Financing a Mobile Home Park: Why Only Pad Rent Counts

A mobile home park is an eligible property type in our Small Balance Commercial program, but only one revenue line is underwritten: pad rent. Park-owned homes are given no value, their rent is not counted, RV space rent is not counted, and outside storage income is not counted.

That is not a haircut. It is a different revenue base. An operator who has spent five years buying homes to fill vacant pads has built a business whose income statement and whose underwritten income statement do not resemble each other. In the worked illustration further down this page, that gap is roughly a third of gross revenue, and it lands on the loan amount, on the appraised value, and on the down payment the buyer has to bring.

This page explains what is excluded, why, what it does to a valuation, and the three places the written guideline is silent so you can raise them with an underwriter before you are under contract instead of after.

The rule, in the program's own words

The eligible property type list says the same thing in shorter form: Mobile Home Parks are eligible, with the parenthetical that no park-owned trailers or their income will be included in value.

The exclusion is restated a third time in the cash flow analysis section, which is where it does the actual damage, because that is the section that builds net operating income.

Three separate provisions, all pointing the same direction. This is not an underwriter's discretionary call you can argue out of on a strong file. It is written policy in three places.

Why pad rent is the only line that counts

The reasoning is that the collateral is land and infrastructure, not houses.

When you finance a park, the mortgage attaches to real property: the dirt, the pads, the utility runs, the roads, the entry, the office building if there is one. A home sitting on a pad on a pier-and-tie-down setup is not part of that. It is chattel — titled personal property, transferable, movable, and in most states carrying its own title rather than being described in the deed.

Our guideline is explicit that the underlying real estate is what secures the loan. The list of unacceptable collateral includes properties without permanent reinforced concrete foundations, and the ineligible property type list separately names mobile and modular homes not on permanent foundations and/or not subject to real estate taxes. A park-owned home on a rented pad is generally both: not permanently founded, and taxed as personal property rather than as real estate.

There is a second and more practical reason. A lender that credits a park-owned home's rent is lending against an asset it may not be able to reach in a default and could not sell as part of the real estate. The guideline handles borrower personal property this way:

That last sentence is the whole principle in one line. Personal property can be pledged. It does not move the LTV. Park-owned homes fall on the wrong side of that line, and so does the income they throw off.

What counts and what does not, line by line

Here is how a typical park's revenue lines map onto the underwriting.

Two things worth pausing on.

First, the cell tower and the billboard. Park owners treat these as the cleanest income on the property — a creditworthy counterparty, a long ground lease, no operating expense. They are excluded anyway. The exclusion is written by source, not by quality.

Second, the word "storage" appears on both sides. The includable examples name laundry, storage and parking as stable and typical ancillary income. The exclusion names outside storage. The separate self-storage property type is described as traditional self-storage only, with no credit to outside storage income. The consistent reading across those provisions is that a back lot where people park boats and RVs is outside storage and is excluded, while an enclosed storage room a tenant rents inside a building is closer to the includable category. The guideline does not draw that line for you in so many words. If storage revenue is material to your deal, get it confirmed in writing before you rely on it.

A worked illustration

Every figure below is invented for the purpose of showing the mechanism. Nothing here is a quote, an approval, or a representation about your park. Rates, cap rates, expense ratios and vacancy factors are not published in the guideline and are not supplied here.

Take a hypothetical 60-pad park. Forty-two pads have tenant-owned homes paying $425 a month. Fourteen pads carry park-owned homes rented all-in at $850 a month. Four pads are vacant. There are eight RV spaces at $500 a month and a back lot generating $1,800 a month in outside storage. Laundry runs $600 a month.

The range on the underwritten column is the honest answer, and it is the single most important thing on this page.

The guideline says two things about the fourteen park-owned homes. Only pad rental income is considered, and no value is given to park-owned trailers. It does not say whether the pad underneath a park-owned home is credited at market pad rent. Read strictly, the $850 all-in rent is not pad rent, so nothing is counted and the underwritten total is $221,400. Read as an allocation, the pad component of that $850 is pad rent and is credited at the park's market rate of $425, adding $71,400 and bringing the total to $292,800.

That is a $71,400 swing in gross revenue on one 60-pad park, driven entirely by a question the written policy does not answer. Ask it. Ask it before the appraisal is ordered.

What it does to debt service

Continue the illustration with invented operating figures. Assume the same 7% vacancy and collection factor on both columns, invented operating expenses of $168,000 on the operator's revenue base and $112,000 on the underwritten base — the operator's number is higher because maintaining, turning and repairing fourteen park-owned homes costs real money.

The 1.15x is not invented. It is the minimum property DSCR for investor purchases and investor cash-out or rate-and-term refinances under the program.

The supportable annual debt service falls by roughly a third. Converting that into a dollar loan amount requires an interest rate and an amortization term, and rates are set in the Pricing Matrix at the time of the Letter of Intent rather than published in the guideline, so no loan figure is given here. But the direction and the magnitude are the point: the same park, the same rent roll, a debt service capacity about two-thirds of what the operator would calculate.

What this does to a purchase

The seller is selling a business. You are buying real estate that happens to have a business attached.

A park listed on total revenue and a park financeable on pad rent are two different prices, and the difference does not come out of the seller's pocket. It comes out of your down payment, because LTV is calculated on the lower of the internal value from appraisal review, the adjusted sales price net of material credits, or the appraised value — and the appraiser's income approach is working from the same restricted revenue base the underwriter is.

