Couple look at kit home while it snows

Kit Homes: What You Should Know Before Buying

Victoria Araj4-minute read

August 11, 2021

Share:

Rocket Mortgage® does not currently offer financing for kit homes.

Nontraditional homes have become all the rage as millennials get creative on their paths to homeownership. The innovation of alternatives to traditional stick-built construction has made homes more affordable, energy-efficient, customizable and accessible to more people. Today, you can order a kit home from Amazon and have all the materials needed to build a house delivered to you.


As innovative and exciting as a kit home sounds, home building kits have been around for well over 100 years. Here’s what you need to know before you buy into their newfound momentum.

What Is A Kit Home?

Kit homes are essentially mail-order homes, delivered in parts by a manufacturer and stick-built on your property either by you or by contractors. House kits are far more affordable than hiring contractors to source all the materials themselves. You can order a kit home to build anything from a work studio to a bungalow to a three-bedroom contemporary home.

While Amazon has revived interest in kit homes, they were extremely popular in the first half of the 20th century. In fact, over 100,000 kit homes were built between 1908 – 1940, according to a University of Maryland archivist. Sears is still the most well-known kit home manufacturer from that era, which came to a close after the stock market crash of 1929.

Great news! Rates are still low in 2021.

Missed your chance for historically low mortgage rates in 2020? Act now!

How Much Is A House Kit?

Like any other stick-built home, kit homes vary in floor plans and pricing. Still, they can be considerably cheaper to build than traditional houses. Many manufacturers of kit homes have business models that are similar to those of modular and manufactured homes. In fact, many home-building kit suppliers will also offer modular options (built off-site and delivered in sections). Rocket Mortgage® offers financing for modular homes. Building or assembling kits in a climate-controlled environment exponentially shortens the build time and, therefore, the labor costs.

Because the construction materials are purchased in bulk and delivered to a factory, the cost for the materials is often lower. This business model also helps reduce transportation costs, both financial and environmental.

The most bare-bones house kit floor plans can come as cheap as $10 per square foot. You may find that the kits don’t come with drywall or even any interior elements. More typically, the cost of an average home kit may be closer to $40 – $60 per square foot, according to HomeAdvisor. It’s a good idea to talk with a general contractor before committing to a house kit to get a more realistic estimate.

How Much Do Kit Homes Cost To Build?

It’s easy to get swept up in the thrill of online shopping for homes with a significantly lower price tag than you’d find on Rocket Homes®. While it’s true that kit homes can be cheaper than building a stick-built house, be prepared to spend at least double the cost of materials themselves.

One home kit manufacturer estimates that the kit amounts to just 25% of the total cost of the home once you include construction labor costs (generally $130 per square foot). If the house kit is $15,000, but you still need to furnish it with appliances, drywall, flooring, etc., it can quickly double in cost in materials alone. Meet with a general contractor before making a big purchase like the bones to a house.

Low rates were a big story in 2020. It was a great year to refinance!

Great news about 2021 so far: Rates are still relatively low.

Pros And Cons Of Kit Home Builds

As with any other financial decision you’ll make in your life, there is no one right answer for everyone. A kit home may ultimately not be much cheaper if you live in a low-cost area. Here are some important factors to consider when deciding between different types of houses.

Pros Of House Kits

Cost: Kit homes are typically cheaper than general contractor traditional home builds, for a number of reasons.

Quick delivery: Kit home manufacturers can typically get the entire kit organized and delivered to you within weeks.

Rapid construction: Because every piece is pre-cut and labeled with directions on how to assemble the house, it can be built significantly more quickly and accurately.

Customization: The biggest benefit to building any home from the ground up is bringing a homeowner’s customized dream home to life.

New home: Kit homes are just as durable as any other stick-built home and can easily last 50+ years. Plus, you get to be the first inhabitants.

Cons Of House Kits

Delivery limits: Most manufacturers have a delivery limit of 750 miles, give or take. If you prefer the floor plans offered at a manufacturer in Utah but you live in Texas, you’ll have to pay expensive delivery fees to receive the kit.

Location: Kit homes may not be cheaper than contractor-produced homes if you live in a rural or less expensive area of the country. If you live in a metropolitan area, a kit home will be unquestionably cheaper.

Lack of standards: The industry is in a new boom, which means nothing has been standardized industry-wide or regulated by HUD. A full kit may include a foundation and interior design for one company, while for another, it won’t even include drywall. Expect to do research.

How To Finance A Kit Home

Getting a mortgage on a kit home is no different than building any other house. Most manufacturers don’t offer financing options. If you can’t pay cash, then you’re looking at a short-term home construction loan. Once your home is built, you can go ahead and apply for a traditional mortgage.

While Rocket Mortgage® doesn’t offer construction financing, including kit home financing, we’re here to help you understand your options. It’s also important to note that we offer financing for modular homes once they’re complete. If you’re ready to convert your construction loan for a modular home to a traditional mortgage, apply online!

Take the first step toward the right mortgage.

Apply online for expert recommendations with real interest rates and payments.

See What You Qualify For

Victoria Araj

Victoria Araj is a Section Editor for Rocket Mortgage and held roles in mortgage banking, public relations and more in her 15+ years with the company. She holds a bachelor’s degree in journalism with an emphasis in political science from Michigan State University, and a master’s degree in public administration from the University of Michigan.