Chattel loan or mortgage?
A manufactured home can be financed two ways:
- Home-only (chattel) loan: secured by the home but not the land, as with a home in a park where you pay lot rent. The CFPB has found chattel borrowers pay higher rates than mortgage borrowers and have fewer consumer protections.
- Land-and-home mortgage: the home and the land are financed together as real estate, like a site-built house. Terms are often longer and rates lower.
FHA Title I limits
FHA's Title I program insures manufactured home loans. HUD set these limits for case numbers from March 29, 2024, and recalculates them every year, so check for a newer figure:
| Title I loan | Single-section | Multi-section | Longest term |
|---|---|---|---|
| Home only | $105,532 | $193,719 | 20 years |
| Home and lot | $148,909 | $237,096 | 20 years (25 for multi-section) |
| Lot only | $43,377 | 15 years | |
How it's calculated
Loan = home price (+ land price) − down payment
Payment = L × i ÷ (1 − (1 + i)−n)
Monthly cost = payment + lot rent + insurance ÷ 12 + taxes ÷ 12
Payment = L × i ÷ (1 − (1 + i)−n)
Monthly cost = payment + lot rent + insurance ÷ 12 + taxes ÷ 12
Worked example
A $90,000 home in a park, $9,000 down, 8.5% for 20 years: the loan is $81,000 and the payment is $702.94. Add $600 lot rent and $75 a month of insurance, and the monthly cost is $1,377.94. Interest over the loan is $87,705.
The same home on $40,000 of land, with $16,000 down at 7% for 30 years, borrows $144,000 at $958.04 a month.
Limitations
- Lot rent usually rises over time. This uses today's figure.
- Used homes may need an inspection or have shorter terms. Ask the lender.
- Whether a home counts as real estate depends on your state's titling rules.