Manufactured Home Loans Explained: Real Property vs. Chattel Financing

(Source: Excerpts from Realtor.com – Allaire Conte, expanded with insights from ManufacturedHomeLoans.com)

Over the last 25 years, home values have skyrocketed, pushing millions of would-be homeowners to the sidelines while propelling existing homeowners into an estimated $48 trillion in real estate wealth.

For families priced out of that boom, manufactured homes have emerged as one of the last naturally affordable paths to homeownership, combining lower upfront costs with modern designs and, in many areas, appreciation rates that rival traditional site-built homes.

But there’s a crucial factor that can have a major influence on how that appreciation builds over time, one that affects long-term equity, resale potential, and financing options. While all manufactured homes are capable of gaining value, the way they’re titled and financed can determine how that value grows. Homes placed on owned land historically appreciate in tandem with the underlying real estate. Homes in leased-land communities can still appreciate, sometimes differently, based on market demand, location, and the quality of the community itself.

That factor comes down to how the home is titled and financed: whether it’s considered real property or personal property (chattel).

Two Paths to Financing: Real Property vs. Personal Property

Real Property

When a manufactured home and the land beneath it are titled together, the home is legally considered real property.
This means it’s treated the same way as a site-built home, qualifying the buyer for traditional manufactured home loans such as FHA, VA, USDA, and conventional mortgages.

Real property loans offer key benefits:

• Longer loan terms (typically 20–30 years)
• Lower, fixed interest rates
• Appraisal-based valuations
• Consumer protections under federal mortgage laws
• The ability to build equity in both the home and land

When financed as real property, a manufactured home can appreciate in value alongside surrounding real estate, making it one of the most financially stable paths to ownership.

Personal Property (Chattel)

If the home is titled separately from the land, or placed on leased land within a manufactured home community , it’s classified as personal property.
In that case, financing is obtained through a chattel loan, which operates under a different set of lending laws, similar to vehicle or equipment financing.

Chattel loans are a vital tool for affordability and accessibility in factory-built housing. They allow buyers to finance their home even when land ownership isn’t part of the equation.
However, there are trade-offs to understand:

• Shorter loan terms (typically 20–25 years)
• Higher interest rates compared to traditional mortgages
• Fewer borrower protections
• The home itself serves as collateral

As noted in the ManufacturedHomeLoans.com article “Are Chattel Loans Available for Manufactured Homes? by Jed Lowman, these loans are particularly common for homes located in land-lease communities or manufactured home parks. They’re faster to obtain and easier to qualify for (which helps many families enter homeownership) but they also build equity more slowly than traditional real estate loans.

Why It Matters

The classification of your home as real or personal property directly impacts not only the interest rate you’ll pay, but also your ability to refinance, resell, and build equity over time.
Two homes can look identical, but if one is titled as real property and the other as personal property, their long-term financial outcomes can differ dramatically.

A real property loan helps homeowners benefit from appreciation in both the home and the land; while a chattel loan, though more flexible, tends to function more like financing for a vehicle: higher rates, faster payoff, and limited equity growth.

Financing Both the Home and the Land Together (Land Home)

For buyers looking to maximize long-term value, combining the home and land into a single loan can be an ideal solution.

As outlined in “Can I Finance Both the Land and the Manufactured Home Together? From ManufacturedHomeLoans.com, this is known as a land-home package, a form of real property financing that simplifies the process and often results in lower total costs.

Benefits include:

• One loan, one payment, one closing
• Potentially lower interest rates
• Streamlined approval and documentation
• The ability to build equity in both the home and the land

This type of loan is particularly advantageous for buyers purchasing a lot for placement or replacing an older mobile home with a new, permanently installed model.

When Chattel Loans Make Sense

While real property loans offer more long-term financial benefits, chattel loans still serve a vital role in manufactured housing.
They’re especially useful when:

• The home is located in a leased-land community
• Buyers want faster approvals and simpler underwriting
• Land ownership isn’t desired or possible
• Lower upfront costs are a priority

In other words, chattel loans can make ownership possible for those who would otherwise remain renters , keeping manufactured housing one of the most flexible and attainable forms of homeownership in the country.  For those ready to take the next step and see what’s possible, explore Moden, a new online retailer where you can browse, customize, and even begin purchasing factory-built homes entirely online. It’s a modern way to shop for homes that fits perfectly with the financing paths we’ve discussed here.