Chattel loan vs. mortgage, side by side.

Why chattel loans run a higher rate than mortgages

A mortgage is secured by real property — land plus the structure permanently attached to it. If a borrower defaults, the lender forecloses on real estate that typically holds or gains value. A chattel loan is secured only by the home itself, titled like a vehicle rather than recorded like real estate. Homes depreciate faster than land, repossession and resale are more complex than a home foreclosure, and the lender has a thinner secondary market to sell the loan into. Lenders price all of that extra risk into the rate — which is why chattel APRs in the illustrative matrix above run roughly 1.5–2 points higher than mortgage APRs at the same credit tier.

When each loan type actually applies

The determining factor isn't the home — it's the land. If you own the land (or are buying it as part of the same transaction) and the home is permanently affixed on a foundation with its title retired, you can typically qualify for a conventional or government-backed mortgage. If you're placing the home on leased land — most manufactured home communities — real-property financing isn't available, because you don't own the real estate the home sits on. You'll be financing the home alone, which means a chattel loan. Read Chattel loan vs. mortgage: which fits your situation for the full decision walkthrough.