Explained: Can You Get a Reverse Mortgage on a Mobile Home

As retirement living costs rise, many seniors are turning to reverse mortgages. This type of loan allows them to unlock the equity built up in their homes. But what if your home isn't a traditional one? 

In this guide, we’ll answer the question, “Can you get a reverse mortgage on a mobile home?” Read on to learn all about its eligibility requirements, interest rates, and alternative loan options.

What is a Reverse Mortgage?

With a conventional mortgage, the borrower makes monthly payments to own their home. That’s not the case with a reverse loan. 

A reverse mortgage allows senior homeowners aged 62 and older to exchange their home equity for cash. You borrow against the value of your home, and instead of making monthly payments, the lender pays you!

Requirements of a Reverse Mortgage

Reverse mortgage requirements are fairly simple – you must:

• Be over 62 years old. 
• Have at least 50% equity in your home.
• Complete government-approved counseling. 

Pros of a Reverse Mortgage

• Additional income for retirees
• Allows you to keep the property
• Can be borrowed without paying off existing loans

Cons of a Reverse Mortgage

• High interest rates
• Possibility of foreclosure 
• Susceptibility to scams

Understanding Mobile Homes

Mobile homes, better known as manufactured homes, are a unique and affordable housing option. They come in all kinds of sizes, with single-wide homes for a smaller footprint and double-wide homes for more living space. But they’re nothing like traditional homes when it comes to financing and qualifying for a reverse mortgage.

Mobile Homes vs. Traditional Homes:

Owning a mobile home and a traditional house can be completely different in many ways.

First of all, mobile homes typically sit on leased land. You own the home itself but not the ground it sits on, which can make a huge impact on appreciation. 

Of course, if the mobile home is in a desirable location, you’ll see its value increase. But in most cases, these homes appreciate at a slower rate compared to traditional homes built on permanent foundations. As you can see, the value of the land itself plays a major role in home appreciation.

Financing a mobile home is also unlike traditional options. Since mobile homes are sometimes considered personal property, they may qualify for chattel loans with higher mobile home interest rates than traditional loans on land and structures.

Can You Get a Reverse Mortgage on a Mobile Home?

Reverse mortgages are great for senior homeowners, but qualifying with a mobile home may be difficult. Here's what you need to know:

• Reverse Mortgage Age Requirement: Like traditional homes, you must be 62 years old or older to qualify for a reverse mortgage on a mobile home.
• Ownership and Title: You need to own the mobile home and the land on which it sits. That means mobile homes situated in parks where you only lease the land don’t qualify for such a loan.
• HUD Approval: Your mobile home must meet all the Department of Housing and Urban Development (HUD) guidelines for construction and safety. This also applies to homes built after June 15, 1976, since they must adhere to specific federal standards.
• Permanent Foundation: The mobile home must be permanently built on a foundation that meets FHA standards. 

Getting a reverse mortgage on a mobile home is trickier than you’d expect. You don’t have as much freedom in terms of location (leased land vs. owned) if you want to be eligible for a generous loan.

Still, there is a silver lining. If you don't qualify for a reverse mortgage but still need to access funds, you may consider: can you get a conventional loan on a mobile home? 

The answer is yes! These mortgages allow you to borrow against the equity in your mobile home. Unlike a reverse mortgage, you will make monthly payments. Sure, the interest rates may be even higher, but they’re still a convenient option for many.

Reverse Mortgage Requirements for Mobile Homes:

While the process may be more challenging, you can get a reverse loan on a mobile home. Be warned that the process isn’t as simple as a standard brick-and-mortar residence. Let's look at the specific property and financial requirements you'll need to meet.

Property Requirements

• Age of Your Mobile Home: Your manufactured home should have been constructed after June 15, 1976. That means it adheres to the Federal Manufactured Home Construction and Safety Standards (HUD Code) established by the HUD. These standards regulate aspects like fire safety, structural integrity, and durability.
• Meeting HUD Standards: Other than that, your mobile home must comply with the latest HUD rules. That means having a HUD label affixed to the exterior to show that it meets federal building codes. 
• Condition and Location: The mobile home must be in good overall condition. That means it should be structurally sound, have a functional plumbing and electrical system, and meet basic health and safety standards. 

