How to get your Manufactured or Mobile Home Financed in Canada

Mobile Home Mortgages

While mobile home mortgages are different then traditional mortgages, you are still able to get them. The financing options available for a mobile home depends on the circumstance you are purchasing the home. Whether you own the land or are paying a rental fee on leased land makes a difference.

Traditional Mortgage

Getting a traditional mortgage on a mobile home can often be difficult but it is a possibility if you own the property that you are trying to put the mobile home on, or are buying a property with a mobile home on it. This is normally the ideal option because traditional mortgages often have much lower interest rates than other types of loans.

Personal Loan

Getting an unsecured personal loan or line of credit can also be an option to purchase a mobile home. However, using this option often doesn’t have as high of a limit as a chattel mortgage. Getting a personal loan for a mobile is often only doable if the cost is $50,000 or less, but some may go as high as $100,000. While a personal loan often has higher interest rates than a traditional mortgage, it is often the same interest rate wise to a chattel loan. The main difference with chattel loans is that they are secured to the house whereas a personal loan isn’t.

Chattel Loan

A chattel loan is similar to a traditional mortgage but it is set up similarly to a secured personal loan. It is sometimes referred to as a personal property lien. This type of loan is usually given to someone who is purchasing a mobile home on leased land such as in a mobile home park. These types of loans typically have a higher interest rate but they also can be open loans as well which is why they more so resemble a secured loan. With chattel mortgages, you still have to renew every few years, whichever term you sign for, but you can often renew early because there are no penalties. Also, if you move the structure the mortgage transfers with you because it is attached to the building not the property. Unlike a traditional mortgage, you can put money on the principal of a chattel mortgage whenever you like.

Price of Mobile Homes in Canada

Pinpointing the price of a mobile home in Canada is difficult. It really depends on where you live, if you are purchasing brand new or used, and if the mobile is on leased land or on land for purchase. In general though, the purchase price of a mobile home can range anywhere from $50,000 to $500,000. It mostly depends on the cost of housing in your area, but mobile homes are generally $200,000 - $300,000 cheaper than your average single family home.

Like other types of homes, mobile homes are covered under the CMHC (Canadian Mortgage and Housing Corporation) insurance and you can purchase a mobile with only a 5% down payment if you are a first time home buyer. Because mobile homes are so much cheaper than a traditional home, many Canadian first time home buyers are starting to go in this direction. This also makes financing options easier to find. The more people looking to purchase a mobile, the more likely lenders are to provide financing.

Buying a Mobile Home

When it comes to purchasing a mobile home, it is important to remember that there are certain regulations the home must meet before you purchase it. Every province has different regulations in regards to what type of mobile homes that are allowed to be put on properties. It also has to meet the zoning requirements for where you are putting it.

If you have purchased a piece of land, depending on where that land is located within Canada and within the municipality, will dictate if you can put a mobile home on the land as well as what type of mobile home. If a mobile home is allowed and you are purchasing a new mobile, this won’t be as much of an issue. However, if you are purchasing a used mobile home, especially in a private sale, that is when you need to verify it meets all of the zoning requirements before you finalize the sale.

Purchasing a mobile home for a mobile park, the home will also need to meet the park's particular zoning requirements. Once the home is in the park, then you can normally make any addition or add any buildings you may want, within reason of course. The park management will let you know if they have any special requirements.

If you are purchasing a home already in a mobile home park, the lender will also need to verify that the mobile home is CSA approved. This is normally a sticker found on the mobile home that contains the identification number for it. A mobile home needs to be CSA approved before it can be purchased to verify it meets North American regulations. Within this CSA number, you will see if the mobile is an A-277 series or a Z-240 series, both are good but some places or parks only except one or the other.

Another thing many lenders look at when you are purchasing in a park is the lease of the land. The longer the lease of the land, the more likely you are to get approved. They also look at where the land is located and who owns it. For some lenders, they will only lend to certain parks.

Financing a Mobile Home with Land

If you are purchasing land with an already existing permitted mobile home on it, then you would normally go the traditional route of getting a mortgage. If it is your first home, you likely only have to put 5% down but if not you would likely need the 20% down. It is likely to be the easiest type of mobile home loan to get as long as you have a good credit score and meet the other mortgage requirements. You should be able to go through any lender for this type of mortgage.

Financing a Mobile Home in a Park

Financing a mobile home in a Park isn’t too tricky as long as the land is owned. When it is leased it gets tricky. When looking for a mortgage on a mobile, not all banks will give you a mortgage. Some banks like the Royal Bank and TD Canada Trust do give mobile mortgages, but credit unions and alternative lenders often are more lenient when it comes to chattel mortgages, which is likely the type of mortgage you would get.

