Exhibit (10)(v)

                                 March 13, 1998



Cavalier Homes, Inc.
Highway 41 North and Cavalier Road
Post Office Box 300
Addison, Alabama 35540
Attention: Mr. Mike Murphy, Chief Financial Officer

         Re:      Amendment  to Revolving  Warehouse  and  Term Loan  Agreement-
                  $7,000,000.00 Increase to Warehouse Loan and  Term Loan(s) for
                  Cavalier  Acceptance  Corporation and  $5,000,000  Increase to
                  Revolving Loan

Gentlemen:

                  Pursuant to a  Revolving,  Warehouse  and Term Loan  Agreement
dated as of February  17, 1994 as amended on March 14, 1996 ("Loan  Agreement"),
by and among Cavalier  Homes,  Inc.,  certain of its  Subsidiaries  and Cavalier
Acceptance Corporation (collectively, the "Borrowers") and First Commercial Bank
("Lender"),  we have made available to the Borrowers,  jointly and severally,  a
Revolving Loan of up to $5,000,000.00,  and to Cavalier  Acceptance  Corporation
("Cavalier   Acceptance")   a  Warehouse   and  Term  Loan  Facility  of  up  to
$18,000,000.00 (the "$18,000,000.00 Loan").

                  This letter shall serve as our  commitment  and agreement with
you that,  subject to the terms and  conditions  set forth  herein,  Lender will
agree to increase the maximum dollar amount available to the Borrowers under the
Revolving  Loan,  and to Cavalier  Acceptance  under the Warehouse Loan and Term
Loan  facilities,  and will  agree to make  certain  other  changes  to the Loan
Agreement,  all as specified  herein.  Unless otherwise  defined in this letter,
capitalized  terms  herein  will  have  the  meanings  given to them in the Loan
Agreement.

                  Our  agreement  set  forth  herein  shall  be  subject  to the
execution of  definitive  amendments  to the Loan  Agreement and such other loan
documentations as we and our counsel may require,  and containing such terms and
conditions  as we may  reasonably  require  and as may  be  customary  for  such
agreements,  and  it is  expressly  understood  and  agreed  that  none  of  the
amendments and changes specified in this letter will become effective unless and
until all such definitive  documents have been executed and all other conditions
to their effectiveness have been satisfied.

                  Subject  to  the  foregoing  and  pursuant  to the  terms  and
conditions  hereinafter  described,  this will serve as our commitment to you as
follows:

                  1.     Increase of Principal Availability:  Article III of the
Loan Agreement will be amended to provide that the maximum  amount of  principal
available under the Warehouse Loan and the Term Loan(s), in the aggregate, shall
not exceed $25,000,000.00.
                  2.     (a)    Reduction of Term  Rate:  Section  3.6(B) of the
Loan Agreement  will be further  amended so that  the Term Rate for future  Term
Notes will be equal to 195 basis points (1.95%) above the Five Year Treasury.
<PAGE>

                         (b)    Interest Options for Revolving  Loans:  Articles
II and III of the Loan Agreement will be amended so that the applicable interest
rate for the Revolving Loan and the Warehouse Loan will be equal to whichever of
the  following  rates  shall,  from  time to time,  be selected by the Borrower:
(i)  the Prime Rate or (ii)  Three-month (90 days)  LIBOR plus 250  basis points
(2.50%).

                  3.     Availability  of  Advances:  Availability  of  advances
under the Revolving Loan and under the Warehouse Loan shall be extended to April
15, 2000.  Article  III  of the  Loan  Agreement  will  be modified in  order to
clarify that although Term Loans must be in an amount of at least $2,000,000.00,
such amount  represents the minimum  amount for such  Term Loan(s)  and that the
maximum amount of such loan may exceed such amount;  provided,  that the maximum
warehouse Loan and aggregate Term Loans may not exceed  $25,000,000.00.  Article
III will be further  modified to convert the Warehouse  Loan to a revolving line
of credit, with availability of advances limited by a Borrowing Formula.

                  The Borrowing  Formula shall provide that the amount available
at any time  shall be equal to the  lesser  of:  (A)  $25,000,000.00  minus  the
outstanding  Term Loan(s) or (B) the  Warehouse  Borrowing  Base.  The Warehouse
Borrowing Base shall be equal to: (A) 80% of the outstanding  principal  balance
of Eligible Contracts whose credit score is rated "A" or "B", and (B) 70% of the
outstanding principal balance of Eligible  Contracts whose credit score is rated
"C"; provided, further, that no more than 15% of the total Borrowing Base may be
comprised of "C" rated Eligible Contracts.

                  4.     Fees and Charges:  In  consideration  of  the  Lender's
issuance  of  this  letter,  the  Borrowers  shall  pay  to Lender the following
commitment and utilization fees, each of which when paid shall be deemed  fully-
earned and non-refundable:

                         (a)    Cavalier Homes,  Inc.  shall  pay  to  Lender  a
commitment fee equal to one-quarter of one percent (.0025) of the Revolving Loan
Commitment ($25,000.00),  and Cavalier   Acceptance   shall   pay  to  Lender  a
commitment  fee  equal  to  three-sixteenths  of  one  percent  (.001875) of its
$25,000,000.00  aggregate loan facilities ($46,875.00).

                         (b)    The Borrowers  shall  pay to Lender a  non-usage
fee equal to one-quarter of one percent  (.00250)  times the Unused Line Amount.
The Unused Line Amount will be  the amount by which  $10,000,000.00  exceeds the
average  outstanding balance of the Revolving Loan for the preceding  term.  The
Unused Line Amount and non-usage fee shall be computed on April 15, 1999 for the
preceding 12 months ended April 15, 1999 and again at maturity for the preceding
12 months ended April 15, 2000.  The non-usage fee shall be payable each  May 15
following the April 15 computation date.

