Prospective manufactured homebuyers can struggle to find a loan, but a Durango nonprofit is offering a new financing option.
For the first time, HomesFund, a Durango-based nonprofit, is offering loans between $20,001 to $75,000, for manufactured homes to residents who qualify in La Plata, Montezuma, Archuleta and San Juan counties.
Up to half of those interested in buying a manufactured home from a local real estate agent can’t obtain a loan for the home, according to a HomesFund news release.
“We want to make sure low-income people that are purchasing these homes have the financial tools they need to complete that transaction,” said Lisa Bloomquist Palmer, executive director of the nonprofit.
The new loan program was made possible by a $600,000 federal award through the Community Development Financial Institutions Fund. The award will fund between eight and 11 loans over the next three years, she said.
The median home price in La Plata County is $425,000, which makes manufactured homes, with their lower price point, an affordable housing option for some residents, she said.
“Many people are finding that stick-built homes are out of their reach, and that the stick-built homes that they can afford are far away from employment centers,” Bloomquist Palmer said.
Still, manufactured housing is not necessarily a cheap option because residents in mobile home parks can owe monthly payments for their homes and lot space rent, she said.
While manufactured homes may not rise in value in the same way a traditional home will, those on the higher end are maintaining their value better than they have in the past because of the housing shortage, she said.
It is often difficult to find financing for manufactured homes because buyers rarely own the property it sits on. Manufactured homes in parks are typically not considered real estate; rather, they are personal property, similar to a car, Bloomquist Palmer said.
“The few lending institutions that are willing to lend to purchasers of manufactured/mobile homes often have unaffordable terms – with high-interest rates and unobtainable down-payment requirements,” she wrote in an email to The Durango Herald.
In 2017, 30 manufactured homes sold in La Plata County, of which 24 were purchased with cash, the news release said.
However, many low-income buyers don’t have access to the $20,000 to $90,000 cash needed to purchase such a home.
Living in a mobile home park can be risky, because the property can be sold and the residents required to leave.
Before HomesFund gives a loan, the agency asks park owners to verify they do not intend to sell the land where the home will be placed. Parks also have to verify they are not facing litigation and are not violating any safety regulations.
HomesFund has already received applications for the manufactured home loans, but none have been approved, Bloomquist Palmer said.
“We’re still ramping up the program,” she said. “We just launched it this year. It’s really to be determined what the demand will be.”