Manufactured homes, which the Biden administration has described as a “vital source of affordable housing,” make up about 10% of new single-family home starts in the U.S. annually. These modern versions of mobile homes are built to robust federal quality and durability standards that meet or exceed requirements for site-built homes but cost much less per square foot to build. However, financing denial rates for manufactured units are far greater than for site-built ones, presenting barriers to homeownership even for well-qualified buyers.
To illuminate the nature of and reasons for these higher denial rates, The Pew Charitable Trusts commissioned research from the University of North Carolina’s Center for Community Capital. The study, “Is Manufactured Home Financing Hard to Get? An Exploratory Analysis of Home Purchase Loan Applications,” used descriptive statistics and multivariate analysis to compare denial rates for manufactured versus site-built home loan applications. It examined variations across loan types, specifically between mortgages—real estate loans that finance the land and structure together—and personal property loans, which finance the purchase only of the home and not the land beneath it. The analysis found that, among applications that borrowers had filled out in full and could be evaluated by an underwriter, lenders denied those for the purchase of manufactured homes nearly eight times more often (54%) than those for site-built units (7%).
The study also showed that reasons for denial and underwriting practices tend to differ between manufacturing and site-built housing. Lenders most often deny loan applications for the purchase of manufactured homes because of borrowers’ credit histories, while excessive debt-to-income ratios are the main reason for rejection of loans for site-built housing. The research suggests that this is a function of underwriting practices that rely on credit history to qualify manufactured home buyers more than for buyers of site-built homes.
However, the exceptionally high denial rates for manufactured home loans are specific to loan programs that are not government-insured. Lenders deny applications for mortgages insured by the Federal Housing Authority (FHA) far less often than those for mortgages without federal backing. Although lenders are also more likely to deny applications for site-built home loans without federal insurance than those backed by FHA, the discrepancy in denials of uninsured versus insured loans is more pronounced for manufactured housing, even when controlling for borrower characteristics.
Further, denial rates were disproportionally higher for Black (71%), Hispanic (42%), and Indigenous (46%) applicants. White applicants had the lowest rate of denials at 34%. These differences remained even when controlling for other factors, such as borrowers’ income and debt-to-income ratios, as well as the home’s loan-to-value ratio and geography.