When it comes to financing manufactured homes, two common options are chattel loans and traditional mortgages. Each option has unique features. As a result, it’s key to understand the differences between manufactured housing chattel loans and traditional home loans. We’ll break down how each type of loan works, who might benefit most from each option, and key factors to consider.
Understanding Manufactured Housing Chattel Loans
A chattel loan is a type of financing used to purchase movable personal property. For manufactured housing, chattel loans cover the home itself, without requiring the buyer to own the land. This loan type is often used when the home will be placed on leased land, in a manufactured home community, or even on a family member’s property. Chattel loans offer flexibility for those who only need to finance the home without the land it sits on.
How Traditional Mortgages Work for Manufactured Homes
A traditional mortgage, also known as a real estate mortgage, is a loan secured by both the home and the land it sits on. A traditional mortgage may be an option for buyers who own or are purchasing the land along with the manufactured home. This type of loan often includes longer terms, ranging from 15 to 30 years. It also tends to bring lower interest rates compared to chattel loans.
Key Differences Between Chattel Loans and Traditional Mortgages
- Loan Terms and Interest Rates
Chattel loans tend to have shorter terms (10–20 years) and higher interest rates due to the loan covering only the manufactured home. In contrast, traditional mortgages offer longer terms (15–30 years) with generally lower interest rates. This will make monthly payments lower. For those aiming to reduce long-term costs, a traditional mortgage might bring more favorable terms if the land is included in the purchase.
- Down Payment Requirements
Down payments for chattel loans are often lower, which can be an advantage for buyers with a limited budget. Traditional mortgages, on the other hand, may require a larger down payment, especially for buyers financing both land and home together. A chattel loan can provide a practical solution for first-time buyers or those seeking an affordable entry into manufactured homeownership.
- Ownership Flexibility
Chattel loans offer greater flexibility. They allow buyers to place their manufactured homes on leased land. This arrangement is often preferable for those moving into established manufactured home communities, as it doesn’t require buying land. With a traditional mortgage, however, buyers commit to purchasing both the home and the land. Therefore, it’s a more permanent investment in one location.
Choosing the Right Loan for Your Manufactured Home
Choosing between a chattel loan and a traditional mortgage depends largely on your long-term goals, budget, and preference for land ownership. A chattel loan delivers affordable access to a manufactured home with flexibility in placement. It’s ideal for those who plan to live in a manufactured home community or lease land.
Alternatively, a traditional mortgage suits those looking to invest in real estate by purchasing both the home and land. It comes with benefits like equity building and potential property appreciation.
Whether you’re drawn to the flexibility of a chattel loan or the long-term investment of a traditional mortgage, financing a manufactured home can open the door to affordable and comfortable living. Consider your financial goals, budget, and living preferences to determine the best option for you. With thoughtful planning, you can find a financing solution that makes owning a manufactured home possible and practical.
At Cambio Communities, our mission is to create welcoming, high-quality living environments at affordable prices for individuals and families who choose to call our communities home. We’re equally committed to offering our team members rewarding career paths that encourage growth and teamwork. Explore our manufactured home communities today to find your perfect fit.
