Securing financing for a manufactured home requires understanding the distinction between real property and personal property. The selection of your loan type has a lasting impact on interest rates, loan terms, and resale values.
1. Chattel Financing vs. Real Estate Mortgages
A chattel loan is a personal property loan used when the buyer does not own the land beneath the home (such as renting a lot in a manufactured home community or park). The home serves as the sole collateral. A conventional mortgage is used when the home and the underlying land are legally merged into a single real estate parcel.
2. Comparing Financial Structures
| Parameter | Chattel Loan (Personal Property) | Real Estate Mortgage |
|---|---|---|
| Interest Rates | Typically 1.5% to 3% higher than conventional mortgages. | Standard market real estate mortgage rates. |
| Loan Terms | 15 to 20 years maximum. | Up to 30 years. |
| Closing Costs | Lower upfront fees, faster closing cycles (7-14 days). | Higher closing costs (appraisals, title insurance, surveys). |
3. FHA Loan Permanent Foundation Stamps
To qualify for FHA Title II financing, the home must be installed on a permanent foundation meeting HUD design handbook standards. A licensed professional engineer must inspect the site and issue a signed compliance letter, verifying that the home has been converted to real property.