What is a Chattel Loan?
Manufactured homes, like boats and heavy equipment, can be purchased with a specialized personal property loan – called a “chattel” loan. Your loan can be structured with options for downpayment and length of the loan – 15, 20 or 30 years.
Usually a minimum of 10% down is required, and the interest rates run a few points higher than standard mortgage rates. Use the mortgage calculator on our finance page to get an idea of how affordable your quality new construction manufactured home can be!
Add lot rent, taxes and insurance to the mortgage payment and see how a new construction manufactured home usually costs less than a 1-2 bd rental in our land lease community locations.
How do I apply for a Chattel Loan?
The loan application for a chattel loan involves much of the same documentation as you need for a conventional mortgage.
Requirements vary by lender, but here’s what to expect:
- Credit score: Most lenders look for 575–620 minimum, though some programs go lower
- Income: Stable, documented income — pay stubs, tax returns, or bank statements
- Debt-to-income ratio: Typically 43–50% maximum
- Home standards: The home generally needs to meet HUD guidelines and be built after 1976
- Down payment: Usually 5–20% depending on your credit profile and the lender
Technically, chattel loans are not classified as mortgages in the traditional sense. They fall under a different regulatory framework (the Uniform Commercial Code rather than mortgage law), which is part of why they work differently and why standard mortgage lenders often can’t help you.
Many lenders have moved into the manufactured home market and claim “expertise” but don’t have the right infrastructure and process to effectively serve manufactured home buyers.
Who you work with matters! Choosing lenders and realtors who specialize in the manufactured home market is key for your home buying success. Our preferred lenders have an excellent track record of funding on day of closing or at worst, within 24 hours.
What is a Dry Settlement?
Most lenders who claim to service this market do not disclose that the settlement will be “dry” – meaning no money changes hands, only the paperwork is signed. Most lenders require a file review AFTER settlement and will only release funds to the seller after this post-settlement review.
Why is that an issue? Imagine the seller’s risk if they allow buyers to move in the home prior to receiving final payments. Everyone plans and hopes for the best, but what if something happens to the home in the meantime?
Dry funding complications at settlement leave buyers frustrated and confused. Moving date and closing date may not be the same day.
Sellers don’t want the risk of occupancy prior to receiving their final funds. Unfortunately, the ripples of chaos and confusion this can cause catch many buyers, sellers and realtors by surprise.
With ABC Home Sales, you have decades of experience with our agents and preferred lenders who specialize in the manufactured housing market.
Related Articles
- Chattel Loan FAQ from American Mobile Home Finance
- How to buy a Manufactured Home
- Buying a Manufactured Home; Pro’s and Con’s; Finance Options – Lending Tree
- HUD Defined Financing Options for your Manufactured Home;
Contact us today to learn more about how to make your home buying dreams come true. Get instant answers! Start your manufactured loan application now;
