Mortgage options vary for mobile home

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Dear Dr. Don,
I am trying to get a mortgage on a double-wide mobile home located by a lake. This is a vacation home and not a primary residence. It has a half-acre lot with it and is weatherized to be a year-round home.

I seem to have trouble getting a conventional mortgage. I am being told for a conventional mortgage it has to be my primary residence. My only option seems to be a home equity loan on my primary residence. Any advice?
— Karl Consults

Dear Karl,
Financing the purchase of a sited, existing mobile home has always been more difficult than conventional financing. There is a Federal Housing Administration loan program for manufactured housing, but it requires the owner to use the home as his or her primary residence. Maybe that’s the source of your earlier advice.

Fannie Mae has a loan program for manufactured housing that allows second homes to be eligible for conventional financing. Its “Manufactured Housing” Web page, while written for loan underwriters, explains the program. Freddie Mac also has a loan program for manufactured housing that can include second homes. It explains its loan program in the fact sheet “Manufactured Homes.”

Taking out a home equity loan against your primary residence to finance the vacation home can work, but it’s possible that not all of the mortgage interest expense is tax deductible. See IRS Publication 936, “Home Mortgage Interest Deduction,” and read the discussion on the home equity debt limit.

I’d suggest working with a mortgage broker to find mobile home financing that works best for you. Before shopping for a mortgage broker, read the Bankrate feature “Want your mortgage wholesale? Try an upfront broker.” You should have financing options. Flesh them out and make the decision that’s best for you.

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