Multiple Loan Type Options Available for Manufactured Home Purchasers

There are numerous home loan programs available for purchasers of manufactured homes. Often the loan type is dependent on the intended home placement site and how the home will be installed on that site.

CAPSULE LOAN TYPES

The following are brief descriptive capsules of the most common loan types available to manufactured home purchasers. Note: Manufactured home financing program terms, interest rates, conditions and availability are subject to change from time to time, as well as the introduction of new programs in the future.

Home Only Purchase Loans

Home only loans (chattel) are personal property loans made for purchase of a new or pre-owned manufactured home that is not permanently attached to real estate and not encumbered into the loan.

Records indicate that a home only loan is the preferred choice of manufactured home purchasers who own the land upon where the home is sited without encumbering the land. Consider these statistics:

• 65% – of manufactured housing residents who own their home, also own the land it is sited on.
• 76% – of borrowers in 2019 who own their land and took out a loan to buy a manufactured home, financed the purchase with a chattel (home only) loan.
• Home only loans are the most common type of financing for manufactured homes in manufactured home communities (a.k.a. mobile home parks) and on private property. Home only loans are also the least complicated, most efficient, require less documentation and are, by far, the most expedient.

Typically, home only (chattel) loans require a minimum down payment between 5 to 20 percent of the total purchase price with an interest rate 2 to 5 percent higher than a mortgage loan. Maturity terms are usually 15 to 20 years.

Land/Home Purchase Loans

Buying property and a new manufactured home at the same time offers the buyer some big financing advantages. 

Because real property is involved, a better mortgage may be arranged with a conventional mortgage.

Conventional loans do require more documentation and a more detailed process, but the money saved by the borrower may be worth it. 

Financing a package utilizing land requiring site construction will require that those home site costs be prepared and/or completed by the purchaser prior to the home being delivered to the site.The alternative is the retailer assisting the buyer in obtaining a companion land/home construction loan.

Land-in-lieu Financing

Most manufactured home lenders will offer a hybrid loan that finances the home as a chattel loan combined with the land with a real estate loan secured by the property where the home is sited.

The most common utilization of land/home financing is wherein the home purchaser refinances the owned land with equity used in lieu of the manufactured home down payment or an outright purchase.

Footnote: The three loan types as posted above are the most utilized financing programs for manufactured housing. Other programs, such as construction loans, end loans, FHA Title 1 home only loans, VA loans, USDA loans and MH Advantage loans are available, but may not be as easily navigated as those we have highlighted.