May 11th, 2016 | More in Building On Your Lot, Home Finance

Understanding Zero Down Payment Options

Equity for a zero down payment optionHome buyers may qualify for zero down or low down payment options if they do their research before they buy a new manufactured or modular home.

Home buyers often ask, “What are the down payment requirements for a new modular or manufactured home loan?”   The real answer is that the amount of the down payment varies based on the type of  loan that the borrower selects.  In some cases, the borrower may even qualify for a zero down payment or low down payment program. So, it is important to research these options before purchasing a manufactured or modular home.

VA Loan or USDA Loan Products with Zero Down Payment Options

Let’s take a closer look at Zero Down Payment loan products.  Two of the more common home loan products with  zero down payment options are those done using a VA loan (Veterans’ Administration) or USDA loan (United States Department of Agriculture) product.  In order to obtain a VA loan, the borrower must either be active duty military or a Veteran.  The buyer must also prove that they are eligible to participate in the program with a Certificate of Eligibility.  Veterans can contact their local VA field office to check eligibility.  In order to obtain a USDA loan, the borrower must meet certain income limitations, and the property must be located in a USDA rural boundary area.  Click the link to check income and property eligibility at USDA’s website:

FHA Loans with Low Down Payment Options

Next on the list of zero down or low down options are FHA loans (Federal Housing Association), which only require 3.5% down, and any or all of the down payment can be gifted funds or gifted land equity.  FHA underwriting guidelines are typically a little more flexible with regard to debt ratio and credit history than most of the other investor guidelines.  FHA does require the borrower to pay both an upfront mortgage insurance premium as well as a monthly premium.

Conventional loan programs can require anywhere from 5%-30% down depending on whether or not loan is a construction loan.  When doing a construction loan, the down payment requirements on the loan products above don’t change.  However if you are selecting a conventional construction loan the down payment requirement is 30%.

Using Equity as a Zero Down Payment Option

Another zero down option is using existing land equity as a down payment.  Many borrowers purchasing a manufactured or modular home are replacing an older manufactured home on their property with a new one.  Frequently, the borrower has accumulated enough equity in the property to use it to cover the entire down payment.  In many instances, the seller also contributes the closing costs; so, in essence, the borrower obtains the home loan with no money out of pocket.

Brett Pierce, President of Retail Lending for CountryPlace Mortgage, one of Palm Harbor’s extensive network of lenders with experience in the manufactured home and modular home industry, provided this informative piece on zero down and low down payment options for buyers. For more information on this and other home financing options, visit or contact your local Palm Harbor Homes model center to find other experienced lenders in your area.

If you want more home mortgage options, contact the team at Palm Harbor Homes today. Call 1-888-466-3718 today to find a store in your area.

©2016 CountryPlace Mortgage, Ltd. (“CPM”) 15301 Spectrum Dr., Suite 550, Addison, TX 75001; Phone: 800-228-1828; NMLS ID #: 2124 ( Trade/Service marks are the property of CountryPlace Mortgage, Ltd. This is not a commitment to lend. Restrictions apply. All rights reserved. Some products may not be available in all states. CPM is not acting on behalf of or at the direction of HUD/FHA or the federal government. See for more information.

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The opinions expressed by the article do not necessarily reflect the opinions of Palm Harbor Homes.


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