1. FHA Loans
FHA loans are a popular choice for financing prefab homes. These loans are insured by the Federal Housing Administration (FHA) and offer flexible qualification criteria. Borrowers with low credit scores or a limited down payment may still be eligible for an FHA loan. The loan can be used to purchase or refinance a prefab home and offers competitive interest rates. However, FHA loans require mortgage insurance premiums (MIP) for the life of the loan.
2. USDA Loans
USDA loans are another option for financing prefab homes. These loans are backed by the U.S. Department of Agriculture (USDA) and are designed for borrowers in rural areas. USDA loans offer 100% financing, meaning no down payment is required. Borrowers must meet income and credit requirements to qualify for a USDA loan. The interest rates for USDA loans are typically lower than conventional loans. However, borrowers may be required to pay an upfront guarantee fee and annual mortgage insurance premiums.
3. VA Loans
VA loans are available for eligible veterans, active-duty service members, and their spouses to finance prefab homes. These loans are guaranteed by the U.S. Department of Veterans Affairs (VA). VA loans offer competitive interest rates and flexible qualification criteria. Borrowers can finance up to 100% of the home's value without requiring a down payment. However, borrowers may need to pay a funding fee, which can be included in the loan amount. VA loans also do not require private mortgage insurance (PMI).
4. Conventional Loans
Conventional loans are a popular choice for financing prefab homes. These loans are not insured or guaranteed by the government. Borrowers with good credit scores and a substantial down payment may qualify for a conventional loan. Conventional loans offer a variety of terms and options, including fixed-rate and adjustable-rate mortgages. Interest rates for conventional loans may vary depending on the borrower's creditworthiness.