Chattel Loan vs. Mortgage: Which Fits Your Manufactured Home?
How home-only (chattel) loans and land-and-home mortgages differ in rates, terms, closing costs and requirements, and how to choose.
Short answer: a chattel loan finances only the manufactured home, as personal property, and is the usual choice for homes in land-lease communities. A mortgage (land-and-home loan) finances the home and the land together as real estate. Mortgages usually have lower rates and longer terms; chattel loans are simpler and faster to close and don't require owning land.
Side-by-side comparison
| Chattel (home-only) loan | Land-and-home mortgage | |
|---|---|---|
| What it finances | The home only | The home and the land |
| How the home is titled | Personal property (like a vehicle title) | Real property, recorded with the land |
| Where the home sits | Land-lease community, family land or your own land | Land you own or buy in the same transaction |
| Foundation | Piers or other approved set-up | Permanent foundation required |
| Typical terms | Shorter | Longer, up to 30 years |
| Typical rates | Higher | Lower |
| Closing costs and time | Lower and faster | Higher; includes appraisal and title work |
| Government-backed options | FHA Title I | FHA Title II, VA, USDA, conventional |
Why chattel loans cost more
With a chattel loan, the lender's collateral is the home alone, without the land. Homes are also easier to move and their values vary more than land. Lenders price that extra risk into a higher rate and a shorter term. According to the Consumer Financial Protection Bureau, chattel loans make up a large share of manufactured home purchase loans, and the market is concentrated among a small number of lenders.
When a chattel loan makes sense
- Your home will be in a land-lease community or mobile home park
- You'll place the home on land owned by a family member
- You own land but don't want to pledge it as collateral
- You want a faster, lower-cost closing
When a land-and-home mortgage makes sense
- You own land, or are buying land with the home
- The home will sit on a permanent foundation
- You want the lowest possible rate and the longest term
- You want to build equity in the land as well as the home
Can I switch later?
Often, yes. If you own the land and place the home on a permanent foundation, you may be able to retire the home's vehicle-style title and refinance into a land-and-home loan. Rules for converting a home to real property vary by state.
This guide is general information, not financial or legal advice. Loan programs, requirements and rates change; contact us for terms that apply to you.