Mobile Home Mortgages on Leased Land

It is even trickier to find mobile home financing options for a unit located on leased land. The length of the lease makes a big difference to a lender. If they are short leases of 10-15 years, it is much more difficult than say an 80 year lease. Generally the same banks that will finance units in mobile home parks will also finance units on leased land, just make sure to get as much information that you can regarding your lease. Your real estate agent will be able to find out any information regarding the lease, otherwise you can talk to the park management if you do not have a real estate agent, they should be able to answer any questions that you may have as well.

General Information Regarding Mobile Home Financing

Mobile, or manufactured homes, can be much more difficult to finance, and it’s not just because of the land beneath it. While oftentimes that can make things more difficult because the bank doesn’t have the land to fall back on, it’s mainly because of how they are built. Because they are built so much differently than a single family home, they often age faster than traditional housing. Having a shorter lifespan makes it difficult for a bank to justify lending you the money over a 25 year period. They may also require an appraisal to verify the structure is worth what the assessment says it is worth. This also verifies that the lender will get a return on their investment and the structure is worth purchasing.

With mobile homes, you are still considered to be getting mortgage financing so the standard mortgage rules apply which is great for those struggling to find a home to purchase. While it can be much more difficult to find a mortgage lender to finance, many Canadians looking to purchase a mobile will contact a mortgage broker. Whether it is a traditional mortgage or a chattel mortgage, they will be able to find you the best offer. It is important to keep in mind though that even if you get an approval on one mobile in a park, the same company may not cover a mobile in another park if you change your mind. There are more regulations so don’t be discouraged.

What about a manufactured home?

While it may sound strange, manufactured homes is actually a general term that includes modular homes and mobile homes.The difference between the two which code the manufactured home has. If the code on the homes is A-277 then it is considered to be a modular home whereas a Z-240 is a mobile home. The term mobile home, though, is used interchangeably between the two and all the same financing rules apply.

Pros and Cons of Purchasing a Manufactured / Mobile Home

Many Canadians who purchase a mobile home do so because it is much cheaper than your traditional home, but there are other things to consider before you make your final decision.

Pros:

When considering purchasing a mobile home, the most obvious plus is that it is considerably cheaper than a traditional home. This is usually because you don’t own the land that the structure is on and it is built to a different code than that over your average single family dwelling.

Another plus when it comes to purchasing a mobile home, is that if you put it on land with permanent foundation, it is more easily movable than a traditional home that, depending on how it’s built, would need to be demolished. You can resell it just as it’s entity instead of having to sell the land with it.

Manufactured homes, whether it is considered a mobile home or a modular home, are built in a controlled environment. Unlike a traditional home that is built in the elements, manufactured homes are built in factories before they are sent to their new home. This means that manufactured homes can be more consistently built to high standards and be more apt to be completed in a timely manner if you are purchasing brand new.

Cons:

While there are many positive aspects to purchasing a mobile/modular home, there are also some negatives. The first is that because mobile homes are on leased or rented land they are considered to be personal property unlike a home on land which is more often considered real property. If a mobile home is found on land you own then it will be considered real property. The problem with a mobile/manufactured home being considered personal property is that it can depreciate in value. We tend to be seeing less of that these days though because more people are turning to mobile homes due to their affordability.

Another negative aspect of owning a mobile home is that it can be much more expensive to finance than your traditional home because you do not own the land. This is a much larger financial risk for lenders so they tend to charge higher interest rates. It can also be more difficult to find a lender willing to finance a mobile home. Very few banks will, most credit unions do but not all alternative lenders. If you are having trouble finding a lender though, you can go through a mortgage broker.

If you own a mobile that is in a mobile home park, where the land is owned or leased, even though you own your own home, you still have a landlord. This is usually the park owner or the park manager. There will likely be certain rules you have to follow in regards to noise bylaws, pets and how you keep your yard. There is also normally a pad rental fee paid monthly to the park owner. This is a fee you need to consider before you purchase the mobile home because every pad rental fee is different. They can also raise them the allotted amount per year according to the tenancy act. Another downside to this is that, even though you own the mobile, if you miss paying your rent or disobey too many of their guidelines, you can get evicted. This would mean you would either have to sell the mobile home, or move it if the park allows that. Some sales contracts may state the mobile is to stay in the park even though you do own it.

Pros and Cons of Mobile/Manufactured Home Financing

When it comes to getting m manufactured home loans, you really have 3 different options but many people tend to go with a mortgage broker.

