Manufactured Home Communities (MHCs) — what many still call mobile home parks — have quietly become one of the more resilient parts of the housing stock. In June, the U.S. Department of Housing and Urban Development (HUD), through the Federal Housing Administration (FHA), announced a new loan product for Manufactured Home Community financing. The program is limited to certain mission-focused entities, such as resident-owned communities, cooperatives, non-profits, state and local governments, community development financial institutions, and Indian tribes — who may use it to finance acquisitions or improvements, including updates to common areas and efforts to maintain rent affordability.
That announcement underscores a broader trend: growing recognition of MHCs as an affordable housing option that pairs the pride of ownership with genuine affordability.
For investors interested in this asset class, the financing side can be more complex than a traditional multifamily deal. Here’s what to know.
What Lenders Typically Look For
Requirements vary by lender, but most manufactured housing loans expect:
- Skirting installed on homes
- More than 50% doublewide units
- Off-street parking
- All roads paved
- All hitches concealed
- No option to purchase individual pad sites on leases
- A DSCR of at least 1.25x–1.30x
- An existing, stabilized property with 50+ pad sites and 90%+ occupant-owned homes
Financing Options for Mobile Home Park Investments
1. Traditional Bank Loans
Commercial banks are a common financing source, typically requiring a 20-30% down payment, with terms based on the lender’s risk assessment. Interest rates are often tied to the prime rate, with loan terms ranging from 5 to 25 years. Some banks — particularly smaller community banks — may be hesitant to finance mobile home parks, viewing them as higher risk. This option tends to work best for shorter-term business plans where the investor may hold for several years before selling.
2. Government-Backed Loans
Fannie Mae/Freddie Mac loans offer flexible 5-, 7-, and 10-year terms with amortizations as long as 30 years. These loans are non-recourse and allow LTVs as high as 80% for eligible properties — best suited for high-quality, stabilized product, since these lenders scrutinize the property closely.
SBA 7(a) loans can be used for the purchase, renovation, or refinancing of RV parks and campgrounds (not MHCs), which can qualify as SBA-eligible businesses. These loans typically offer lower down payments, as low as 10%. Standard MHC investments do not qualify under SBA.
3. Private Lenders and Hard Money Loans
For investors who need quicker access to capital or can’t secure traditional financing, private lenders and hard money loans are viable options. These loans rely more on the property’s value than the borrower’s creditworthiness, making them easier to obtain, but they come with higher interest rates and shorter repayment terms — better suited to short-term financing or turnaround projects. Private money can be a good solution for an MHC that needs substantial rehabilitation to reach a stabilized state, serving as interim financing.
4. Seller Financing
In some cases, a mobile home park seller may be willing to finance part or all of the purchase. This can be especially useful for buyers who can’t secure traditional financing or want more flexible terms — and it can be a great option for a seller facing a large tax bill on sale, since seller financing spreads out the tax impact over time and creates a steady, passive income stream.
5. CMBS (Commercial Mortgage-Backed Securities)
CMBS financing is generally available for stabilized property types, often starting at $2 million with LTVs up to 75%. After closing, these loans are packaged and sold on the secondary market by banks, lenders, and other institutions. It’s a good option for large purchases with a long-term hold, though these loans usually carry substantial prepayment penalties (defeasance).
Strategies for Securing Financing
- Tell the story. This is often overlooked, but it can be the most crucial part of securing the ideal financing. Write an overview of why you, as the investor, like the deal — are there location strengths that might not stand out to the average reviewer? A strong relationship with the local municipality, which wants to see the investment you’ll bring to the community? A well-told story that gets to the heart of why a deal makes sense — financially and for the community — can make all the difference.
- Build a strong business plan. A well-prepared plan outlining potential revenue growth, occupancy improvements, and expense management is essential. Lenders want to see a clear path to profitability and a plan for mitigating risk.
- Prepare for due diligence. Lenders will conduct thorough due diligence before approving financing. Be ready to provide detailed financial statements, tax returns, a comprehensive property inspection report, and information about the park’s operations.
The Bottom Line
Financing a mobile home park investment requires a strategic approach that accounts for the unique aspects of the property, the market, and the investor’s financial position. Understanding the available financing options — and preparing thoroughly for the lending process — helps investors secure the capital they need to enter this increasingly recognized corner of the housing market.
