Pay Dirt Series – Financing Mobile Homes on Owned Land

When you get outside the major cities, its not uncommon to see mobile homes on land.  In other words, the borrower owns both the land and the mobile home.  Depending on the province, the rules about whether the home is a chattel or a fixture vary, but regardless of the legal structure, there is usually a way to finance these properties.

There are a couple of considerations to keep in mind if one of these deals crosses your desk.

The age of the home will be important.  Mobile homes tend to depreciate faster than traditional stick-built homes.  As such their economic life is usually shorter, so you may see lenders put more emphasis on the value of the land if the home is older.

The lender may also want the appraisal to show how the home is affixed to the land.  We’ve seen some questionable ‘engineering’ used to support the home, which usually detracts from the value that can be put on the home.  Ideally the lender wants to see concrete piles, or steel screw piles are good, or alternatively, blocking and tie-downs that meets building code.

Also, many of these homes have had additions built on to them.  Lenders will usually insist that there be evidence that these were done with permits and inspections, especially for any electrical work that was done.

While they’re a bit different from traditionally built homes, mobile homes on land owned by the borrower are usually financeable.