Owning a home doesn't have to remain a distant dream, especially for low to moderate-income families. Manufactured homes can offer an affordable, flexible housing solution, blending comfort with convenience. You can follow this process for buying a manufactured home to get started.

Buy a Manufactured Home in 6 Steps

This guide will walk you through the basic steps in the process of how to buy a manufactured home in Minnesota, we'll answer your questions like "why are interest rates higher on manufactured homes," and "do manufactured homes hold value?" As well as provide tips for navigating this alternative path to home ownership.

Step 1: Understanding Your Needs and Budget

The first step in your journey to purchase a manufactured home involves assessing your needs and financial capabilities. These homes come in a variety of sizes and layouts, catering to individuals, couples, and families.

It is essential to factor in the total cost, including the home price, land or lot expenses, as well as transportation and installation costs in many cases. Therefore, establishing a realistic budget as a first step is important to ensure long-term housing affordability. 

How to Plan Your Home Ownership Budget

To help you get a feel for what you can afford when purchasing a manufactured home and how to plan your savings for your down payment, we recommended using this easy budget planning worksheet you can download for free.  Give it a try, and if you need more help, you can always schedule a consultation with our Home Lending Advisors.

Step 2: Researching and Choosing a Manufactured Home Dealer

If you are looking to buy a new manufactured home, finding a reputable dealer is key. A good dealer will offer transparency about costs, customization options, and after-sales support. The dealer you're working with should be able to tell you which manufactured homes are the best quality and provide you with high-quality options suitable for the harsh Minnesota winters.

Visiting multiple dealers and touring home models will give you a clearer idea of what's available within your budget.  According to manufacturedhomes.com, there are currently a total of 24 manufactured home dealers in and round the state of Minnesota. This directory is a great starting point for this stage of your research. 

Step 3: Selecting Your Manufactured Home

Selecting your home is the exciting step. While overall appearance is important,  but you'll also want to think about energy efficiency and warranties. Energy-efficient manufactured homes can lead to significant savings on heating and cooling bills, an important consideration, especially, if you have a limited budget.

It's also important to understand the various types of manufactured homes available when making your selection. From single-wide homes, which are typically more affordable and compact, to double-wide homes that offer more space and customization options, each option caters to different lifestyles and budgets. Single-wide homes are ideal for individuals or small families looking for a cozy living space, while double-wide homes are perfect for larger families or those who desire more room to spread out.

YouTuber Kerry Tarnow has a great video (8 minute watch) you can watch that breaks down the differences between the two. His entire channel is dedicated to providing education on all kinds of different aspects of manufactured homes.

Consider how each option aligns with your needs and preferences to ensure that you find the perfect manufactured home that fits your lifestyle and budget seamlessly.

Step 4: Financing Your Manufactured Home

If you're interested in buying a manufactured home, you've likely wondered, "Do banks finance manufactured homes?" The answer is yes, manufactured home loans are a key aspect of the purchasing process. However, not all banks or credit unions provide this type of financing, as manufactured homes are typically financed with a type of loan called a chattel loan. However in some cases a traditional mortgage loan can be used. 

Chattel loans provide financing for mobile or manufactured homes situated on leased land. Unlike traditional mortgages, where the land is owned by the homeowner, in this case, the home itself is considered "personal movable property" used as collateral for the loan. Meaning, the loan remains valid even if the home is moved to a different location. This is why interest rates are higher on manufactured homes, as there is a perceived higher risk associated with these loans and the fact that the homes are not permanently affixed to the land.

All that being said, a traditional mortgage loan can be used to finance your manufactured home in situations where you own the property the home is being placed on. 

If your concerned about the affordability of a manufactured home, there are programs designed to help buyers secure financing at competitive rates, including those offered by the Minnesota Housing Finance Agency.

Questions about Manufactured Home Loans? Let's talk.

Step 5: Finding and Preparing Your Manufactured Home's Location

The decision to buy a manufactured home also involves finding the right location. In Minnesota, options include buying a lot, leasing within a community, or placing the home on private property. Each choice has its pros and cons, and zoning laws will dictate what's possible. 

You can find more information on how this works at The League of Minnesota Cities website, but as of 2021 under state law, no city zoning regulation may prohibit manufactured homes that are built in conformance with the manufactured home building code and comply with all other zoning ordinances (Minn. Stat. § 462.357, subd. 1).

Manufactured Homes on Owned Land

If you are purchasing the land your home will be placed on, you'll need to ensure your home will have access to utilities, such as water, electricity, and sewage connections, to ensure that your manufactured home has all the necessary amenities for comfortable living. This step also includes laying a solid foundation that can withstand the harsh Minnesota weather conditions, from freezing winters to humid summers.

Obtaining the required permits is an important step as well to ensure that your home complies with local regulations and zoning laws, giving you peace of mind that your investment is secure. Careful planning and budgeting are essential during this stage to avoid any unexpected costs or delays in the installation process.

Manufactured Home on Leased Land

If you're considering buying a home on leased land, like in a manufactured home park or mobile home community, take the time to explore your options in your desired area. It's a good idea to meet with the park owners and take a tour of the available homes in the community.

Not all manufactured home parks are created equal, so be sure to do your research. Additionally, inquire about the amenities the park offers, such as playgrounds, storm shelters, and waste management services. Understanding the terms and conditions of the land lease at each manufactured home community you're interested in is also an important part of the decision making process.

Step 6: Installation and Moving In

When you purchase a new manufactured home, the delivery and installation of your manufactured home is a momentous occasion. The installation process includes setting the home on its foundation, connecting utilities, and completing any necessary inspections. This part of the process can sometimes take a few days to complete, make sure to ask your dealer about these timelines. 

It's important to note that anyone who installs or repairs manufactured homes must be licensed by the Minnesota Department of Labor and Industry, so make sure to verify that they are current on their license requirements. 

If you've purchased a manufactured home that is already placed in a park, the process is much simpler. You'll be able to move in the same as you would with a site-build home. 

Once your home is ready for you to move into, you can start making it your own, decorating and arranging it to suit your tastes and needs.  For some additional help on moving into a new home, we recommend reviewing this free moving guide.

Final Considerations When Buying Your Manufactured Home

The pros and cons of a manufactured home include affordability, flexibility, and speed of construction versus concerns about durability and financing. For many individuals, couples and families in Minnesota, the advantages make it a worthwhile option.

As you embark on this journey, remember that quality, efficiency, and thorough planning are your keys to success in buying a manufactured home that will serve as a comfortable, lasting residence for years to come.

By understanding the process, from selecting the right dealer to securing financing and preparing your land, you can navigate the journey to homeownership with confidence.  And if you'd like to explore how to buy a manufactured home with a loan from First Alliance Credit Union, you can meet with our expert team. We're here to help you!