Both modular and manufactured homes are prefabricated homes, meaning they are built in a factory or building facility and then transported and assembled at the home site. One of the key differences between modular homes and manufactured homes is that a modular home is always attached to a permanent foundation, whereas a manufactured home can be moved. This primary difference has an impact on financing options.
If you’re tired of renting and ready to own your home, there are a ton of options to choose from. Two options that are usually less expensive than buying a traditional home are modular homes and manufactured homes.
The terms may occasionally get used interchangeably, but there are quite a few differences between modular and manufactured homes. Read on to learn the details of how manufactured, and modular homes differ and some of the advantages and disadvantages of owning prefabricated homes vs. site-built homes.
Differences between modular homes vs. manufactured homes
Both modular and manufactured homes are built in factories as opposed to at a building site. However, there are several differences prospective buyers should be aware of before purchasing modular or manufactured homes.
Construction and delivery
A modular home is partially constructed in a factory and is built in multiple pieces, which are known as modules (hence the name “modular home”). Upon completion, the modules are transported to the home site and assembled and configured according to the buyer’s preferences. They’re then attached to a permanent foundation, which could be a concrete slab, crawl space, or basement.
Manufactured homes, sometimes still known as mobile homes or trailers, are also constructed in off-site factory settings and built-in sections — single, double, or triple-wide. However, a manufactured home is fully constructed before delivery, unlike a modular home. In addition, manufactured homes are built on a steel chassis and can be affixed to a homeowner’s lot with either a temporary or a permanent foundation.
Typically manufactured homes that aren’t placed on a permanent foundation can be found in mobile home parks where the land beneath the manufactured home is leased not owned by the homeowner. By contrast, owners of modular homes usually own the land their home sits on, just like traditional on-site homes.
Like site-built homes, modular homes come in many different architectural styles, such as ranch-style, Cape Cod, log cabin, or two-story colonial. They also offer a variety of other features like different layouts, floor plans, attached garages, and porches, just like site-built homes. Once a modular home is completed, it’s very difficult to tell the difference between it and a site-built home.
Manufactured homes are generally easier to spot because they have very similar designs — some are just bigger than others. Plus, they typically aren’t permanently affixed to a foundation, and modular homes are always on a permanent foundation.
As mentioned previously, manufactured homes used to be called mobile homes or trailers (and sometimes still are). That said, those terms no longer apply unless the dwelling was built before 1976. The change was related to the passing of the National Manufactured Housing Construction and Safety Standards Act. This authorized the United States Department of Housing and Urban Development (HUD) to establish and amend the Federal Manufactured Home Construction and Safety Standards.
These newer building codes regulate that modern manufactured homes must be compliant in areas such as fire resistance, durability, energy efficiency, and safety. In short, manufactured homes are of a much higher quality now than they were prior to 1976 when the new standards went into effect.
Modular homes, by contrast, must adhere to the exact same state, regional, and local building codes as traditional homes. This means they can vary by state, but it also means that they’re just as safe and secure as any traditional home. In some cases, states have adopted the federal code which is generally more stringent than some local requirements.
Financing for modular homes vs. manufactured homes
Because modular homes are permanent structures, they’re eligible for conventional loans when you buy an existing one. However, it’s important to note that if you’re not buying an existing modular home, you may need to get a construction loan while it’s being built. You can then that loan convert into a regular mortgage after it’s permanently attached to the land.
Many traditional lenders, however, won’t offer conventional loans for buyers of manufactured homes. This is because the homes are moveable, sometimes rest on temporary foundations, and often sit on leased land. Therefore, they usually aren’t legally considered “real property.”
“Real property” is defined as a piece of land and everything that is permanently attached to the land. Manufactured homes are generally considered personal property — much like cars, boats, and other vehicles — because they can be moved. (Although it should be noted that, these days, they are rarely moved after being transported from the factory to the home site.)
For this reason, many mortgage lenders won’t offer conventional mortgages, so buyers may need to get a chattel mortgage instead. Having said that, if your manufactured home is permanently attached to a piece of property, you may be eligible for a conventional loan or some government-backed loans such as ones from Fannie Mae or Freddie Mac.
To get a better idea of what financing options may be available for you, take a look at the modular and manufactured home mortgages below.
Housing market considerations
Both modular and manufactured homes can be more difficult to resell than more traditional homes, but the reasons are a little different.
