Modular homes continue to grow in popularity for homebuyers looking to build in rural areas. They offer a clear path to homeownership without the complexities of traditional construction. If you are planning to buy a modular home in a rural location, it is important to understand your loan options and how lenders view these types of homes.
This guide will walk you through loan programs available for modular homes in rural communities, how to qualify, and what you need to prepare before applying.
What Is a Modular Home
A modular home is built in sections at a factory, then transported to a permanent site where it is assembled on a foundation. It must meet state and local building codes and is treated as real property once installed.
A modular home is not the same as a manufactured home. Manufactured homes follow HUD code standards and often qualify for chattel loans. Modular homes follow the same code as site-built homes and qualify for many of the same loan programs.
Why Rural Buyers Choose Modular Homes
Building in a rural area often presents challenges. Labor and materials can be limited. Timelines can stretch. Modular construction offers more control over cost and timing.
Buyers often choose modular homes because:
- Construction takes place in a controlled setting
- On-site work is limited to foundation, utilities, and assembly
- Costs are easier to predict
- They qualify for traditional home loans if installed on permanent foundations
What Are the Best Loan Options for Modular Homes in Rural Areas
There are several financing options for modular homes. The best one for you depends on where the home is located, your credit profile, and the type of land involved.
Let’s walk through the most common loan options for modular homes in rural areas.
1. USDA Home Loans
A USDA loan can be a strong option if your modular home is located in an eligible rural area. These loans are backed by the United States Department of Agriculture and designed to help low to moderate income households.
Key features:
- No down payment required
- Fixed interest rates
- Flexible credit guidelines
- Must meet income and location eligibility
- Home must be primary residence
ManufacturedHome.Loan outlines USDA eligibility and how these loans work for modular homes.
At eLEND, you can review USDA loan programs and start the prequalification process.
2. FHA Loans
FHA loans are another option for buyers with limited down payments or less than perfect credit. The Federal Housing Administration insures these loans, allowing lenders to offer more flexibility.
FHA highlights:
- Minimum 3.5 percent down payment
- Lower credit score thresholds
- Available for modular homes on permanent foundations
- Must meet FHA appraisal and property standards
FHA loans are often used by first-time buyers. They can also be used to refinance an existing mortgage on a modular home. You can review FHA loan programs at eLEND.
3. VA Loans
If you are a veteran, service member, or surviving spouse, you may qualify for a VA loan. These loans are backed by the U.S. Department of Veterans Affairs and offer some of the most borrower-friendly terms.
VA loan features:
- No down payment
- No private mortgage insurance
- Competitive interest rates
- Home must be primary residence
- Certificate of eligibility required
Modular homes qualify for VA loans as long as the home is installed on a permanent foundation and meets local code.
Learn more about manufactured and modular home VA loans at eLEND.
4. Conventional Loans
Conventional loans may be a fit if you have strong credit, stable income, and a down payment. These loans are not backed by government agencies.
What to expect:
- Minimum down payment often starts at 5 percent
- May offer better terms for borrowers with strong credit
- Modular home must be real property
- Appraisal and construction standards apply
Conventional loans allow more flexibility in loan structure but require a higher level of documentation. If your modular home is part of a land and home package, this could be a strong choice.
Visit eLEND’s modular home loan section for information on conventional loan guidelines.
5. Land/Home Packages
In rural areas, many buyers purchase the land and the modular home together. Financing both in one loan is called a land/home package.
Benefits of land/home loans:
- Combines home and land into one mortgage
- Simpler monthly payment structure
- May offer better terms than separate loans
- Works with FHA, VA, USDA, and conventional programs
ManufacturedHome.Loan provides financing guidance for modular homes and land packages.
What You Need to Qualify
Loan approval depends on several factors. Prepare the following:
- Proof of income (W2s, pay stubs, tax returns)
- Credit score (most lenders require at least 620 for conventional loans)
- Property details including location and land ownership
- Modular home specs and compliance documents
- Down payment funds or gift documentation
If you are purchasing land, provide the sales contract and legal description. If refinancing, include your current mortgage statement.
Appraisal and Property Standards
For most loan programs, your modular home will need to pass an appraisal. The home must be:
- Built to local and state code
- Installed on a permanent foundation
- Located on land you own or are buying
- Classified as real property
- Free of title or lien issues
Some lenders also require the home to be newly constructed or recently installed.
What Loan Terms Are Available
Loan terms vary based on program and borrower profile. Here is what to expect:
- Loan terms: 15, 20, or 30 years
- Fixed or adjustable interest rates
- Monthly payments include taxes and insurance
- Prepayment options may vary
Ask your lender to walk through total cost over time, not just monthly payment. Compare loan estimates from multiple lenders.
Can You Refinance a Modular Home in a Rural Area
Yes. If you already own a modular home and want to refinance, you have options.
Reasons to refinance:
- Lower your monthly payment
- Lock in a fixed interest rate
- Take cash out for upgrades
- Change loan type (e.g., FHA to conventional)
ManufacturedHome.Loan’s refinance page explains available loan options. eLEND also offers refinancing for modular homes under FHA, VA, USDA, and conventional programs.
How to Choose the Right Loan Program
Every homebuyer is different. Think about:
- Do you meet income or location rules for USDA
- Are you eligible for VA benefits
- Do you need a low down payment option like FHA
- Can you qualify for conventional financing
- Are you buying land with the home
Talk to a loan advisor who understands modular home financing. Not all lenders specialize in this area. eLEND and ManufacturedHome.Loan work with buyers like you every day.
Final Questions to Ask Your Lender
- What loan programs do you offer for modular homes
- Do you offer land/home package loans
- What is the minimum credit score
- Do you require the home to be on a permanent foundation
- What are the total closing costs
- How long does the approval process take
- Can I lock my rate early
If you are ready to get started, visit:
- eLEND.com to view modular home loan programs
- ManufacturedHome.Loan to explore purchase and refinance options
Lender NMLS: 2826
Trade / Service marks are the property of American Financial Resources, LLC DBA eLEND and ManufacturedHome.Loan. Trade names may vary by state. For more information,please visit here. Some products may not be available in all states. This is not a commitment to lend. All loans subject to credit approval. Equal Housing Lender.