It is a common misconception that modular homes are harder to finance than site built. Whether you’re buying your first home or using your hard earned equity to move into your next one, there are several mortgage and financing products available for the modern home buyer.
While each person’s situation is unique, most banks, appraisers and insurance companies will treat modular homes the same way they do a site built home. Generally, if a home buyer would qualify for financing on a site built home, that same home buyer should also qualify for financing on a modular home.
The lender might choose to use a draw mortgage. Draw mortgages release money in phases as the project is completed. This is probably the most common financing option our lenders use. Often the bank (or lawyer) will pay out 85% of funds when the home arrives on site and the remaining 15% is released upon completion.
There are more financing options available today than ever. If you’re considering a new home purchase, your bank can best advise you on which option would be best for your situation. Some of the possibilities are:
- Traditional mortgage
- Draw mortgage as mentioned above
- Mortgage insured through CMHC’s “Chattel Loan Insurance Program” for homes being placed into land lease communities
- Mortgages insured through CMHC’s “On Reserve” programs for Aboriginal Housing
- Home equity loans
- Lines of credit
- Personal loans
If you’re considering a new home purchase but just aren’t sure where to start, CMHC (Canada Mortgage and Housing Corporation) has some excellent home buyer resources available on their website –http://www.cmhc-schl.gc.ca/.