Manufactured Home
Hard Money Loans

First Capital Trust Deeds (FCTD) is not a good source of financing for manufactured home hard money loans.

FCTD is a mortgage brokerage that originates 500+ hard money loans each year – but isn’t in the business of financing manufactured homes. Our lenders don’t like the asset class of manufactured homes, so we pass on nearly every single one of these financing requests that comes in every week or so.

This article covers the following topics related to manufactured home hard money loans, including:

• The difference between consumer purpose and business purpose loans
• Most all hard money lenders fund business purpose loans only
• The majority of manufactured home loan requests are for consumer purpose loans
• Business purpose manufactured home loans
• Where else you can look for manufactured home financing

Let’s dive into the details.

The Difference Between Consumer Purpose and Business Purpose Loans

With the passage of the Dodd Frank Act in 2010, Congress established new rules for consumer purpose and business purpose loans with which mortgage lenders need to comply.

A consumer purpose mortgage is a loan for a primary residence, second home, or if cash-out proceeds will go toward personal use such as debt consolidation, personal tax liens, college tuition, or remodeling your primary residence.

A business purpose mortgage is a loan secured by an investment property, a short-term bridge loan to a house flipper, or a construction loan made to a home builder whose business is building homes to sell to consumers. The use of funds are going toward a bona fide business or investment purpose. 

To get a better idea about the two types of loans, I wrote extensively about the difference between consumer and business purpose loans in this blog post.

Most Hard Money Lenders Fund Business Purpose Loans Only

Nearly every hard money lender will only fund business purpose loans. They will not make a consumer purpose loan.

Hard money loans, which are usually short-term bridge loans of 6-24 months, aren’t intended for consumers to finance their primary residences for the long-term. It’s not a viable option. It is, however, a viable financing option for a house flipper who buys properties that need major overhauls before selling the property to a buyer using conventional bank financing.

The Majority of Manufactured Home Loan Requests are for Consumer Purpose Loans

Most of the manufactured home hard money loan requests FCTD receives are for owner-occupied consumer loans.

Herein lies the disconnect:

• Nearly every hard money lender will only do business purpose loans on investment properties.
• Yet, nearly every manufactured home loan request FCTD receives are for owner-occupied consumer purpose loans.

Consumers want a hard money loan product that hard money lenders do not provide.

Business Purpose Manufactured Home Loans

Traditional mortgage lenders have loan programs for manufactured homes used for business purposes. I know an investor here in Central Oregon who has bought several manufactured homes for their short-term rental business. They get conventional mortgages on all the properties through a traditional mortgage lender.

Where Else You Can Look for Manufactured Home Financing

There are mortgage programs for financing manufactured homes, many of which are government-backed conventional loans through agencies like FHA, USDA, Fannie Mae and Freddie Mac. Traditional mortgage broker and mortgage lenders have access to all those programs.

Below are a few other ideas for manufactured home financing:

Manufactured Home Dealer Trade Association

The manufactured home dealers in each state have a trade association that advocates for rules and laws that benefit the industry and their members. There are probably lenders who are also members of the association. You can ask for a lender list.

Manufactured Home Dealer Near You

Another source to check is a manufactured home dealer near you. They work with several lenders when selling homes.

Seller Financing

If the property you’re buying is owned free and clear, the seller may be willing to carry a loan for five, ten, or fifteen years.

Community Bank or Credit Union

Community banks and credit unions can also finance manufactured homes. A community bank may have only one or just a few bank branches.

Conclusion

Manufactured home hard money loans are not something that FCTD provides. The loan requests we receive are for consumer purpose loans, whereas nearly every hard money lender only does business purpose loans. Rather than looking for an owner-occupied hard money loan, time would be better spent checking with traditional mortgage lenders, trade associations, dealers, seller financing, and community banks and credit unions. You’ll have a much better chance of success than pursuing a manufactured home hard money loan.