What is a chattel loan? A loan secured by the home itself rather than by land, the usual financing for a manufactured home on a rented lot or one not yet titled as real property.
Chattel is an old word for movable personal property, and a chattel loan is secured by the thing rather than by real estate. In housing that means a manufactured home that is not real property: a home in a park on a rented lot, a home on land the buyer does not own, or a new home before it is affixed and retitled. The lender's security is the home in the way a car loan's security is the car, and the paperwork looks more like a vehicle title than a mortgage.
The terms are worse than a mortgage's, and not by a little. Chattel loans commonly run 15 to 23 years rather than 30, and the rate typically sits several percentage points above a comparable mortgage, so the same balance costs meaningfully more every month and for fewer years. Closing is faster and cheaper in exchange, with no lender's title policy and no appraisal in the mortgage sense. The remedy on default is faster too: the lender repossesses the home rather than foreclosing on real estate, without the recorded notice sequence a Nevada deed of trust requires. FHA's Title I programme is the government-backed version of this lending, with its own loan limits and its own approved lenders.
Converting the home to real property is what closes the gap. Where the same owner holds the land, the home is set on a permanent foundation and the running gear is removed, the owner can surrender the vehicle-style certificate of title and have the home recorded as part of the real estate, after which it is financed with an ordinary mortgage and assessed as real property. In Nevada that runs through the state's manufactured housing division and then the Clark County Assessor and Recorder, and it is a paperwork exercise ending in a recorded affidavit rather than a construction project. A home in a park cannot do it, because the lot is rented and there is nothing of the owner's to affix it to. That one fact separates the two purchases sitting side by side on a manufactured home listing here.
A worked example
A 2016 double-wide in a Las Vegas park lists at $95,000 with lot rent of $700 a month. No mortgage is available, because the buyer will never own the lot, so $85,500 is financed as a chattel loan over 20 years at around 9 percent: about $770 a month. The same $85,500 on a 30-year mortgage at 6.5 percent would be about $540. The buyer's housing cost is the $770 plus the $700 of lot rent, and the loan is gone ten years sooner.
What a mobile home costs in Las Vegas
Questions people ask
Can you get a mortgage on a manufactured home?
Yes, when the home is titled as real property on land the same owner holds. Conventional, FHA and VA all lend on affixed manufactured homes that meet their construction and foundation standards. A home on a rented lot is not real property, so a chattel loan is what is left.
Why are chattel loan rates higher than mortgage rates?
The collateral can be moved and it depreciates more like a vehicle than a house, the balances are small so the fixed cost of originating one is spread over less money, and the secondary market for the loans is narrow. Shorter terms and higher rates are how that is priced.