Manufactured Home Loans Explained: Real Property vs. Chattel Financing

Over the last 25 years, home values have exploded—pushing millions of would-be homeowners to the sidelines and catapulting existing owners into an estimated $48 trillion in real estate wealth.

For families priced out of that boom, manufactured homes have offered one of the last naturally occurring affordable paths to ownership with modern builds, lower upfront costs, and in many areas, appreciation that keeps pace with site-built homes.

But there’s a catch—one that can cost buyers tens of thousands over time. Some of the loans that make manufactured homes attainable can come with higher interest rates, weaker protections, and fewer paths to building lasting equity.

While some manufactured homes can be purchased with a traditional mortgage, others are financed through an entirely different system. The difference for borrowers often comes down to a single line on the title: whether the home is considered real property or personal property.

Two paths to financing: Real property vs. personal property

The way a manufactured home is titled determines nearly everything that follows—the loan you qualify for, the rate you’ll pay, the protections you receive, and the equity you can build.

Real property

If your home and the land beneath it are titled together, it’s considered real property. These homes are eligible for standard mortgage products just like site-built homes, and are regulated under traditional mortgage laws that require disclosures, appraisals, and other protections.

Personal property

If the home is titled separately from the land, it’s classified as personal property, or chattel. In that case, the loan is treated more like a vehicle or equipment loan, and is regulated under a different set of laws. Chattel loans usually have shorter terms, higher interest rates, and fewer consumer safeguards.

When home and land are one: Real property loans

Loans for manufactured homes that are considered real property look and function much like those used for site-built homes, because they are the same.

“As long as the home is going on a permanent foundation, you can use a traditional mortgage, like an FHA, VA, USDA, Fannie Mae, or Freddie Mac,” says Derek Watkins, retail sales manager at Planet Home Lending. 

About 58% of manufactured home loans in 2022 were structured this way, according to research from the Urban Institute. Borrowers in this category typically earned around $65,000 a year and secured median loan amounts of roughly $175,000—nearly double the size of personal property, or chattel, loans and half the size of site-built homes.

That combination of longer terms, lower rates, and access to federal protections gives real property borrowers the same core advantage as any homeowner: a stable path to build equity over time.

And that opportunity has paid off. Over the last 24 years, manufactured homes that are classified as real property have appreciated 211.8%—just one point less than site-built homes, according to the Urban Institute. And since 2012, they’ve even appreciated faster than site-built homes.

When home and land are separate: The chattel loan market

Personal property, or chattel, homes have more limited financing opportunities. The loans for these properties fall under the Uniform Commercial Code (UCC) instead of traditional mortgage law.

Because the structure itself serves as the collateral, not the land, lenders see chattel loans as riskier. That added risk translates into higher rates, shorter repayment terms, and limited borrower protections.

“There are specialist finance solutions, such as chattel loans, available for buying mobile homes that function similar to mortgages, despite not being secured against the property itself,” explains Lee Trett, director and co-founder of Money Helpdesk. “Eligibility is assessed based on the make, model, features, condition, and depreciation factors of the property, rather than standard home loan criteria.”

The difference in cost can be significant. In 2022, the average interest rate on a manufactured home financed as personal property was about 8%, compared with 5.5% for manufactured homes financed as real estate. Borrowers also face higher denial rates—roughly 66%, versus 43% for real-property loans, according to data from the Urban Institute.

Access to government-backed programs is also limited. Virtually none of today’s chattel loans are backed by federal programs such as FHA, VA, or USDA. Most remain privately held, where interest rates and servicing standards can vary widely, according to the Consumer Financial Protection Bureau.

But even with these caveats, they remain a valuable tool toward homeownership.

“People think that manufactured homes are harder to finance and they’re really not. They’re just like loans for stick-built homes,” says Watkins. “But interest rates vary a lot among lenders, so it definitely pays to shop around.”

Depreciation and long-term value

Borrowers using a chattel loan need to look beyond their monthly payment to really understand the affordability and return on their investment.

Because chattel loans typically finance only the structure—and not the land underneath—borrowers don’t benefit from land appreciation, one of the biggest drivers of home equity.

And when the home sits on leased land, rising lot rents or expiring leases can further erode resale value. They can even lead to eviction.

In Florida, mobile home owners faced an eviction rate of 1.5% per year—triple the foreclosure rate for traditional homeowners, according to the Eviction Lab’s analysis of more than 60,000 eviction filings in mobile home parks between 2012 and 2022. 

Over time, that can turn what began as an affordable purchase into a depreciating asset.

“One thing we always remind modular and mobile home buyers of before they purchase is that such properties tend to depreciate in value, while traditional real estate usually increases,” says Trett.

This depreciation gap explains why two homes that look identical on the surface—one titled as personal property and the other as real property—can have dramatically different financial outcomes. A manufactured or modular home that’s permanently affixed to land and titled as real property can appreciate alongside neighboring houses, building equity over time. But one financed as chattel often loses value, especially when the underlying land remains out of reach.

What borrowers can do

With the right preparation, manufactured home buyers can expand their options—and, in some cases, qualify for the same types of loans available to traditional homeowners.

“Owning land can be a real help because the value of the property can count as your down payment,” Watkins says. “About half my customers do this.”

It also pays to shop beyond the dealer’s lender. Dealers often work with a single financing partner, but rates can vary among independent lenders, banks, and credit unions that specialize in manufactured housing. Comparing multiple offers can save thousands over the life of a loan.

If your home will be on leased land, review the lease carefully. Look for clauses that limit rent increases, protect your resale rights, or require advance notice before termination. These details directly affect both your monthly budget and the long-term stability of your investment.

And don't neglect government and conventional loan programs that support manufactured housing. Options such as FHA Title I, Fannie Mae’s MH Advantage, and Freddie Mac’s CHOICEHome may offer lower rates, standardized terms, and fixed-rate structures that resemble traditional mortgages.

Taking time to understand these distinctions can mean the difference between a loan that drains wealth and one that builds it.