In this article, you will learn about the numerous lending programs available to manufactured homeowners for home improvement loans and purchases.
We’ll cover 18 separate loan and grant programs plus additional ways you can finance a home remodel. The majority of the programs mentioned are insured, or backed, by the federal government. Grants you don’t pay back, loans you do.
Homeowners have many unique home improvement loans and grants available to them.
Improvement projects can include anything from building an addition to upgrading a heat pump and can cost quite a bit. Thankfully, there are financing opportunities available to you that can help you make the needed changes to your home.
We’ll cover the most popular manufactured home improvement grants and loans available in the US. We’ll also cover other financing possibilities that can help you get your mobile or manufactured home remodeled or updated.
Some programs are dependent on income or location and may not be available to you but you’re bound to find at least one opportunity that can help you fund your dream and turn your manufactured home improvement project into a reality.
Saving up for your future home improvement projects is the cheapest and most popular method to cover the costs of a manufactured home remodel.
Financial experts agree that paying cash is always the best option for home improvement projects.
While you are in complete control with this route, it can take a long time reach your goal. The key to a healthy savings account is to make regular deposits and not touch the money. We’ve been saving up for our home remodel for over 4 years and still haven’t reached our goal – something always seems to come up!
Bank Savings Club
Some banks have special savings clubs, much like a Christmas Club, for home improvement projects. These clubs usually offer a higher APR or other benefits not available with a regular savings account. Be sure to ask your bank what is available.
Banks and lending institutions offer many different loans that you can use to finance a manufactured home improvement project. Just about anyone with good credit can find a willing lender but getting the best terms on the loan requires research and planning.
There are two types of personal loans that you can use to remodel your home:
Unsecured Personal Loan
First is the unsecured personal loan. These loans can range from a couple hundred dollars to $15,000 or more. They can have a fixed or variable APR.
An unsecured loan simply means that you do not have to put collateral up for the loan. The interest rate is typically dependent on your credit score and income ratio.
Check your bank, local credit unions, and larger nationally-known lending companies to find your ideal loan.
Secured Personal Loan
A secured personal loan requires collateral. If you fail to pay the loan the bank receives the collateral.
Variables differ depending on credit score, location, and lending institution. Be sure to shop around for the best terms.
Home Improvement Loans
Home improvement loans are specifically for homeowners that want to remodel or improve their home. They are popular among homeowners because they can be relatively easy to get, especially if your home is financed through the same bank.
Before we continue, we need to understand what home equity is. Nationwide describes equity as the difference between the appraised value of your home and how much of your mortgage you have left to pay off.
Home Equity Loans
Home equity loans have historically delivered a reliable, tax-deductible cash-stream for home improvements and repairs. Unfortunately, the loans have become more scarce during the latest housing slump but they are making a comeback. We’ll likely see lower rates and better terms in the near future.
Home equity loans are sometimes called second mortgages because you agree to pay off the loan over a period of years. These loans typically have a fixed APR and the banks will typically lend you around 85% of your home’s current appraised value minus whatever is owed on the mortgage.
Greg McBride, a senior financial analyst for Bankrate.com states, “Lenders are looking for homeowners to retain a 15% equity stake after the loan,” so you’ll need a fairly large amount of equity in your home just to qualify.
You can also get a home equity loan that requires a down payment though McBride warns, “If you don’t want to tie up equity in the home, you’re looking at a much smaller loan with a higher interest rate.”
HELOC or Home Equity Line of Credit
A HELOC is a revolving line of credit that is based on your home’s value (along with your credit score and other factors). They are best used for expenses that reoccur and have variable interest rates. You can use whatever amount you need whenever you need it, as long as you don’t go over your limit and pay your monthly payments.
Usually, a HELOC is divided into two periods:
- The draw period is when you use the credit and are only paying the interest accrued on the balance. It’s during this period that you’ll likely pay similar expenses as you did when closing on a mortgage (application fee, title search, appraisal, and points).
- The repayment period is after the money is spent and you start paying both the principal and interest on the loan.
The difference between a home equity loan and a HELOC:
Alphabet Soup Grants and Loans
HUD, FHA, USDA, and the VA are all government entities that insure loans available to the general public. To apply for these grants and loans you have to go through an approved lender and meet the various requirements and qualifications specified for each program.
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Here are a few home improvement loans and grant programs that you may be eligible for:
203k Rehabilitation Loan
The 203k loan is available to buyers that want to buy a damaged or older home and repair it. The rehab loan can be used to purchase and/or repair a home that’s at least one year old.
HUD describes the 203k program:
A portion of the loan proceeds is used to pay the seller..or.. the existing mortgage, and the remaining funds are placed in an escrow account and released as rehabilitation is completed.
The cost of the rehabilitation must be at least $5,000, but the total value of the property must still fall within the FHA mortgage limit for the area. The value of the property is determined by either (1) the value of the property before rehabilitation plus the cost of rehabilitation, or (2) 110 percent of the appraised value of the property after rehabilitation, whichever is less.
To apply for a 203k you must work with an FHA approved lender. You can search the database by state here.
FHA Streamlined 203k Construction Loan
The 203k Rehab Loan is basically the 203k loan but the streamlines loan only handles loan amounts under $35,000 to repair, improve, or upgrade a home.