                         (c)    Cavalier  Acceptance  shall pay to Lender a non-
usage fee equal  to  one-quarter  of  one  percent  (.00250)  times  the  Unused
Commitment Amount.  The Unused Commitment  Amount shall be computed on April 15,
1999  and  April  15,  2000,   and  shall  be  equal  to  the  amount  by  which
$25,000,000.00  exceeds  the average outstanding  balance of the  $25,000,000.00
facility during the preceding 12 months ended on April  15.  The  non-usage  fee
shall be payable each May 15 following the April 15 computation date.
<PAGE>

                  The   Borrowers   shall   further  be  jointly  and  severally
responsible  for the  payment of all legal  costs or fees  incurred by Lender in
connection  with the preparation of the  documentation  necessary to provide for
the matters described in this letter.  The Borrowers  acknowledge and agree with
Lender  that  each  of the  fees  described  in  this  paragraph  is a fair  and
reasonable  payment  to be made by  Borrowers  to Lender on  account of the loan
commitments  provided  herein,  and each of the  Borrowers  understand  that the
obligation  to pay such fees shall be absolute and  unconditional, regardless of
whether the transactions contemplated hereby are closed.

                  5.     Joinder to Loan Agreement:   It  is  acknowledged   and
contemplated that each Subsidiary of Cavalier Homes, Inc. shall be a co-borrower
under the Loan  Agreement,  and  Cavalier  Homes,  Inc.  will  cause each of its
Subsidiaries  that are not  presently  parties to the Loan  Agreement to execute
such  documents  as may be  reasonably  required by the Lender in order for such
Subsidiary to become a Participating Subsidiary under the Loan Agreement.

                  6.     Amendments to Loan Agreement.  The availability  of the
increased funds to be provided to the Borrowers and to Cavalier Acceptance shall
be governed by and subject to all terms and  conditions  presently  set forth in
the Loan Agreement,  and including also such additional  terms and provisions as
may be provided for in the amendment  documents described in this letter, all as
may be required by Lender.  Lender and  Borrowers  will enter into certain other
amendments  to the  Loan  Agreement  as may be  required  by  Lender,  and  such
amendments shall  specifically  include,  but not necessarily be limited to, the
following:

                           (a)      Covenant  7.2(L) will be amended to increase
                                    the   maximum   lease    obligations    from
                                    $2,000,000.00 to $3,000,000.00.

                           (b)      Covenant  7.2(U) will be amended to increase
                                    the maximum aggregate  capital  expenditures
                                    from $6,000,000.00 to $14,000,000.00.

                           (c)      Covenant   7.2(H)(6)   will  be  amended  to
                                    increase  the  permitted  indebtedness  from
                                    $2,500,000.00 to $10,000,000.00.

                  7.     Prepayment Penalty for Cavalier Acceptance  Term Loans:
Section  3.5 of the Loan  Agreement  will be  amended  to  further  provide  for
prepayment  penalties in the event that  Cavalier  Acceptance  should prepay the
Term Loans,  with the prepayment  penalty for prepayments  occurring  during the
first two (2) years of any such Term Loan(s)  payable on the amount by which the
principal  prepayments  in the aggregate  exceeds 10% of the amount of such Term
Loan(s),  and with  such  penalty  in the first two (2) years to be equal to two
percent  (2%),  and which  penalty  shall be reduced to 1% in the third year and
with no penalty occurring for subsequent prepayments.
<PAGE>

                  8.     Opinion of Counsel:  The Lender  will be provided  with
such  opinion  of counsel as it may  request  which verifies the  authorization,
execution, delivery and  enforcement  of the Loan  Documents,  and pertaining to
such other matters as the Lender may require.

                  9.     Adverse Change:   The   Lender's  commitment  described
herein shall terminate if any  adverse change occurs in the financial  condition
of Cavalier Acceptance or of Cavalier Homes, Inc.

                  This letter is not intended  to, and does not,  contain all of
the terms,  provisions  and  conditions  that may be  included in the final loan
documents,  which shall include,  among other  provisions,  conditions that will
require that all representations and warranties made in the Loan Agreement shall
be true and correct as of the date of the closing, and providing further that no
Default or Event of Default under the Loan Agreement  shall have occurred and be
continuing.

                  Unless accepted by you on or before March 13, 1998, this offer
will expire, and the various  transactions  described herein must be consummated
on or before April 15, 1998, or this commitment shall expire.

                  If the terms and conditions described herein are acceptable to
you,  please  indicate your acceptance by returning a signed copy of this letter
to me, together with the commitment fees of $71,875.00, not later than March 13,
1998.

                  We appreciate  the  opportunity  to provide this financing for
you.

                                                           Very truly yours,

                                                           /s/ James D. Williams
                                                              ------------------
                                                               James D. Williams
                                                                Vice President


<PAGE>


              Accepted and agreed to this 13th day of March, 1998.


                                                       FOR ALL BORROWERS:

                                                       CAVALIER HOMES, INC.

                                                 By: /s/ MICHAEL R. MURPHY
                                                    ----------------------------
                                                         Michael R. Murphy
                                                 Its:  Chief Financial Officer
                                                    ----------------------------

                                                 CAVALIER ACCEPTANCE CORPORATION

                                                 By: /s/ JERRY F. WILSON, JR.
                                                    ----------------------------
                                                         Jerry F. Wilson, Jr.
                                                 Its:         President
                                                    ----------------------------