VA Guarantee for Modular Homes

The VA will guarantee loans for prefab homes and modular construction. However, it's all about risk.  So, here is what is important to remember, and what is not.

A.    The VA does not loan the money, it guarantees a portion of the loan that the lenders or banks make for the purchase of you modular home.  That means that the VA takes the risk out of the loan by assuring that (typically) 25% of the loan will be paid off.   It is truly the only government guaranty available on the market.  

B.    Lenders lend the money.  These lenders are mortgage companies and banks who rely upon the VA Guaranty to make your loan. Lenders honor the rules of the financial markets, rules that are set by Fannie Mae and Freddie Mac.

A modular home is not the same as a manufactured home for VA purposes. Although the parts or sections of a modular home are built in the factory and then moved to the building site, the home must still be put up and completed at the building site. A veteran may obtain a loan to purchase a modular home under VA's regular home loan program.

Modular Homes

These can sometimes be called prefab homes. The pieces of the home are actually built in a factory.  They are then shipped to your building site, assembled, wired, finished, equipped with sinks and furnaces, connected to utilities, inspected and handed over, all in the space of a few days.  The result is a custom designed, newly built home with everything brand new. This approach to new home ownership can often be the best possible bang for your buck.  And, banks lend on modular homes the same as a stick built house.
However, there is sometimes confusion in the Fannie Mae Freddie Mac world about manufactured homes and modular homes.  You and your loan officer need to approach with care to make certain that everyone understands that the VA term for manufactured home is not the same as that often used in the residential mortgage world.

Bottom line

For modular homes, if otherwise qualified for the loan, the VA will guaranty the loan and the lenders will do the deal.    

For more information on modular homes for veterans, contact Tidewater Custom Modular Homes.

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