A mobile home owner obtains a mortgage loan by applying for financing with a mortgage lender, Investopedia notes. The type of loan for which the home qualifies depends on whether the home is considered personal property or real property. Whereas mobile homes classified as real property are eligible for traditional mortgage financing, personal property financing requires a chattel mortgage.
Most states allow mobile home owners to convert mobile homes from personal property to real property, or real estate, by permanently installing a home on land and connecting it to electric service, the Uniform Law Commission explains. The home can be on land the homeowner owns or leases, but the owner must have the right to locate the home there. Owners typically must also file a certificate of location in their local jurisdictions.
Mortgage loans available for mobile homes qualifying as real estate include those backed by the Federal Housing Authority and Fannie Mae, Investopedia notes.
Owners of mobile homes that are considered personal property can finance their purchases using chattel mortgages, Investopedia explains. Loan terms usually are shorter for chattel loans than for traditional mortgage loans, and interest rates are higher. However, chattel borrowers pay lower closing costs, and their loans often close faster.