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Using a Personal Loan for a Mobile Home

A personal loan can be a quick way to buy a mobile home, but it's not always the best.

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By Hilary Collins

Written by

Hilary Collins

Writer

Hilary Collins is a finance writer and editor. She loves taking topics that could be dry and complicated and turning them into engaging stories with actionable takeaways.

Edited by Jared Hughes

Written by

Jared Hughes

Editor

Jared Hughes is a personal loan editor for Credible and Fox Money, and has been producing digital content for more than six years.

Updated January 17, 2024

Editorial disclosure: Our goal is to give you the tools and confidence you need to improve your finances.

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Manufactured homes, also commonly referred to as mobile homes, are homes prefabricated in a factory rather than built on site. A manufactured home costs an average of $85 per square foot — almost half of what a site-built home costs, according to the Manufactured Housing Institute. Because of that price difference, mobile homes have become an appealing option for homebuyers. If you’re not able to front the cost, however, a personal loan for a mobile home is a viable option.

Types of mobile homes

“Mobile homes” is a term often used to describe the modern manufactured home. But mobile homes, manufactured homes, and modular homes were distinguished from one another in 1976 because of changes in policies set by the Department of Housing and Urban Development (HUD).

There are three main types of “mobile homes,” though there is some overlap between the types.

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Mobile home

These were mass-produced after World War II to be more affordable housing options. But in 1974, Congress passed the National Manufactured Housing Construction and Safety Standards Act, which standardized manufactured home construction, and the Housing Act of 1980 subsequently mandated that such homes built after June 15, 1976, be referred to as “manufactured homes” in federal laws and literature.

Mobile homes are relatively small, factory-built houses that were transported to a location and used as a permanent home. There are single-wides, which are a smaller option, or double-wides, a larger option that are formed from two separate pieces and put together on site.

Both options could generally be moved again after their initial assembly, but the ease of such a move depends on factors including the age and condition of the mobile home, how much it weighs, and how far you wish to move it.

Manufactured home

Manufactured homes were previously known as “mobile homes,” but after 1976, they were distinguished from mobile homes with a red certification label placed on each transportable section’s exterior. Manufactured homes are made in factories and built to comply with HUD code, then moved to a permanent site. However, they can be larger and more customizable than single- or double-wides, and are not usually meant to be moved again after their initial set-up.

Modular home

Modular homes are a type of manufactured home that have parts built in a factory and then assembled and placed on a permanent foundation. They require more on-site construction than manufactured homes and aren’t intended to be moved once installed.

Learn More: What Type of Insurance Do You Need for Modular Homes?

Pros and cons of using a personal loan for a mobile home

A personal loan is a loan that is usually a fixed rate, meaning the interest rate won’t change from month to month, and unsecured, meaning you don’t have to provide collateral to “secure” the loan. These loans come in a lump sum and you repay them in installments over a period of time. They have few restrictions around their use and are often used to make major purchases, cover emergency expenses, or to consolidate debt.

Pros:

  • Less time-consuming process: Most home loans will be backed by the home you’re purchasing, which creates a longer process with many steps. Since personal loans are usually based on your credit score and history rather than the home you’re buying, it’s generally a smoother and faster process.
  • Can save on fees: Many home loans may include fees for things such as home inspections, appraisals, and closing costs. Personal loans don’t come with these expenses — though you may see an origination fee or prepayment penalty, depending on the lender.
  • Don’t need to own land: Some loan options will require you to own the land where you plan to install your manufactured home. This isn’t the case with personal loans.
  • No collateral needed: If you default on your loan, your home won’t be taken, as most personal loans are unsecured and don’t require you to back the loan with something you own, like your home.

Cons:

  • May not qualify for a large enough loan: While mobile homes are less expensive than traditional homes, you still may have difficulty qualifying for a personal loan large enough to purchase the one you want. The average cost of a new manufactured home was $125,000 in April 2023, according to the U.S. Census Bureau. Many lenders offer maximum loan amounts of $100,000 for personal loans, and you may not be able to qualify for the maximum amount.
  • Might be able to get a lower interest rate with a mortgage: The average fixed-rate mortgage has a 7.31% interest rate as of September 2023, compared to an 11.48% interest rate for a personal loan as of May 2023, according to data from the Federal Reserve.
  • Will have to repay quickly and can expect much higher payments: Personal loans have much shorter repayment terms than loans designed to be used to purchase a home, which make the monthly payments quite high.
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700

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7.80% - 35.99%

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620

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660

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4.54.5

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8.49% - 35.99%

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$1000 to $50000

Min. Credit Score

600

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8.99% - 29.99%

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$5000 to $100000

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8.99% - 35.99%

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600

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44

Credible rating

Fixed (APR)

9.57% - 35.99%

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660

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3.93.9

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9.95% - 35.99%

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550

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710

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11.69% - 35.99%

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560

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11.72% - 17.99%

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640

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-

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14.30% - 35.99%

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$3500 to $40000

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640

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18.00% - 35.99%

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Other types of financing for mobile homes

If a personal loan doesn’t sound like the right option for you, here are other ways you can finance your mobile home.

