What’s the Difference Between Modular Vs. Manufactured Homes?

When home availability is low and home prices are rising, buying a house can become challenging – especially for first-time home buyers. To expand your pool of potential homes and make home buying more affordable, you may begin exploring options outside of traditional homes. Two popular house styles that you might want to consider as a buyer are modular and manufactured homes.

Over the years, the terms “modular homes” and “manufactured homes” have in some cases been used interchangeably. But while the two may have some striking similarities, each has very specific characteristics that make it unique. These characteristics include how it’s constructed, how it’s transported, its cost and more.

Let’s take a close look at the differences between modular and manufactured homes, the pros and cons of each, and how to choose the right fit for your home buying needs.

Defining Modular Homes Vs. Manufactured Homes

Let’s start by looking at the definition of modular homes and the definition of manufactured homes.

What Is A Modular Home?

A modular home is a custom-built house produced offsite, usually en masse in a climate-controlled factory. However, modular homes aren’t the same as mobile homes – in fact, they’re just like traditional, site-built homes in that they’re placed on a permanent foundation and must comply with local municipalities. While both modular and manufactured homes are types of prefabricated homes, they have some notable differences to bear in mind.

The main difference between modular and manufactured homes is how they’re initially built – while modular homes are assembled in a factory and then finalized and put together on the homeowners’ property, manufactured homes are fully built on a chassis for mobility and then delivered to the homeowners’ property.

What Is A Manufactured Home?

Manufactured homes are the type of prefabricated housing that can be used interchangeably with the term “mobile home.” Quite literally made to be mobile, manufactured homes must be built on a permanent chassis and be capable of transport to the home site. This qualifies these homes for certification from the U.S. Department of Housing and Urban Development (HUD).

As the only remaining type of home construction on the market still regulated by the federal government, manufactured homes also differ from modular homes in that they must adhere to HUD standards and construction codes. Modular homes, on the other hand, must simply be in compliance with their local, state or regional building codes. And since manufactured homes are widely regarded as a type of mobile home, finding financing options for them can be harder. That’s because many lenders won’t cover anything not set on a permanent foundation.

Differences Between Modular And Manufactured Homes: A Side-By-Side Comparison

Pros And Cons Of Modular Homes Vs. Manufactured Homes

The same way that a ranch-style home or a colonial-style home could work for some people and not others, a manufactured or a modular home may or may not work for you or fit your lifestyle.

Let’s have a look at the limitations and advantages that both modular and manufactured homes offer:

Pros Of Modular Homes

Buying a modular home can be extremely cost-effective. Modular homes are built in bulk, resulting in extremely attractive, affordable prices – especially when compared with the price of a more standard house.

• Energy-efficiency: Modular homes are oftentimes constructed in a much more energy-efficient way than homes built on site, or “stick-built homes.” Not only can you save on your utility expenses each month, but you can also rest a bit easier if you have a green thumb to satisfy.
• Home value appreciation: Since they’re set on a permanent foundation, modular homes may also have the benefit of an appreciating resale value, just like stick-built homes.
• Traditional financing: You shouldn’t have a problem finding a lender to finance a modular home. Modular homes are usually treated like on-site builds when you need financing. This can mean great news for your interest rate, insurance premiums and loan options.
• Smooth construction and buying process: Since modular homes are constructed in a controlled environment, you won’t encounter issues or setbacks that you might with a traditional home build. Variables like a rainy day or extreme heat won’t affect your timeline, and purchasing a modular home can be a pretty speedy process.

Cons Of Modular Homes

• Size limitations: With the benefit of a speedy build comes the consideration of size limitations. Specifically, most modular homes can’t offer you the same spaciousness as an on-site build. With an average double-size modular home typically measuring around 900 square feet, this housing option may not be best for large families or those who crave wide-open spaces.
• Cost of land: Perhaps the most important order of business before buying a modular home is securing land to permanently build on. Depending on your location, buying the land for your home could come at a high price – that doesn’t even include the actual modular home cost itself.

Pros Of Manufactured Homes

• Customizability: As for customizability, manufactured homes offer many options. With floor plans and house styles that can accommodate additions and updates, plus special features and modifications, your manufactured home can be just as hands-on and imaginative as a standard home when you go to order it.
• Safety: Since all manufactured homes must comply with HUD regulations, you can take heart in knowing that your house is up to date with strict construction and safety standards. Together, these ensure a healthy and hazard-free home.
• Affordability: The cost of manufactured homes is one of their biggest drawing cards. With an average cost of $72.21 per square foot, according to the Manufactured Housing Institute – as opposed to a traditional home’s average $143.83 per square foot – manufactured homes can give many families a pathway to homeownership they wouldn’t otherwise have.
• Smooth construction process: Similar to a modular home, manufactured homes offer a much more efficient construction process than building an on-site home. Depending on the size and condition of your lot, your manufactured home could take as little as a week or two to install completely.

Cons Of Manufactured Homes

• Fewer financing options: Since manufactured homes are technically mobile homes, you may have to seek more help or jump more hurdles when getting a mortgage. In some cases, lenders might even view your home as personal property and not real estate. Rocket Mortgage® does offer conventional financing for manufactured homes that are permanently affixed to the land and titled as real property.
• Slow or no value appreciation: Long-term appreciation in value is slow, if it happens at all, with manufactured homes. Traditional and modular homes appreciate in value much more consistently and quickly. The exception with manufactured homes is if the home is tied to the land. That’s because much of any home’s real monetary value is in the land it sits on. If not tied to the land, a home simply ages and can depreciate in a matter that’s similar to cars. This is why it’s much easier to get a mortgage when manufactured homes are permanently affixed to the land and titled as real property.
• Stigmas: For many, the stigma and misconceptions about owning a manufactured or mobile home may be the biggest drawback. Hurtful labels surrounding mobile home communities have been perpetuated by the media for years, and you may be met with the occasional ill-informed comment.
• Land availability: The most important piece of buying a manufactured home is knowing where you want to place it. Many areas can have a shortage of land suitable for living, or you may have to sink some money into site preparation.

When Should You Choose A Manufactured Home Vs. A Modular Home?

So, when is it the right time to buy a manufactured home over a modular one, or vice versa?

If you’re looking to save money, a manufactured home may be the right option for you. However, if you want your property to increase in value over time, a modular home might be a better investment, depending on current housing market trends. And, if you think you might struggle to find traditional financing, you may have a better chance of securing funding for a modular home than a manufactured home.

Speak with a real estate agent to discuss your housing options. They’ll help you decide if a modular home or a manufactured home is a good investment, and they’ll find available properties in your desired area and guide you through the mortgage process.

The Bottom Line

Although modular and manufactured homes are sometimes perceived as one and the same, they have notable differences and unique benefits to explore. Both are relatively affordable home options, however. If you need reliable financing, our friends at Rocket Mortgage can help. Get approved online or give them a call at (833) 326-6020.