Chattel Loan vs. Marine Loan for a Floating Home: What's the Difference?

When you start looking for financing on a Sausalito floating home, lenders and brokers will throw around terms like "chattel loan" and "marine loan" — sometimes interchangeably. They're related but not identical. Understanding the distinction matters because different loans come with different rates, terms, and underwriting requirements.

What Is a Chattel Loan?

A chattel loan is a loan secured by personal property — specifically, movable assets that are not permanently affixed to land. "Chattel" is a legal term for personal property as opposed to real property (land and things attached to it).

For a floating home, chattel financing means the lender takes a security interest in the vessel itself, rather than a real estate mortgage on the land. The loan is recorded as a lien on the vessel's title, not as a deed of trust on real property.

What Is a Marine Loan?

A marine loan is a type of chattel financing specifically underwritten for watercraft and vessels. Marine lenders use vessel-specific valuation tools (primarily NADA's Marine Appraisal Guide) rather than real estate appraisals. They require marine-specific documentation — including a marine survey by a certified surveyor — as part of their underwriting process.

Marine loans are available through the institutional lenders in this market — in Sausalito, that means Bank of Marin and a second lender Paul works with directly — lenders who hold their loans on their own books and understand vessel and floating home financing.

How Do They Differ from a Mortgage?

Both chattel and marine loans are fundamentally different from a conventional mortgage. A mortgage is secured by real property — land and the structures permanently attached to it. A floating home sits on a leased water slip, so it typically doesn't qualify as real property and can't be mortgaged through Fannie Mae, Freddie Mac, or most retail banks.

The exception: some floating homes have been legally converted to real property through permanent affixation, which allows conventional mortgage financing. But this is uncommon in Sausalito.

What About Portfolio Loans?

Portfolio loans are a third category. These are loans that banks and credit unions hold on their own books rather than selling to secondary markets. They're not technically chattel or marine loans — they may use real estate or personal property underwriting depending on the lender. But they're the other major source of floating home financing. See our guide to portfolio loans for more.

Which One Do You Need?

For most Sausalito floating home purchases, the choice comes down to whether a marine lender or a portfolio lender offers better terms for your specific situation. A marine loan from a specialty lender is often the first call — established process, experienced underwriters, and active programs for floating homes. A portfolio loan may offer better terms for higher-priced homes, buyers with complex income situations, or homes that don't fit standard marine lender criteria.

Working with a broker who has active relationships with both types of lenders is the fastest way to know which fits your purchase. Call Paul at (415) 332-7539 to find out.