If you own a manufactured home, you may have heard the terms personal property and real property, and wondered why they matter. When it comes to manufactured home loans, the classification of your home can make a big difference in the financing options available to you.
In many cases, manufactured homes start out as personal property (similar to a vehicle) especially if they’re not permanently attached to land you own. But with some steps, you can convert your manufactured home into real property, which opens the door to traditional mortgage financing and potentially lower interest rates.
Let’s break down what this process looks like, why it matters, and how it can benefit you.
Why the Classification Matters
The way your manufactured home is classified affects:
- Financing Option: Homes classified as personal property typically qualify for chattel loans, which may have higher interest rates and shorter terms. Converting to real property can make you eligible for conventional, FHA, VA, or USDA loans.
- Value and Resale Potential: Homes considered real property often appraise higher and attract more buyers.
- Tax Implication: Real property is taxed as real estate, while personal property is taxed differently (or not at all, depending on the state).
Steps to Convert from Personal to Real Property
While the exact process can vary by state, here’s a general overview of what’s typically required:
- Own the Land Your Home Sits On
To be classified as real property, your manufactured home must be permanently attached to land you own. If your home is in a park or on leased land, it will remain personal property.
- Permanently Affix the Home to the Land
This usually means placing the home on a permanent foundation and removing the transportation elements like axles, wheels, and hitch. States often have specific building codes for this step.
- Retire the Title or Certificate of Origin
Personal property manufactured homes have a title—like a car. Converting to real property requires “retiring” that title with your state’s motor vehicle or housing department.
- Record the Home as Real Property
Once the title is retired, you’ll need to record the home as part of the real estate with your county’s recorder or assessor’s office. This links the home to the land on your property records.
- Meet Local and State Requirements
Every state has its own regulations. Some require inspections, engineering certifications, or proof of foundation compliance before allowing reclassification.
Benefits for Loan Purposes
Once your manufactured home is recognized as real property, you’ll have access to:
- Lower Interest Rates: Real property loans often have better rates than chattel loans.
- Longer Loan Terms: Mortgages can extend to 15, 20, or 30 years, lowering monthly payments.
- Broader Loan Programs: FHA, VA, USDA, and conventional loans become available.
These benefits can save you thousands over the life of your loan while also increasing your home’s value.
The Bottom Line
Converting your manufactured home from personal to real property is a smart move if you want better manufactured home loans, increased value, and more financing flexibility. It does require some upfront work, owning the land, installing a permanent foundation, retiring the title, and meeting local requirements, but the long-term payoff can be well worth it.
If you’re thinking about making the switch, it’s wise to work with both a lender experienced in manufactured housing and your local county or state office to ensure you follow all the correct steps.
Ready to explore your financing options? At ManufacturedHomeLoans.com, we connect you with lenders who understand the unique needs of manufactured homes and can help you navigate the path to real property classification. Start your journey today and unlock better loan opportunities for your home.
