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Navigating Construction Loan Options for Modular Homes: Find the Ideal Solution for Your Family

Michael Green

Updated: Dec 30, 2024




A critical step of turning your dream home into a reality, is knowing how to finance it! Modular homes are popular because of their cost-effective, customizable, and efficient path to homeownership, so understanding your financing options is essential. At Corey’s Construction we are here to guide you through all the different construction loans available so you can experience smooth financing from start to finish

Why Choose Construction Financing for Modular Homes?

Construction loans are specially designed to finance the building of homes, including modular homes. Unlike traditional mortgages, which cover the cost of a completed house, construction loans are disbursed in phases as the project progresses. 

This gradual disbursement will allow you to efficiently manage all expenses as your home is being built. Upon home completion, these loans will frequently turn into permanent mortgages, which makes the transition into homeownership seamless.


Here is a list of popular financing options available:


1. Conventional Construction Loans

These loans typically require a strong credit score, a down payment of 10%-20%, and a good debt-to-income ratio. Qualifying for this loan will allow you to benefit from competitive interest rates and flexible terms. One of the biggest advantages of these loans is that they will convert into permanent mortgages once your home is completed, which simplifies long-term financing


2. Builder Financing

Corey’s Construction, and some other modular home builders, can offer in-house financing or have a partnership with lenders that specialize in modular construction. This form of financing often simplifies the process by combining construction and financing into a single package. This often includes competitive rates and more flexible terms since we are invested in keeping the project on track. 

This financing option allows for an integrated experience where the builder and lender are able to work together and guarantee that every stage of the construction process is funded correctly and in a timely manner.


3. VA Loans

If you are a veteran, active-duty service member, or eligible surviving spouse, these loans are a great option for the financing of your home. These are backed by the U.S. Department of Veterans Affairs and offer the following benefits: no down payment, no private mortgage insurance, and lower interest rates

For those who qualify, VA loans provide one of the most cost-effective paths to building a modular home. Corey’s Construction can help you work with VA loan specialists who understand the unique process of building modular homes.


4. Public Servant Loans

Public servant loans are available to teachers, police officers, firefighters, and other public service professionals. These loans are designed to offer favorable terms such as reduced down payments, lower interest rates, and more flexible qualification standards.

If you’re a public servant, you may be eligible for additional assistance programs that help make building your modular home more affordable.


5. FHA Loans

These loans are insured by the Federal Housing Administration and are frequently a great option for first-time homebuyers. This is because they are designed to have smaller down payments as well as lower credit scores. Down payment can be as low as 3.5% which makes it more accessible for those with smaller savings. They also have more flexible credit requirements, making it a great choice for families looking to build with a smaller upfront investment. Similar to other options listed, these loans also turn into a permanent mortgage upon construction completion.


What Lenders Look for When Financing Modular Home Construction

Lenders will evaluate several factors to determine your eligibility for different construction loans, including:

  • Credit Score: more conventional loans will typically require higher credit scores (620 and above), but FHA and VA loans often have more flexible credit requirements

  • Down Payment: This amount varies based on the loan type - FHA loans can require as little as 3.5% while others can require anything from 10-20%

  • Debt-to-Income Ratio (DTI): Lenders will assess this to ensure you can handle monthly payments on your loan without forcing you into financial strain.


How Corey’s Construction Can Help You Finance the Construction of Your Modular Home

We understand that financing is one of the most important parts of building your home, so we offer personalized guidance to help you work through each and every step of the loan process. We have a team of finance specialists who work closely with lenders and have extensive background in modular homes specifically. This will help to ensure that the loan you choose is the best for your needs. Regardless of loan type, we will work with you to find a solution so you and your family can align your financials with your future.


Take the Next Step in Financing Your Modular Home

Securing the right financing is the first step in building your modular home. Regardless of whether you are a first-time home buyer or an experienced homeowner, we are always happy to assist you in every phase of the process. To learn more about what loan might be best for you, schedule a call with one of our finance specialists today! Let’s bring your vision to life!



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