Why can't MHP tenant qualify for single family home mortgage?

Single family home 100k with FHA loan(3.5% down) only cost $454 a month (30 yr fix rate)

Some MHP lot rent is about the same price. Why can’t the tenant just get a loan for single family house?

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Because they don’t meet underwriting guidelines, such as debt to income ratio, or maybe they don’t have good credit.


A lot of folks don’t have 3500 down and enough spare money to fix a house if something goes wrong.


Usually due to the fact that they have zero savings and will likely never have any. They either live pay check to pay check or are on welfare.

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Some of our tenants would ask to finance the $454 first month rent. Not that we would do that, but that is indication of their limit of affordability. To come up with a $3500 down payment would have to be the result of a lottery winning or some other windfall.


In areas where SFR with bad credit is available for $454 / month on a $100k home, equivalent MHC lot rents are not over $350, I reckon.

In areas where MHP rent is up over $450, 3BR SFR is probably at $250k+.



Brandon’s logic seems correct.

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They will have to include taxes and insurance as well. This Ratio has to be in line with underwriting guidelines plus their total Debt To Income Ratio has to be in line as well.

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Might also have to do with the difference between real and personal property. Also the collateral issue mentioned below - a MH would be tough collateral for a bank if they didn’t have systems in place to store/sell it.

21st Century Mortgage and Clayton Homes (both owned by Berkshire Hathaway - Warren Buffet), have very attractive financing options for MHs. Frank discusses it in an interview here with Ryan Howerton:

I would be interested in hearing from anyone that has had any success with the 21st Mortgage. My experience was a complete let down for both new and used homes. I don’t even consider it a viable option as a park owner. I was looking for them to finance homes in my park(s) for potential buyers. I should note that I have purchased new Clayton homes for placement and sale in my parks recently.

I did not need capital to buy homes, just a means to finance a home for buyer. The 21st Mortgage process, as it was explained to me, requires the owner to guarantee the loan for each buyer. Not a path I care to go down.

The 21st Mortgage business model appears to be the park owner takes all the risk and 21st Mortgage takes all the money. I would love to be proven wrong in my assessment if someone has a different experience. Thanks.

Interesting why Warren would buy Clayton Homes, has sales-:heart_eyes:lots, mortgage (lending) branch and control OVER 50% of that market versa buying mobile home parks. Warren is very conscience of owning businesses with a large moat around them (total control) and than still charging home owner over 8% and than placing the collateral problems on park owners. Buffet is brilliant (the Oracle from Omaha) and our family experience with this family he will always have the best cards and for awhile you might think you ??? He is an honest business man but much more business sophisticated than 99.99% of the population.

Mick, I am curious as to why the program was a let down to you. I understand you are not in favor of the owner guarantee, but you knew that before you signed up (or should have known). Also, if you have enough cash, why did you sign up in the first place?

Now that you signed up under those terms, what went wrong? Are you not able to sell your new or used homes? Do tenants not want to apply for the mortgage? What is the specific let down?

mPark, After many emails and conversations with representatives I determined the 21st Mortgage program was not an option for me or my buyers. It was very difficult to get a straight answer from a representative, they would dance around the issue of the “owner guarantee” and never answer my question directly, which was - “do I guarantee the loan for a buyer?” In fact, your question is the closest I have ever gotten to someone stating it right up front.

The response was along the lines of “let us send you an application, you should complete an application”. Always vague about why they simply would not answer my question directly. I was even told at one point that I did not need to guarantee the loans, only to receive an application that clearly included the loan guarantee.

The reason I was interested in 21st Mortgage is because they specialize in mobile home lending. Its not always easy to find lenders for such loans, 21st could have been the one to do that. It would have been great to know I had that “partner” that I could send buyers to and that understood the mobile home lending process.

From my perspective, the park owner, the organization comes across as less than honest and not trustworthy. Why can’t they (you?) write loans like any other lender? Leave the park owner financially out of it.

It would be great, and I’d still be interested…

My question is WHY Warren would be a dominate players in the MH business (Clayton Homes) and never buy ONE mobile home park or buy out a syndication where buying 50 parks or more is possible. Why does he need 21st Century to charge such high interest rates when presently SBA has loans as low as .5% ? Why does he tie up park owners for collateral. AS I have said he has the winning cards and watching him can be very rewarding financially. He will put just the smallest piece of meat on the table to find takers and now we hear some unfortunate stories. HE is brilliant and the best business person to take lessons from (at least for me).

Does anyone recommend alternatives to 21st Century, for example CAVCO’s purchase program ? Or simply having tenants finance directly with a different national chattel lender or a local bank?