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We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence. Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover.
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you.
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Sometimes, dream homes can become a reality much faster than you think. Modular houses allow you to construct a home on a plot of land, often faster, cheaper and of equal or better quality than traditional stick-built homes. Here’s everything you need to know about this unique type of home.
Modular homes, sometimes referred to as prefab homes, are factory-built houses. They’re made off-site in large factories, then put together at the building site. You’ll need to own or rent a plot of land to install it on.
The styles and layouts of modular homes can be as varied as your imagination, with soaring ceilings, window walls and more, and they can be ordered from standard plans or custom-made to your specifications. The modules are trucked to the site and then assembled with cranes in your desired configuration.
While a modular home is technically manufactured, it’s not the same as what we call a manufactured home or mobile home. That’s mainly because of the way modular homes are built, explains Benjamin Ross, a real estate expert and investor in Texas.
“Manufactured homes have a distinct look because they are not built on a foundation,” Ross says. “Modular homes and traditional stick-built homes can be difficult to tell apart from each other.”
“Modular homes are permanently attached to their foundations, and once they are installed, they are effectively and legally no different from other site-built homes,” agrees Gordon Stott, co-founder of Connect Homes in Los Angeles.
Another key difference is where the home is allowed to be located. “Manufactured homes can typically only go in areas where zoning allows — trailer parks or very rural areas,” Stott says. Manufactured and mobile homes are also built to a different set of codes than modular homes, which are typically constructed based on local regulations.
Furthermore, Stott says, modular homes are legally classified as real property, while manufactured or mobile homes are considered personal property. Manufactured homes can become real property when they are permanently affixed to the ground. But mobile homes, which can move from one location to another, are typically taxed similar to vehicles and thus depreciate in value.
Modular homes can vary widely in size and scope, so the cost varies with many factors. Here’s a breakdown of what you might expect to spend, according to HomeAdvisor estimates:
While a modular home generally goes up faster than a traditionally built home, the process does take time: typically anywhere from four to nine months. The exact timeline depends on the size of the home, how long it takes to get permits and whether you’re using a standard floor plan or have added customizations. Sometimes builders have a backlog of projects that can delay things, while others have capabilities that can expedite the build.
As with any home purchase, there are a few different financing options for a modular home. One common route is a construction loan, which is a shorter-term loan that funds the cost of the land and project. Construction loans can be structured in several ways, but typically once the home is complete, the loan converts to a mortgage.
“[The] process isn’t much different from financing the construction of a typical home,” Stott says. “You get a construction loan, which can be rolled over into a fixed-rate mortgage.”
Construction loans can be obtained from a variety of mortgage lenders, including banks, credit unions and other institutions, and sometimes through the builder’s preferred lender partner.
Modular homes could work for many different types of buyers, Stott says. These include:
Find a lender. “Start with the lender,” Ross says. “You first need to know if you are approved and how much you are approved for. They will then direct you to various modular companies they have worked with in the past.”
Do your research. It’s important to first know whether your area allows for modular homes, and, if so, to then find a reputable builder. Consider builders who can show you their track record or point you to testimonials or past projects. You can also vet the builder through the Better Business Bureau or based on other third-party reviews.
Ask about price and process. After you’ve found a builder, ask about what is and isn’t included in the base price of the home. What do you need to pay for upfront and what do you pay at the end of the project? Has the builder made arrangements for the appropriate inspections to obtain a certificate of occupancy? Be sure to get everything in writing, including the prices you were quoted.
Bankrate.com is an independent, advertising-supported publisher and comparison service. Bankrate is compensated in exchange for featured placement of sponsored products and services, or your clicking on links posted on this website. This compensation may impact how, where and in what order products appear. Bankrate.com does not include all companies or all available products.
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