When exploring ways to finance a manufactured home, most buyers start with traditional manufactured home loans or chattel financing. But if you’re a homeowner with built-up equity, you might be wondering: Can I use a HELOC (Home Equity Line of Credit) to buy a manufactured home? The short answer is sometimes, but with some conditions you’ll want to understand first.
In this article, we’ll break down what a HELOC is, how it works, and whether it’s a smart option for purchasing manufactured housing.
What Is a HELOC?
A HELOC (Home Equity Line of Credit) allows you to borrow against the equity in your current home. Think of it like a credit card backed by the value of your property, you can draw funds as needed, up to a limit, and pay interest only on what you use. HELOCs often come with lower interest rates than personal loans or credit cards, making them attractive for large expenses.
Can You Use a HELOC to Buy a Manufactured Home?
Yes, in many cases you can. Since a HELOC gives you access to cash, you can use those funds for nearly any purpose including buying a manufactured home. However, there are important details to keep in mind:
- You need existing home equity. If you’re currently renting or don’t own property, a HELOC won’t be an option.
- The manufactured home may need to be paid for in cash. Unlike a mortgage loan that goes directly toward the home purchase, HELOC funds are dispersed to you, meaning you’ll likely need to pay the dealer or builder outright.
- Your lender’s rules matter. Some HELOC providers have restrictions on how the funds can be used, so always confirm before applying.
Pros of Using a HELOC for Manufactured Housing
- Flexibility: You can use the funds not just for buying the home, but also for setup, land improvements, or interior upgrades.
- Potentially lower rates: HELOC interest rates are often lower than unsecured personal loans.
- Quick access to funds: Once approved, you can access money when you need it, which can speed up the purchase process.
Cons to Consider
- Risk to your current home: A HELOC uses your existing home as collateral, so failing to repay could put that property at risk.
- Variable interest rates: Many HELOCs have adjustable rates, meaning your payments could increase over time.
- Not always the best fit: If you don’t have enough equity or need a long-term structured loan, a manufactured home loan may be a better option.
HELOC vs. Manufactured Home Loans
While a HELOC can work for some buyers, most people purchasing manufactured homes rely on manufactured home loans (including FHA, VA, USDA, or conventional financing). These loans are specifically designed for manufactured housing and often provide more favorable terms for buyers who don’t already own property with equity.
If you’re buying your first home, a manufactured home loan may be the more straightforward path. If you already own property and want flexibility, a HELOC could be worth exploring.
Final Thoughts
A HELOC can be a creative way to buy a manufactured home, but it isn’t the right fit for everyone. The key is understanding your financial situation, equity position, and long-term goals. For many, a manufactured home loan designed specifically for manufactured housing will provide the security and structure they need.
At ManufacturedHomeLoans.com, we’re here to help you explore all your financing options, from HELOCs to specialized manufactured home loans. Ready to find the best path toward affordable homeownership? Visit us today to learn more and connect with lenders who understand manufactured housing.
