Modern modular home with landscaping.

Modular Vs. Manufactured Homes: What’s The Difference?

Carey Chesney4-minute read

September 20, 2022

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The housing market is filled with options – like a grocery store, there is something for everyone. Modular and manufactured homes are affordable routes to homeownership. Understanding the key differences between these types of homes is essential for anyone interested in learning more about how to buy a house. Let's explore the differences together. It’s important to note that Rocket Mortgage® currently does not offer financing on manufactured homes

What Is A Modular Home Vs. Manufactured Home?

Modular and manufactured homes are prefabricated structures, meaning they are partially or fully constructed in an off-site factory.

The primary difference between modular and manufactured homes is that modular homes are held to the same local, state and regional building codes required for on-site homes. Manufactured homes are held to a federal code set by the Department of Housing and Urban Development (HUD) and have the ability to move.

Modular Home Defined 

modular home is like a traditional home, placed on a permanent foundation. The house structure is partially constructed in a factory and shipped to the homeowner’s lot. The construction of a modular home must comply with local building codes and standards in the area where the home will be placed.

Modular homes come in all shapes and sizes. In many cases, it’s hard to tell the difference between a modular home and a traditional stick-built home. Similar to standard on site-built homes, modular homes fluctuate in value with the traditional housing market.

Most banks and mortgage lenders offer financing on modular homes which means buyers will have a more diverse range of options when it comes time to purchase their home. Rocket Mortgage finances modular homes.

Manufactured Home Defined

A manufactured home is built in a factory or warehouse in accordance with building codes set forth by the U.S. Department of Housing and Urban Development (HUD).  The homes are. transported to the home site, either in sections or as a whole, and installed on either a temporary or permanent foundation. In most cases, they will be permanently affixed.

Modern manufactured homes can come in three general floor plans: 

  • Single-wide: A home built in one long section.

  • Triple-wide: A less common model with three sections joined together for a larger, more spacious home.

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What’s The Difference Between Modular And Manufactured Homes?

While both manufactured and modular homes are cost-effective alternatives to traditional site-built homes, there are some key differences to consider when deciding between the two.

If you had your heart set on a site-built home but want to take a more cost-conscious and efficient approach, a modular home build might be the way to go. Once they’re assembled, modular homes are essentially the same as site-built homes, sitting on a permanent foundation.

While both modular and manufactured homes are built in factories, manufactured homes are actually held to federal standards after the HUD Code was created in 1976. The established code transformed the term mobile home until the upgraded, modern manufactured homes that you see today.

Below we compare modular and manufactured homes:

 

Modular Homes

Manufactured Homes

Construction

Multiple factory-made pieces assembled at home site

Built-in sections, can be single or multi-width

Foundation

Permanent / traditional

Steel chassis with ability to be affixed to land

Mobility

No

Yes

Real Property

Considered real property once completed on site

Must be permanently affixed to the site, then must be converted from chattel to real property through the county

Financing options

Standard

Limited

Relative customizability

Higher

Moderate

Code requirements

Local, state and regional codes

Federal HUD code

Home site

Private property

Private property or land-lease

Customizing Modular And Manufactured Homes

Modular Home

Modular home design has come a long way from its inception. Modular home plans today come in all shapes and sizes, from a tiny home to a two-story colonial. A modular home can have a lot of custom features such as an attached garage, wrap-around porch, and an endless variety of floorplans. Because modular homes adhere to strict building codes and are placed on a permanent foundation, most banks and lenders offer a variety of financing.

Manufactured Homes

Manufactured homes have also come a long way from the basic single and double-wide days. While newer manufactured homes may not be as customizable as modular homes, they still come in a variety of architectural styles, floor plans, and add-ons that can meet your needs.

Financing Modular And Manufactured Homes

Mortgages are loans secured by real estate or land, and the permanent fixtures built on it. Modular homes are placed on a permanent foundation. Once a modular home is assembled, it’s treated exactly like a site-built home so it can be financed through a regular mortgage. When it comes to a manufactured home, well, not so much. The difference comes down to the legal definitions of real property and personal property.

Essentially, personal property is movable property and real property is immovable property – land and anything attached to the land. Many lenders, including Rocket Mortgage, do not finance the purchase of manufactured homes because the land on which they sit is generally rented, and the home itself can be moved. Thus, it is not considered real property.

While there are some lenders that may finance manufactured homes, they may charge higher interest rates because the risk they take on is higher. There are certain circumstances where FHA or VA loans may be available for manufactured homes. 

Complying With Local Zoning Laws

Modular homes are subject to the same zoning laws as site-built homes, another characteristic that makes them more like traditional homes than manufactured ones.

Manufactured homes are constructed according to a code administered by the U.S. Department of Housing and Urban Development (HUD) and the local building code. The foundation for manufactured homes is also up to local code. When it comes to zoning, this means that local ordinances on land use can restrict where manufactured homes can be placed. For example, if a manufactured home is built for a specific state and the buyer cancels their order, the home must be resold to a buyer in that state.

Modular And Manufactured Homes Vs. Mobile Homes 

There are different construction methods and standards when it comes to mobile, modular, and manufactured homes.

The term “trailer” no longer accurately represents what manufactured homes are. In 1976 Congress authorized the National Manufactured Housing Construction and Safety Standards Act which authorized HUD to establish construction standards for manufactured homes. Today we refer to mobile homes or trailers as “manufactured homes.”

Mobile homes or trailers built prior to June 15, 1976, would not likely pass today’s building standards. Today’s modern modular home is built for longevity. Congress intended to protect the quality, fire resistance, energy efficiency, durability, safety and affordability of manufactured homes by setting a standard to follow for the industry. It established uniform performance-based construction standards and encouraged cost-effective and innovative construction techniques. HUD also established a program to provide resolution of disputes between consumers, retailers and manufacturers.

The Bottom Line: Understand The Pros And Cons Of Modular And Manufactured Homes Before You Buy

There are a lot of options when it comes to modular and manufactured homes. If you’re looking for a home that will appreciate over time, with a lot of options for upgrades and expansion, a modular home could be the perfect fit for your family.I

If you’re more interested in saving money and flexibility, a manufactured home may be the better option for the family on the move. Home buying can be overwhelming, so don’t go at it alone. Check out the Rocket Mortgage Home Buying Resource Center to learn more about home buying tips.

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Carey Chesney

Carey Chesney brings a wealth of residential and commercial real estate experience to readers as a Realtor® and as a former Marketing Executive in the fields of Health Care, Finance and Wellness. Carey received his Bachelor's in English at University of Wisconsin-Madison he received his Masters in Integrated Marketing & Communications at Eastern Michigan University.