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.
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.
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, compared to an 12.33% interest rate for a personal loan, 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.
