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What Is a Mobile Home Loan?

Many banks and lending institutions offer financing for the purchase of a new or used mobile home.
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  • Written By: Ken Black
  • Edited By: Andrew Jones
  • Last Modified Date: 13 April 2014
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A mobile home loan is a financing tool, by which the financing of a mobile home can be done. A mobile home mortgage loan is similar in many ways to a traditional home mortgage, but there can be some very important differences. The type of mobile home, whether the land is being financed, and the age of the unit all play a factor in getting approved.

Though many people choose mobile homes because they are cheaper than traditional homes, there could be additional expenses that go along with financing. For example, a mobile home loan that does not include the land will often have different terms than one that does. One thing that should remain the same is that there should be a tax deduction for the interest paid, as long as the home serves as the primary residence of the taxpayer.

Usually, a mobile home loan will not be available on a unit that is more than 30 years old, especially if it does not have a permanent foundation. Lenders simply see the risk as being too great. The average life expectancy of a mobile home suggests they are often not around much longer than 30 years. For this reason, a lender is going to be very hesitant to finance a home that is unlikely to survive the length of the loan. In some cases, this may be overcome by taking a loan that is only 15 years long, rather than 20 or 30.

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Another option for a mobile home loan is the personal property loan. This loan is specifically for mobile home buyers who will not be owning the land underneath it. Such a situation is very common with mobile home owners because many sit on rented lots, or may often be moved from one location to another. The length of these loans may vary somewhat from traditional mortgages. Often, the interest rates on a personal property loan will be higher than those on traditional mortgages.

The down payments for a mobile home loan typically run from 5% to 10%. Lenders will accept larger down payments as well. Getting one to accept less than 5% will likely require the purchasing of mortgage insurance. This insurance will pay the loan in the case of a default by the borrower. The percentages of down payments required for a traditional home and mobile home are very similar. Of course, the down payment for a mobile home will generally be more affordable as the cost of the home is usually less.

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