203(h) Mortgage Insurance Program For Disaster Victims
If your home was located within a designated disaster area you may be eligible for the Section 203(h) program, a program made possible through the Federal Housing Administration (FHA). They insure, or back, mortgages that help victims of a major disaster get their homes repaired as quickly as possible.
The FHA requires all applications be submitted to the lender within one year of the declared disaster.
A searchable listing of approved FHA lenders nationwide is available here. Homeowners should also contact a HUD-approved housing counseling agency for assistance. You can call them toll-free at (800) 569-4287.
Title I Property Improvement Loan Program
If the equity in your home is limited but you need to make repairs to your home, you may want to check into an FHA Title I loan.
Title I loans can be used for an array of repairs and updates such as wheelchair accessibility improvements, building ramps, or replacing windows. Energy-saving systems such as solar or thermal also qualify for a Title 1 loan.
Improvements can be made by the homeowner or s contractor. However, only the cost of materials may be financed if sweat equity is used. Improvements made by contractors are covered for both labor and materials.
Manufactured homes are qualified for Title 1 loans though there are limits:
“the maximum amount for a property improvement loan for the alteration, repair or improvement of a Manufactured (Mobile) Home that qualifies as real property is $25,090 and the maximum term is 15 years.
The maximum amount for a property improvement loan for the alteration, repair, or improvement of an existing Manufactured (Mobile) Home classified as Personal Property is $7,500 and the maximum term is 12 years.”
The FHA’s Title 1 Loan Program Covers Manufactured Homes too!
Title 1 loans can also be used to purchase a manufactured home. Learn more about the manufactured home loan here.
The Neighborhood Stabilization Program (NSP) Grants
The Neighborhood Stabilization Program was established by HUD to stabilize communities by offering grants to purchase and redevelop foreclosed and abandoned homes and residential properties.
If your neighborhood qualifies you may be able to get assistance with home buying and construction. There’s no specific mention of manufactured homes on the material I researched but there’s always a possibility.
HOME Investment Partnerships Program
The Home Investment Partnership Program may be available to you through your state agency. The program evaluates and sets formula grants to States and local offices to fund a variety of activities including building, buying, and/or rehabilitating affordable housing.
HUD does not provide HOME assistance directly to individuals or organizations. If you are interested in participating in this program, you need to contact your local or state government to find out how the program operates in your area. Participation requirements may differ from one grantee to another.
FHA’s Energy Efficient Mortgage for ENERGY STAR Manufactured Homes (EEM)
The EEM program allows a homeowner to finance the full 100% of their expenses incurred to make the home more energy efficient.
The program uses terms like ‘energy package’ to describe the updates that this loan covers. A package is determined by a formula – algebra finally paid off!
They take the total cost of the improvements and deduct the present value of the energy saved over the remainder of the home’s life. At least, that’s how I understood it.
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USDA Rural Housing Repair Loans and Grants
The maximum loan amount is $20,000 with a 1% fixed interest rate. The maximum grant available is $7,500. Loans and Grants can be combined for up to $27,500 in total assistance.
Here’s a brief list of what the Rural Housing Repair Loans and grants can be used for:
- Roof repair or replacement
- Insulation, doors, caulking, and storm windows
- Wood burning stoves that meet safety requirements
- Repair of structural supports
- Room addition for large families
- Provision repair for sewage and water systems
- Reasonable connection fees
- Repair needed due to previous occupants
- Fee payment on loans
- Accessible to handicapped (if needed)
- Packaging fees for applications
- Flood insurance
- Cannot finance an existing manufactured home on land
- Learn more here
Emergency Homeowners Loan Program (EHLP)
More Home Improvement Programs
Solar Energy Incentive Programs
There are several incentive programs for energy-saving home upgrades. The federal tax credits are probably the most popular – you can credit up to 30% of your costs. Learn more about the qualifications for the energy saving programs here.
Weatherization Assistance Program
The U.S. Department of Energy initiated this program in order to help low-income Americans get help weatherizing their homes. Determine if you are eligible for weatherization assistance here.
Last but not least, are the high-cost credit products such as credit cards and private contractor loans. Honestly, I’m not a fan of either one but sometimes you need new windows or a leaky roof repaired. Sometimes, being able to make home repairs sooner, rather than later, is worth every dime.
Contractor loans are very similar to credit cards; they are not secured and typically have a high-interest rate.
You may be able to find a larger contractor or supply company that has partnered with a small lending institution and can offer to finance your home improvement project but you’ll likely do better by going to your bank and applying for a personal loan or even a revolving line of credit.
With the right planning, you could use a credit card to finance your home improvement project though it’s typically not recommended.
It’s always best to quickly pay the balance down before the interest compounds. Bankrate advises that you use a card that offers a cash-back reward program as well as additional consumer protections (extended warranties) whenever possible.
Sweat equity is a popular method for tackling home improvement projects and our favorite way to update a home here at Mobile Home Living. Why pay for it when you can do it yourself?
If you are willing to do a little manual labor during your home improvement project you can save thousands of dollars. A penny saved is a penny earned!
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Home Improvement Loans are Widely Available
From grants to loans, there are several ways to finance your manufactured home improvement project. That old saying rings true once again, “If there’s a will, there’s a way!”
Have you received a government insured loan or grant? Please help us learn more about them by sharing your experience and advice!
Thanks so reading Mobile and Manufactured Home Living!