Chattel Loan
What Is a Chattel Loan?
A chattel loan is a loan secured by movable personal property rather than real estate.
In housing, chattel loans are commonly used to finance:
- Mobile homes
- Manufactured homes not permanently affixed to land
- Homes located on leased land
Because the home is classified as personal property instead of real property, the financing structure differs from a traditional mortgage.
Why It Matters in a Mortgage
Chattel loans typically:
- Have shorter loan terms
- Carry higher interest rates
- Offer fewer consumer protections than traditional mortgages
They are often used when:
- The borrower does not own the land
- The home is not permanently attached to a foundation
- The property is titled similarly to a vehicle
Understanding the classification of the home determines which financing options are available.
How It Works
- Home is titled as personal property.
- Borrower applies for chattel financing.
- Loan is secured by the structure itself, not the land.
If the borrower defaults, the lender may repossess the home rather than pursue foreclosure on real estate.
Chattel Loan vs. Mortgage
Chattel Loan → Secured by personal property
Mortgage → Secured by real estate
Legal rights and protections differ significantly.
FAQs About Chattel Loans
Can a manufactured home qualify for a mortgage instead of a chattel loan?
Yes, if it is permanently affixed to owned land and properly titled as real property.
Are chattel loans more expensive?
They often carry higher interest rates due to increased lender risk.
Do chattel loans follow the same foreclosure process as mortgages?
No, repossession procedures may apply instead of traditional foreclosure.
Related Terms
