Key Takeaways
- Chattel loans finance homes without land, like manufactured homes or RVs.
- Interest rates are higher, but loans are easier to qualify for.
- Chattel loans offer shorter terms than traditional mortgages.
- Great option when traditional mortgages aren't available for movable property.
Article Summary
A chattel loan is a loan for movable property, which includes [manufactured homes](/learn/manufactured-home), houseboats, or RVs. With the chattel loan, the home itself is the collateral. A chattel loan does not include the land beneath the property.
Chattel Loan: Explained in Plain English
Chattel loans are common when buyers want to finance a home they don't own land for, such as a manufactured home in a leased-land community. The lender holds a lien on the property (the "chattel") until the loan is paid off.
Because the loan is secured only by the movable property and not by real estate, rates are typically higher and loan terms shorter compared to conventional mortgages. Still, chattel loans can be more accessible in certain situations.
Use Case: Manufactured Home in a Land-Lease Community
Imagine a buyer purchasing a $90,000 manufactured home in a community where the land is leased, not sold. A traditional mortgage wouldn’t apply because the buyer isn’t purchasing real estate.
A chattel loan allows the buyer to finance the home itself, while paying monthly rent for the land. This makes the home purchase possible without the upfront cost of buying land.
Questions Home Buyers Ask About Chattel Loans
Common questions about chattel loans and how they work for financing movable property.
What can be financed with a chattel loan?
Chattel loans are used to finance manufactured homes, modular homes, houseboats, RVs, and other movable property that isn't classified as real estate.
How are rates and terms different from mortgages?
Chattel loans often carry higher interest rates and shorter terms than traditional mortgages. For example, while mortgages may run 30 years, chattel loans are commonly 15–20 years.
Are there government-backed chattel loan programs?
Yes. The FHA Title I Manufactured Home Loan Program insures certain chattel loans, making them more affordable for qualified borrowers.
Can chattel loans be refinanced?
Yes. Depending on the lender and market conditions, borrowers may refinance a chattel loan into a mortgage if they later purchase land, or into another chattel loan with better terms.
Do I need land ownership for a chattel loan?
No. That's one of the main benefits. Chattel loans allow buyers to finance a home when the land is rented or leased, which is common in manufactured home communities.
