Down Payments Explained: How Much Do I Need for a Mobile Home Loan in CA & AZ?
There is no single down payment for a manufactured home loan. The amount depends on the program, your credit, the home itself, and whether the land under it is leased or owned, so two buyers looking at similar homes can be asked for different amounts.
You can still see today what different amounts would do to your loan. Enter a home price in the payment calculator and try two or three down payments; the results are educational estimates, not a loan offer. Then ask for the requirement that applies to your scenario, because a percentage published for another kind of loan will not tell you.
What a down payment does
The down payment is the part of the price you pay rather than finance. It lowers the amount you borrow, which lowers the payment. It also gives the lender a cushion: the loan is smaller than the home’s value, and you have your own money in the home.
Lenders measure that cushion as loan-to-value, or LTV: the loan amount divided by the home’s value. They weigh it together with your credit and income, which is why the requirement is not one flat figure.
What moves the requirement up or down
Factors that change a down payment requirement
| Factor | How it affects the down payment |
|---|---|
| Leased or owned land | A home in a land-lease community is financed on its own as personal property. A home on land you own can often be financed with the land as real property. Each loan type has its own requirements. |
| The home | The home is the collateral. Its age, whether it was built to the HUD Code (on or after June 15, 1976), its size and its condition affect which programs will lend on it. |
| Your credit history | Credit requirements vary by program and investor. A thin or damaged credit file can mean more cash is expected. |
| The program | Each program sets its own rules. Government-insured programs exist, with their own eligibility, property, foundation and fee rules. Ask whether one fits your situation. |
| Land you already own | On a land-and-home loan, equity in your land may be able to stand in for some or all of the cash. |
That last row is called land in lieu, short for land in lieu of a cash down payment. Whether it is available depends on the land’s value, any liens against it, the program, and your qualifications.
Choosing an amount means choosing what to keep
The program sets the least you can put down. Above that, the amount is your decision, and it is really a choice between borrowing less and keeping more cash on hand.
Run both versions of your own numbers through the calculator to see what the difference does to the monthly cost. A lender may also look at what you will have left after closing, so emptying every account to reach a bigger down payment is not always the stronger application.
The down payment is not the only cash you need
A buyer who saves only the down payment comes up short at closing. Depending on the transaction, cash to close can also include:
- Escrow, title and recording fees.
- Valuation and inspection. An appraisal or value review, and any inspection you order yourself.
- Insurance. The first homeowners premium, since the lender requires a policy before the loan funds.
- Prepaid property taxes, where they apply.
- Community move-in costs, for a home on leased land. Ask the office about its application fee, any deposit, and when the first month of space rent is due.
- Moving costs and utility deposits.
The calculator’s “Estimated Cash to Close” section adds estimated closing costs and setup or transport fees to your down payment, so you can see one total.
Which money counts, and how you show where it came from
Lenders generally verify the source of down payment funds, so you need to show where the money came from as well as how much there is. The Consumer Financial Protection Bureau’s guide to building a loan application packet lists the same kinds of records.
Common sources of a down payment and how each is documented
| Source | What you are usually asked for |
|---|---|
| Your own savings | Recent bank or investment statements showing the money in your account |
| A gift from family | A signed gift letter saying the money is a gift and not a loan, plus proof of the transfer. Some programs limit gifts or do not accept them. |
| Sale of your current home | The closing statement showing your proceeds |
| A retirement account | Account statements and the terms of the withdrawal or loan. Talk to your tax preparer first. |
| Borrowed money | It usually has to be disclosed and counts as a debt. Ask before you borrow any part of a down payment. |
Taking money out of a retirement account can have tax consequences. That is a question for your tax preparer, and nothing here is tax advice.
Santiago Financial, Inc. keeps a gift letter and a deposit verification form with its other printable forms. If you are buying from a relative, part of the home’s value can sometimes be given as a gift of equity instead of cash; buying a manufactured home from a family member explains how that sale is documented.
Cash is one of three things that cap a loan, along with the home’s value and the payment your income supports. How much you can borrow shows how they fit together. To find out what a specific home would require, talk with a specialist before you make an offer.
