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How Long Can You Finance a Mobile Home?

Financing a trailer house can be a great way to get into the homeownership market without breaking the bank. However, financing depends on your credit score and other financial factors. How long can you finance a mobile home? Let’s learn more about that.

You can finance a mobile home for up to 30 years. The shorter term of the loan, the lower the interest rate will be. The interest rate on a 30-year credit is higher than on a 15-year credit. You must make monthly payments to the bank or lender until the sum is paid.

A girl sitting in front of her trailer

How Long Can You Finance a Mobile Home?

You can finance a trailer house for as long as you agree with the bank or lender. That period usually depends on the portable property you’re buying since there are three types: mobile, manufactured, and modular.

You’ll need to get a loan from a bank or other lender to pay for the house, and each property type will require different interest rates and monthly payments. You can usually get a lower interest rate by adding a down payment, but the size of the credit will also affect it.

The most extended term of any trailer allowance is 30 years; you can also get a 15-year credit. Shorter terms mean lower interest rates but often higher monthly payments since you’re paying it all off in less time. Depending on several financial aspects, you may be able to finance your house for anywhere from five to twenty years.

It’s possible to finance a trailer with a 3.5% down payment, which is part of the purchase price in cash. The rest is financed through mortgages, and you may even take advantage of a reverse mortgage if allowed.

A parked trailer in a parking lot

Are Mobile Homes the Same as Manufactured?

Movable, manufactured, and modular homes are types of portable housing. Some people might also call them trailer houses or just trailers.

Manufactured and modular houses are an excellent option for those who want the convenience of a factory-built house without a high price tag. Trailers, on the other hand, are a more affordable option for those who aren’t ready to commit long-term.

Movable, Manufactured, and Modular Homes – The Differences

Manufactured and modular houses are essentially the same- they’re both factory-built structures, typically out of steel or aluminum frames with panels of sheets of fiberglass, plastic, or metal siding.

The main difference between the two is that a manufactured house is factory-made and transported to the site, while a modular house is assembled on-site from prefabricated modules.

Trailer houses are a different story. They’re usually made of wood or metal and are designed to be transported on wheels, but they can also be factory-made. While they’re less expensive than the other two, they’re also less sturdy and weather-resistant.

A house plan, a pair of glasses, measuring tape, and a pen

What Are Financing Options Available for Trailer Houses?

The type of property you choose will affect how much you can borrow and the interest rate. Manufactured and modular houses are usually easier to finance because they’re considered real property. Trailers, on the other hand, are deemed personal property and are often more expensive to finance.

These “real” homes are typically financed through personal or mortgage loans, while trailers are usually funded through equity loans or lines of credit.

Make sure to read about what life insurance is a good mortgage, and insure yourself even more while residing in a trailer house.

Conventional Loans Can Be FHA-Insured

You can get funding for a trailer with the help of the government. The government offers programs to help you finance your land or property, such as the FHA, VA, and USDA. FHA-insured mortgages are a great option.

If you’re buying a trailer house, an FHA-insured mortgage will likely have the lowest interest rate and the most flexible terms. With this, you can finance up to 97% of the home’s purchase price, meaning you’ll only need a small down payment to keep your monthly payments low.

You can also get someone to co-sign a mortgage for a trailer house with you. That would be someone who agrees to make the monthly payments if you can’t. However, the cosigner must have good credit and a steady income.

A Chattel Loan Is Specifically Made for Mobile Homes

A chattel loan is secured by personal movable land. This includes cars, boats, jewelry, and trailer houses. This type of mortgage expires the fastest but has a lower closing fee.

The borrower typically pledges their movable property as collateral. If they default on the loan, the lender can seize and sell the land or property to repay the debt. It’s sometimes called “pawn loans” or “collateral loans.”

Get a Personal Loan for Your Modular Home

When you apply for mortgages, you likely mostly want the conventional option. But, when it comes to loans, there’s the option of personal loans, too. However, getting this for a movable house requires some planning. Here’s what to consider:

  • You’ll need to have a good credit score. The lender takes on more risk by giving money to someone purchasing movable property, so they want to ensure you can repay them,
  • The interest rate on trailer loans tends to be higher than for traditional homes, so compare interest rates from different lenders,
  • Make sure you budget for all the associated fees of owning a trailer house, like land taxes, insurance, and repairs,
  • Plan ahead and ensure you can afford your new place comfortably.

How to Pay Off a Trailer House Loan

You can get a loan for a trailer house with a fixed or adjustable interest rate. The fixed-rate loan’s interest rate doesn’t change while it lasts. But, an adjustable-rate loan’s interest rate can vary depending on market conditions.

Also, your mortgage is personal property now; you choose how to pay it off. You can do it with a lump-sum payment, also called a balloon payment. This means you pay off the entire amount in one swoop at the end of the credit term. However, it doesn’t mean you’ll pay off your mortgage faster.

Other payment types you can do are bi-weekly – made every two weeks, or monthly – made once a month.

A calculator and notepad placed on a pile of dollar bills

Your Trailer House Awaits

You can get help from a housing counselor if you have questions about financing a trailer house. They can help you understand the different types of loans available and compare offers from other lenders.

There are many ways to finance trailers; the right option depends on your circumstances. By researching your options and working with a qualified financial advisor, you can find the best way to finance your new place and live carefreely.