FHA Title 1 loan

The Federal Housing Administration (FHA) works with private lenders to help people buy manufactured homes. This program helps buyers get longer repayment terms and lower interest rates than they might be able to with traditional loan options.

Fannie Mae manufactured housing loan

Another federal program that helps buyers afford manufactured homes, these are mortgages with at least a 5% down payment available to borrowers with credit scores of at least 620. These loans allow purchases of a variety of manufactured homes, and offer temporary interest rate buydowns that help borrowers save on interest.

Fannie Mae also offers another program called MH Advantage. However, these loans can only be used for properties built to certain standards consistent with site-built homes. MH Advantage requires a minimum down payment of 3% and offers higher loan-to-value (LTV) ratios up to 97%.

Freddie Mac mortgage

These are another loan option for low- and middle-income borrowers. These fixed-rate mortgages come with extra paperwork for manufactured homes, however, as these types of loans are considered riskier.

VA loan

These loans, backed by the Department of Veterans Affairs, are available to veterans, service members, and their family members. They are available for up to 95% of the purchase price, and for repayment terms of up to 25 years and 32 days, though the term will be based on the type of manufactured home you buy, such as a single-wide versus a double-wide.

USDA loan

This U.S. Department of Agriculture program helps low- and middle-income borrowers in rural areas buy a single-family home, including manufactured housing. The monthly payments are based on the applicant’s income and can’t be more than 29% of their gross monthly income.

Chattel mortgage

These mortgages are available for moveable property, meaning that you won’t have to own the land you plan to live on to take out this kind of mortgage. These loans tend to come with higher interest rates than other mortgage options. Research from the Consumer Financial Protection Bureau also finds that chattel mortgage borrowers are less likely to refinance, and face high denial rates.

Loan amount
Repayment term
Minimum credit score
Land ownership requirement
Personal loan
Up to $200,000
1 to 7 years
Minimums vary by lender, but you will likely need a FICO score of 670 or higher to qualify for competitive rates
No
FHA Title 1 loan
Up to $92,904 (for both lot and home)
Up to 25 years and 32 days
No minimum
No
Fannie Mae manufactured housing loan
Up to 95% of LTV
Up to 30 years
620
Yes, unless the home is located in a co-op or condo project
Freddie Mac mortgage
Up to 95% of LTV
Up to 30 years
620
Yes, unless the home is located in a condo project. Mortgages secured by manufactured homes located on leasehold estates that meet certain requirements are also eligible with prior written approval.
VA loan
95% of total purchase price including a funding fee
Up to 25 years and 32 days, depending on property type
No official minimum, but will need to earn enough to take on a loan and have a good credit score
Yes
USDA loan
Determined by state and county
30 years
No official minimum, but will need to show the ability to manage debt
Yes
Chattel mortgage
Up to $275,000
Up to 23 years
575
No

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FAQ

How do I compare personal loans for mobile homes to other financing options?

Some of the most important factors to consider when you compare loans include interest rates, fees, monthly payment amounts, repayment terms, and minimum credit requirements. Take a close look at the total cost of the loan over time, and make sure the monthly payment fits comfortably into your budget.

What are the interest rates on personal loans for mobile homes?

Personal loan rates can vary widely, but remember that the lowest advertised rate will only be available to certain borrowers — those with high credit scores and healthy incomes that aren’t already carrying a lot of debt. As of May 2023, the average interest rate for a two-year, fixed-rate personal loan from a bank was 11.48%, according to the Federal Reserve.

Can I use a personal loan for a mobile home if I have bad credit?

If you can qualify for the amount you need, yes, you can use a personal loan to buy a mobile home, even with bad credit. However, with a low credit score you may struggle to qualify for a large enough amount, and you may find that the interest rates for low-credit borrowers are too high to justify the purchase.

How do I get a personal loan for a mobile home?

Prepare to apply by checking your credit report for errors that might be bringing down your score. Next, prequalify with a range of lenders, including banks, credit unions, and online lenders. Compare the offers to see which is best for you. Once you’ve determined which is right for you, finish the paperwork and begin planning for repayment.

Meet the expert:
Hilary Collins

Hilary Collins is a finance writer and editor. She loves taking topics that could be dry and complicated and turning them into engaging stories with actionable takeaways.