Financial Requirements

As with traditional reverse mortgages, lenders will check your creditworthiness and income to see how eligible you are and what they’re willing to lend you. Luckily, there's no minimum credit score requirement. However, we still recommend aiming for a higher credit score. 

Other than that, they’ll check your income to ensure you have enough to cover everything. That includes property taxes, homeowner's insurance, and any ongoing maintenance for the mobile home.

Your mobile home must also be free and clear of any existing mortgages or liens. That’s right – you'll need to pay off any outstanding loans attached to the property before you ask for the reverse loan.

Mobile Home Interest Rates

Interest rates for mobile homes can vary depending on the reverse loan type you choose. Here's a quick overview of current averages:

• FHA Loans: 7.32% (offers lower rates for qualified borrowers)
• Fannie Mae/Freddie Mac Loans: Varies (typically require higher credit scores)
• Chattel Loans: 7.60% (commonly used for financing mobile homes on leased land)
• Personal Loans: 11.53% (higher interest rates but can be easier to qualify for)

Factors Affecting Mobile Home Rates

Several key factors influence the interest rate you'll receive on your mobile home loan:

• Credit Score: Just like traditional mortgages, your credit score makes a difference. Borrowers with strong credit scores (generally above 700) tend to get better deals, potentially as low as 4%. Lower credit scores (575–700) may bring rates up to the 7–10% range.
• Down Payment: The size of your down payment also affects your interest rate. A larger down payment (20% or more) shows that you’re financially responsible. This makes lenders confident enough to offer a lower interest rate. 

Some programs allow for smaller down payments (like FHA loans with a minimum of 3.5%), but they tend to have higher interest rates.

• Loan Term: Generally, shorter loan terms (10–15 years) have lower interest rates than longer terms (20–30 years). It’s simple math – you'll be paying off the loan amount faster with a shorter term.
• Market Conditions: Mobile home loan rates aren’t immune to the nation’s overall economic trends. When the Federal Reserve raises interest rates, mobile home loan rates will increase as well. They’ll also drop in periods of economic growth and low inflation.

One important point to consider is that mobile home interest rates are generally higher than traditional site-built home mortgages, often by 1–3%. For example, as of mid-2024, the average rate for a 30-year fixed mortgage on a traditional home was around 6.5%. Meanwhile, the average for reverse mortgage mobile home loans was 7.32%.

That’s mainly because lenders assume there is a higher risk with mobile homeowners. They are considered personal property in some cases. That’s why lenders view them as less stable investments than traditional real estate. 

Alternative Financing Options"

Reverse mortgages are a unique way to access equity in your mobile home. Still, they may not be the right fit for everyone. Here are some alternative financing options to consider:

1. Conventional Loans on Mobile Homes

Getting a conventional loan on a mobile home is hard but not impossible. You’ll need to own the land your mobile home sits on, meet minimum property standards, and have a good credit score (often above 660). 

With a conventional loan, you make regular monthly payments to pay it off over time. This is incredible if you have a steady income and want to build equity in your mobile home. 

2. Other Loan Options

• FHA Loans: The FHA offers loan programs made just for mobile homes. These loans are easier to qualify for, with down payments as low as 3.5%. They come with higher interest rates, though.
• VA Loans: The Department of Veterans Affairs (VA) has special loan programs for veterans who are buying a mobile home. These loans demand no down payment and have lower interest rates. Still, they’re only for qualified veterans and active-duty service members.
• Personal Loans: Personal loans allow you to finance minor repairs or renovations to your mobile home. However, they have the highest interest rates on this list.

Conclusion

With a national average sales price of $51,000, mobile homes are a pretty affordable way to own a home. However, financing a mobile home requires planning. Reverse mortgages may have stricter rules for mobile homes, but they’re more generous than traditional loans. 

Explore your options and contact a mobile home financing professional at Equity Access Group to help navigate the process.