Chattel Loans: What Every Manufactured Home Buyer Should Know Before Purchasing

Last Updated on February 14, 2025 by Ian Golightly

Understanding Chattel Loans for Manufactured Homes

A chattel loan for manufactured homes is a specialized financing option that allows buyers to purchase a manufactured home without owning the land beneath it. Unlike traditional mortgages, which finance both the home and land, chattel loans focus solely on the home itself. This financing structure is ideal for buyers placing their homes in mobile home parks or on leased land.

For many prospective buyers, a chattel loan for manufactured homes is the most practical solution to achieve homeownership. However, before committing, it’s crucial to understand how these loans work, their differences from other financing options, and the key factors to consider before applying.

How Chattel Loans Differ from Conventional and FHA Loans

To make an informed decision, let’s compare chattel loans with conventional and FHA loans:

Feature	Chattel Loan	Conventional Loan	FHA Loan
Purpose	Finances a manufactured home (excluding land)	Finances both home and land	Government-backed loan for home and land or just home (Title I)
Collateral	The home itself	Home and land	Home and land (or just home for FHA Title I)
Interest Rates	Typically higher	Lower than chattel	Lower due to FHA guarantee
Loan Term	10-20 years	15-30 years	15-30 years
Land Ownership	Not required	Typically required	Can finance a home in a park (FHA Title I) or on owned land (FHA Title II)
Down Payment	Often 5%-20%	Varies (5%-20%)	As low as 3.5%

 

Chattel loans generally come with higher interest rates than conventional mortgages due to the increased risk for lenders. However, they offer flexibility for homeowners who do not own land, making them an essential financing option for manufactured home buyers.

Benefits of a Chattel Loan for Manufactured Homes

For many homebuyers, a chattel loan for manufactured homes offers unique advantages:

• Easier Qualification: Since the loan is secured by the home itself, lenders often have less stringent credit requirements than traditional mortgages.
• Faster Approval Process: These loans typically close quicker than conventional home loans.
• Lower Upfront Costs: Chattel loans often have lower down payment requirements and fewer closing costs.
• Ideal for Park Living: If you plan to place your manufactured home in a mobile home park, a chattel loan allows you to finance just the home while leasing the land.

However, it’s essential to weigh these benefits against potential downsides, such as higher interest rates and a shorter loan term, which can result in higher monthly payments.

How to Qualify for a Chattel Loan

Securing a chattel loan for manufactured homes involves a few key requirements. Lenders typically look for:

• Credit Score: A minimum score of 600+ is preferred, though requirements vary by lender.
• Proof of Income: Borrowers must demonstrate a stable income source to ensure they can repay the loan.
• Debt-to-Income Ratio (DTI): Lenders prefer a reasonable DTI, typically under 43%.
• Down Payment: Generally between 5%-20% of the home’s value.

Where to Get a Chattel Loan

Chattel loans are offered by specialized manufactured home lenders, banks, and credit unions. Some of the most well-known lenders include:

• 21st Mortgage Corporation
• Vanderbilt Mortgage
• Triad Financial Services
• Local Credit Unions

Each lender has unique terms and conditions, so it’s essential to compare loan offers before making a decision.

Considerations Before Getting a Chattel Loan

Before securing a chattel loan for manufactured homes, prospective buyers should evaluate several factors:

1. Higher Interest Rates: Compared to traditional mortgages, chattel loans often have higher APRs, increasing the long-term cost of the loan.
2. Shorter Loan Terms: Most chattel loans range from 10 to 20 years, leading to higher monthly payments.
3. Depreciation: Manufactured homes typically depreciate faster than site-built homes, affecting resale value.
4. Lot Rent: If placing the home in a mobile home park, monthly lot rental fees must be factored into the total housing costs.
5. Resale Challenges: Selling a home financed with a chattel loan can be more difficult than selling a site-built home.

Understanding these factors can help buyers make a well-informed decision before committing to a chattel loan.

What Can Be Purchased with a Chattel Loan?

Chattel loans are versatile and can be used to finance various types of personal property, including:

• Manufactured & Mobile Homes (placed on rented or leased land)
• Modular Homes (if classified as personal property)
• Tiny Homes (if moveable and not permanently affixed to land)
• Houseboats (if registered as personal property)
• RVs or Trailers (some lenders offer chattel financing for these)

Final Thoughts: Is a Chattel Loan Right for You?

A chattel loan for manufactured homes is a practical solution for buyers who want to finance a manufactured home without purchasing land. While these loans offer flexibility and lower upfront costs, they also come with higher interest rates and shorter loan terms.

Before applying, potential borrowers should compare financing options, review lender terms, and calculate total housing expenses, including loan payments and lot rent. By doing so, buyers can ensure they make a financially sound decision when purchasing a manufactured home.