Chattel loans cost manufactured home buyers $2,600/year more than mortgages

Roughly 42% of manufactured home loans are chattel loans (personal property loans) rather than traditional mortgages, and they carry interest rates averaging 4.4 percentage points higher. On a typical $80,000, 20-year manufactured home loan, that's $2,600 per year in extra interest — or 5.6% of annual income for a family earning $50,000. The borrower gets a worse deal not because they're a higher credit risk, but because their home is classified as personal property (like a car) rather than real property (like a house). Chattel loan borrowers also face higher denial rates and are far less likely to refinance. The structural reason this persists is a Catch-22: you need to own the land to get a mortgage, but 57% of manufactured home owners rent their lot. And converting title from personal to real property requires navigating a different bureaucratic process in each of the 50 states, with requirements scattered across motor vehicle, finance, and tax codes. Black, Hispanic, and Native American borrowers are disproportionately pushed into chattel loans even when controlling for land ownership, compounding the inequity.