A chattel loan is used to finance a manufactured home that sits on leased land or in a community where the borrower does not own the underlying property. In these cases, the home is financed as personal property rather than real estate.
Chattel loans are one of the most common financing tools for manufactured homes located in land-lease communities. They work differently from a traditional mortgage, with their own set of rates, terms, and qualification standards.
Lender Express can help you understand whether a chattel loan is the right option for your situation and connect you with lenders who specialize in this type of financing.
WHAT IS A CHATTEL LOAN?
A chattel loan is a loan secured by personal property rather than real estate. When a manufactured home is located on leased land, the home itself, not the land, serves as the collateral. This is why chattel loans are sometimes called personal property loans.
Chattel loans are commonly used for manufactured homes in land-lease communities, also known as manufactured home parks or mobile home parks. In these communities, residents own their homes but pay a monthly lot rent to the park owner for the land they sit on.
Because the home is not tied to owned land, it cannot be titled as real property, which means standard mortgages typically do not apply. Chattel financing fills that gap.
Key Benefits
- Provides a financing path for homes in land-lease communities where standard mortgages do not apply
- Faster closing process compared to a traditional mortgage in many cases
- Lower purchase price compared to buying land and a home together
- Access to a wide range of manufactured home communities in desirable locations
- Option to refinance later if you purchase land and convert the home to real property
- Available for both new and existing manufactured homes
How It Works
- You identify the manufactured home you want to purchase and the community where it is located.
- The lender evaluates the home, the community, and your financial profile.
- The loan is structured based on the value of the home as personal property, not real estate.
- At closing, you take ownership of the home and begin paying lot rent to the community separately.
- Monthly payments are made on the chattel loan while you also pay your lot rent.
- If you purchase land in the future and move the home, you may have options to convert to a traditional mortgage.
Chattel loan rates and terms are different from standard mortgages. Use our mortgage calculator to estimate payments, keeping in mind that your actual rate and term will depend on the specific loan program.
Mortgage Calculator: https://lenderexpress.com/mortgage-calculator/
Who This Loan Is Best For
- Buyers purchasing a manufactured home in a land-lease community or park
- Buyers who want to own a home but are not ready or able to purchase land
- Buyers looking for an affordable entry into homeownership in a specific location
- Existing manufactured home community residents who want to finance a home purchase or refinance
- Buyers whose home cannot be titled as real property due to the land arrangement
A chattel loan is NOT the best fit for buyers who own or plan to own the land where the home will sit. In that case, a manufactured home loan may allow access to better rates and terms through standard mortgage programs.
BASIC REQUIREMENTS
General Requirements
- The home must be a manufactured home built to HUD standards (post-1976)
- The home is titled as personal property, not real estate
- The land must be leased, not owned, for chattel financing to apply
- Credit score requirements vary by lender and program
- Down payment requirements are typically lower than a standard mortgage but vary by lender
- The manufactured home community may need to meet certain lender standards
Chattel loan terms, rates, and requirements differ from traditional mortgage programs. Your loan officer will help you compare the options and understand the full cost of ownership including lot rent.