A modular home, as explained, is always considered real property, which means its price fluctuates along with the traditional housing market. However, some people still have a lingering stigma that goes along with prefabricated homes.
Both buyers and real estate agents alike may have the idea that, despite all other factors being equal, a site-built house is worth more than a modular home. Because of that perception, it’s possible there will be less interest in the property or it may sell for less than a comparable traditional house.
Manufactured homes also can have a stigma attached to them, particularly if they’re located in a designated mobile home park. Plus, while they’re technically moveable property, it can take thousands of dollars to move the home if the buyer either doesn’t like the location or has plans to move it elsewhere.
This is in addition to the fact that manufactured homes are not legally considered real property. Because of this, manufactured homes are subject to depreciation, like a car, which can make it more difficult to generate a profit when they’re resold.
Modular vs. manufactured home: Which is better?
If you’re interested in a custom-style home where you get to choose the layout and architectural style, but don’t have the money for a custom site-built home, a modular home might be the best choice for you.
Not only do you get to pick out the style of the house, but you can also choose the flooring, cabinets, doors, and fixtures just like you can with traditional site-built homes. And you can do this without the prohibitive costs of new construction, including architects, engineers, and multiple contractors.
On the other hand, if you like the flexibility and cost-efficiency of a mobile home, then a manufactured home might be more your speed. A manufactured home can be a great starter home for individuals or young couples who may not have the financial power to buy a more traditional home just yet.
Because manufactured homes are often placed on leased land, they’re usually less expensive to own. This allows homeowners the opportunity to save for a more traditional home without having to deal with a rental situation in the meantime.
Are modular homes as well built as regular houses?
One of the major issues between homes built at the job site versus modular homes is the largely unfounded belief that a house built in a factory is inferior to a stick-built house. However, aside from the fact that they use the exact same local codes, factory-built homes can often be of superior quality to stick-built houses because they’re built in factories.
Simply put, a factory is a setting with strict quality controls and standards that you might not always get on a construction site. Plus, you never have to worry about the weather delaying or damaging the building because it’s all done in a climate-controlled environment. Having said that, always make sure to fully research the reputation and work of any modular home-building manufacturer.
Is a manufactured home the same as a mobile home?
While the terms manufactured home and mobile home (or trailer) are often used interchangeably, only dwellings that were built after 1976 and follow HUD standards fall under the designation of “manufactured homes.” This is because the federal code set by HUD has enhanced safety standards and installed other requirements that mobile homes built prior to 1976 do not have.
Are modular homes harder to insure?
Modular homes require the same standard type of homeowner’s policy that you would get for any traditional homes built on-site. Manufactured homes, on the other hand, require special policies that are designed specifically for these types of dwellings.
One reason for the different (and typically more expensive) insurance policies offered for manufactured homes is that they tend to be more vulnerable to fires, floods, and wind or storm damage. In addition, manufactured homes are more likely to have issues with pipes freezing due to less insulation than either modular homes or houses built on-site. Finally, manufactured homes tend to have more thefts (and therefore more theft claims) than other types of homes, which also drives up the cost of insurance premiums.
- Manufactured and modular homes are both housing units that are built in a factory.
- Modular homes are meant to be placed on a permanent foundation, whereas manufactured homes are not always permanently affixed.
- Modular homes must follow the same local, state, and regional building codes required for traditional construction. Manufactured homes follow building codes required by the Department of Housing and Urban Development (HUD).
- Modular homes can usually qualify for a conventional loan, but most traditional mortgage lenders don’t consider manufactured homes real property. Because of this, they won’t approve standard mortgages for them.
- If HUD-certified manufactured homes are permanently affixed to a homeowner’s lot, they may be able to receive conventional mortgages or government-backed loans.
View Article Sources
- Manufactured (Mobile) Homes — U.S. Department of Housing and Urban Development
- Real vs. Personal Property — New York State Department of Taxation and Finance
- What Is a Modular Home? — SuperMoney
- Buying a Mobile Home: What You Need to Know — SuperMoney
- What is a Single-Family Home? — SuperMoney
- What Is a Chattel Mortgage? — SuperMoney
- What Is a Patio Home? — SuperMoney
- How To Finance a New Garage or Detached Structure — SuperMoney
- Navy Federal Home Mortgage — SuperMoney
- USAA Mobile Home Insurance — SuperMoney