If the appraisal comes in on pad-rent-supported value and the contract price reflects total-revenue value, the loan sizes off the lower number, and every dollar of the difference is cash you bring on top of your normal equity.

There is one structural response worth knowing about: sell the park-owned homes to the residents. A home sold to its occupant converts an excluded rental stream into a pad rent stream that counts, removes the operating expense of maintaining it, and moves the resident toward being a tenant-owner rather than a renter. Whether that is right for your park, and how the sales should be papered, is a business and legal question rather than an underwriting one. But it is the most direct way to close the gap, and it takes time, which means it belongs in your plan before the loan application rather than after.

How a park is classified and underwritten otherwise

The pad rent rule is the headline, but it is not the only thing that shapes a park file.

A park is always an investor property. The guideline classifies a Manufactured Housing Park as an Investor Property regardless of occupancy, alongside multifamily, 1-4 unit residential and PUDs. You cannot underwrite a park as owner-occupied by living on site. That means the property DSCR, not global debt service coverage, is the underwriting method.

Tier II. Parks sit in Tier II, which is the tier that carries the commercial property types rather than multifamily and residential-majority mixed-use. Maximum LTVs by property type, tier and credit program are set in the current Pricing Matrix rather than in the guideline text.

The program parameters that do appear in the guideline for investor loans: loan size $100,000 to $2,500,000, maximum exposure across all products $6,250,000, minimum property DSCR 1.15x, minimum occupancy 75%, and a stabilization requirement that the property has held 75% occupancy over a 90-day trailing underwriting period. Maximum LTV is 80% for purchases with a FICO of 725 or above and 75% for cash-out and rate-and-term refinances.

Occupancy on a park is another silent question. The 75% occupancy and 90-day stabilization requirements are stated in units of occupancy, and the guideline does not say whether a pad under a park-owned home counts as occupied for that test. A park with a large park-owned inventory could plausibly be read either way. Raise it.

Experience and location can cut the ceiling further. An inexperienced investor — someone who has owned at least one property for twelve months but does not meet the experienced test — is capped at 70% LTV, and ownership of a primary residence does not count toward experienced status. Separately, a property that meets MSA requirements but is deemed rural by the appraiser is capped at 60% LTV. Parks are disproportionately rural. That combination is worth checking early.

Management. The property must be managed by an experienced, reputable professional, third-party or self-managed. A self-managed commercial property requires the borrower or guarantor to live within 200 miles of it and meet the minimum investor experience standard, unless they can verify five or more years of ownership experience with real estate of like kind, size and geographic area.

Preparing a park file so the exclusions do not surprise you

Three practical steps.

Separate the rent roll before anyone else does. Produce a rent roll that shows, for every pad: tenant-owned or park-owned, the pad rent, and — where the home is park-owned — the all-in rent and your allocation between pad and home. Do not hand over a single blended rent column. If you make the underwriter and the appraiser do the split, they will do it conservatively.

Separate the ancillary income. RV spaces, outside storage, billboard and cell tower revenue should each be their own line, not folded into "other income." Lines that are going to be excluded are cleaner to exclude when they are already itemized, and a blended "other income" figure invites the whole bucket to be struck.

Bring the standard documentation. For an investor property the file calls for the most recent two years of operating statements or Schedule E plus year to date, and a current rent roll; the appraiser's rent roll analysis is acceptable. For purchases where the seller cannot produce a rent roll or operating statements, reliance is placed on the appraiser's analysis — which, for a park, means the appraiser's judgment about pad rent allocation drives your loan with no counterweight from your own numbers.

Two more items that apply to any file and are easy to overlook on a park. Post-closing liquidity reserves of six months of the qualifying principal and interest payment are required, measured as of the date of the final underwriting approval memo rather than the closing statement. And appraisals must be ordered through an approved Appraisal Management Company — an appraisal ordered directly by the borrower or the broker is not acceptable, and a report prepared for the borrower's benefit is not accepted at all.

What this page does not do

This is an explanation of one underwriting rule and its consequences. It is not an approval, a pre-approval, a quote, a rate, or a commitment to lend, and no figure here has been applied to a specific property.

It does not give you a loan amount. The worked illustration deliberately stops at supportable annual debt service, because converting that to a loan requires a rate and an amortization term that are set at the Letter of Intent rather than published.

It does not give you a maximum LTV for a park. Maximum LTVs by property type, tier and credit program live in the current Pricing Matrix, which changes.

It does not resolve the three silences it flags: whether the pad beneath a park-owned home is credited at market pad rent, whether such a pad counts as occupied for the 75% test, and whether expenses attributable to park-owned homes are excluded alongside their income. Those are underwriter questions on a specific file.

It does not cover titling, conversion of homes from personal to real property, park zoning, utility submetering law, rent regulation, or the tax treatment of selling homes to residents. Those go to your attorney, your accountant, and your municipality.

And it does not cover excluded income generally. For the broader treatment across all property types, read [what income a commercial lender excludes from NOI](/blog/what-income-a-commercial-lender-excludes-from-noi). This page is only about parks.

Guideline SBC 08/03/2026 · Reviewed August 31, 2026

Published August 31, 2026 · Updated August 31, 2026