Traditional Bank

Getting a mobile home mortgage with a traditional bank is pretty tricky but definitely not impossible, it really depends on the specifications of the mobile that you are purchasing. That being said, traditional banks will usually have the best interest rates and you may even be able to get a traditional mortgage instead of a chattel mortgage.

Some negatives would be that you are locked in if you get a traditional mortgage and you can’t refinance early like you could with a chattel mortgage. Traditional banks also require a lower debt to income ratio and a higher credit score than other lenders. They often don’t like to go above 40% of your income going towards debt whereas other lenders will go up to 50%.Overall though, getting a mobile home mortgage is very similar to getting a regular mortgage through a traditional bank and whichever lender you choose you are most likely going to have to get CMHC insurance.

Credit Union

If you are unable to go with a traditional bank a credit union is also a great option. If you already bank with your local credit union then your chances of getting approved are higher. Also, a higher number of credit unions will give out mobile home mortgages over traditional banks. While they do sometimes have higher interest rates, they are often quite flexible and, with a chattel mortgage, you can refinance once you have proven that you are able to make your payments on time.

Alternative Lenders

Not all alternative lenders will give out mortgages to mobile/manufactured homes, but a lot of them will. This has a lot to do with the fact that more and more people are purchasing mobiles, as well as the fact that it is not something that a lot of other lenders do. For this reason though, you can sometimes end up with higher interest rates. They are often a little more flexible with your credit score though as long as you can prove that you are financially stable and able to make your payments. That being said, CMHC rules do state you need to have a minimum credit score of at least 680 in order to qualify for an insured mortgage, which is needed for most mobile and manufactured homes.

Mortgage Broker

Ultimately, many mobile home buyers find it very difficult to get a mortgage on their own. First, it is hard to know which lenders will qualify you and, honestly, it can be daunting to figure out where to start. That is where a mortgage broker comes in. They go through your finances as well as your credit history to determine what you qualify for and then, based on the home that you choose, they work to find you the best approval that they can. They can find you a lender that works for you as well as compatible with what you are choosing to purchase.

One thing to keep in mind, though, is that not all mortgage brokers are willing to look for financing for mobile homes. Don’t let that scare you because many still are so be sure to call around. While they may not have been as popular a few years ago, more and more Canadians are gearing towards purchasing mobile homes because they may not be able to afford to purchase otherwise. Even though financing is more expensive, it is still cheaper than renting if you can even find a place to rent.

A-277 (Modular Homes) and Z-240 (Mobile Homes)

While these numbers may not seem super important at first glance, they actually are. All mobiles that are being bought, sold or moved, must have a valid CSA number, whether it is a CSA 277 or CSA Z240. Every mobile must have this sticker attached as well. It is either on the outside of the trailer or inside the kitchen cupboards, others can be found on the electric panel as well. This specific identification number is registered in the manufactured homes registry, sometimes referred to as the personal property registry.

CSA A277

Unlike the Z240, the A277 isn’t a building code. It is actually a certification standard. Basically it can only be used to verify a residential, industrial or even a commercial for compliance with certain building standards. Where this unit is being placed must hold those standards. In Canada, the CSA A-277 certification meets most building standards, while the CSA Z240 does not.

CSA Z240

THe CSA Z240 is the National Standard for manufactured/mobile home constructions according to the CSA. You can have this type of mobile home in most of Canada, except for in Alberta. Alberta requires you to have a CSA A277 standard manufactured home.

Overview

If you are looking at purchasing a mobile/manufactured home, it is important to look at all of the factors before you make any decisions. Can you afford the more expensive financing? Is this a wise investment for you financially? Are you putting on land or purchasing on leased/owned land with a rental fee? Is it a high pad rental fee? Can you maintain the rules of the park? There are so many factors to consider but for many it is a great choice. Just like with mini homes, apartments and even condos, many Canadians are turning to different types of housing besides the traditional single family home. With increased inflation, many of these options are becoming more appealing to buyers.

That being said, no matter what you choose to buy, it can add up fast with moving costs, closing costs and many other hidden fees that come with purchasing. Inevitably you may need to purchase new appliances or furniture as well. This is where Spring Financial can help. While we don't offer mortgages for mobile/manufactured homes, we do offer personal loans for all credit types. These loans range anywhere from $500 to $35,,000. So, once you have made your purchase, give us a call at 1-888-781-8439 or apply online in just 3 minutes. You can receive your money in as little as a few hours after approval. No matter what you need the money for, Spring Financial can help you out.