Home Only: The Most Common, Most Efficient Loan When Financing Without Land
Home only loans, also known as chattel loans, are personal property loans made for the purchase of a manufactured home that is not permanently affixed to real estate.
These loans are the most common and most utilized for financing manufactured, modular, and mobile homes. They are also the least complicated, most expedient, and require the least cash down payment. Chattel loans also offer lower monthly payments than other types of so-called traditional home loans.
In the U.S, 70% of all manufactured homes are placed on private property, primarily in rural areas, and often are not attached to real property and financed utilizing home only chattel loans.
Approximately 30% of all manufactured homes are sold and sited in manufactured home land-lease communities (often called “mobile home parks”) and financed as home only loans.
Typical home only loan interest rates are 3-5% higher than a traditional mortgage. Down payment requirements may range between 5% to 20%. Terms for these loans are usually capped at 20 years.
Today’s modern manufactured homes are comparable with traditional site-built homes in every respect, with an amount to finance about half that of a site-built home. Because of the large price difference, the initial cash investment in the form of a down payment will be much lower and the total monthly payment requirement, including space rental, will be considerably lower as well. This can all be had without sacrificing quality, amenities, or square footage.
The retailer selling the home will often include minimal site preparation costs within the total selling price and in the amount to be financed, if the retailer utilizes in-house personnel or an on-site contractor bearing their approval.
Manufactured home only loans require less processing and documentation, dramatically reducing the time frame from application, approval, and delivery to home occupancy.
Some lenders do not offer home only chattel loans on mobile homes built before 1976 HUD regulations for manufactured homes became effective, so keep this in mind when choosing a lender.