufactured home
• Purchase price of the land
• The cost of all other real property improvements
• VA Loan Funding Fee
• Any balance owed by the Veteran “on a deferred purchase money mortgage or contract given for the purchase of the lot”

What You Should Know About VA Home Loans For Manufactured Homes

Buying a modular home, manufactured home, or mobile home with a VA mortgage means the potential to purchase a home with no down payment and with the ability to pay the mortgage off early without penalty.

But before you commit to the purchase of a manufactured home, it’s smart to get some important details such as the age of the property, the total square footage of the floor area, and whether or not you will have to contend with issues like installing a vapor barrier in the crawlspace.

You should also consider your options in terms of buying (or not buying) the land to place your new home on. If you never considered the purchase of a parcel of land in this context, using a VA loan to do so may be a good idea thanks to the zero-down option as well as the ability to refinance the loan later on with a VA Streamline Refinance that could result in a lower monthly payment or interest rate, depending on circumstances.

VA loan rules also allow cash-out refinancing of a mobile home or manufactured home, but you will need to see if there is a participating VA lender willing to offer such an option for a mobile home.

 

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• Getting Started With VA Loan Benefits
• VA Loans, Investment Properties, and Deployments
• VA Loan Occupancy Rules: What You Need to Know
• The VA Loan Certificate of Eligibility