Manufactured Homes, Defined And Explained

If you’ve been on the house hunt for a while now, you’ve more than likely heard the term “manufactured home.” But what is a manufactured home?

For many home builders and buyers, manufactured homes are an affordable alternative to more traditional, expensive real estate. The modern manufactured home can feature the same desired amenities as pricier housing.

Manufactured homes are, as their name suggests, “manufactured” in factories piece by piece in accordance with building codes set by the U.S. Department of Housing and Urban Development (HUD). The homes are transported to the home site and installed on either a temporary or permanent foundation.

Modern manufactured homes can come in three general floor plans:

• Single-wide: This is a home built in one long section.
• Double-wide: This is when two sections are joined to make a larger home. This model is popular with first-time home buyers.
• Triple-wide: This describes a manufactured home that has three sections joined together for a larger, more spacious home. This is the least common model.

A newer model of manufactured homes, dubbed the CrossMod by the Manufactured Housing Institute, can include features similar to traditional site-built homes like garages, covered porches and interior drywall. A CrossMod can also be financed and appraised similarly to traditional housing.

There tends to be a lot of confusion when it comes to differentiating between various types of prefabricated housing.

Some terms are used interchangeably when they really describe different types of houses. While the distinctions might seem subtle, it's essential to nail down the difference if you're considering purchasing a manufactured home or similar prefab home.

Mobile Homes And Trailer Homes

While the terms “mobile home” and “manufactured home” are often used interchangeably in the home buying process, the former term has been technically obsolete since 1976, when the National Manufactured Housing Construction and Safety Standards Act enforced by HUD went into effect. The same is true of “trailer.” While the term is still sometimes used colloquially, it no longer accurately represents what manufactured homes are.

Just remember, “mobile home” refers to any manufactured home made before June 15, 1976. Manufactured homes these days feature more solid structures and greater amenities than their predecessors, making the distinction between them an important one. 

If your home has been converted to real property – meaning it’s been permanently affixed to land – Rocket Mortgage^®can help you finance your home with a conventional loan, FHA loan or VA loan.

Modular Homes

Modular homes are also built in factories. There are a few crucial differences, though. Unlike manufactured homes, modular homes are:

• Delivered in sections and built on-site, almost always on permanent foundations
• Generally governed by local state building codes rather than the HUD Code
• Subject to the same zoning laws as site-built homes
• Known for entirely customizable floor plans
• Automatically considered real property once completed

If you're looking at either of these housing options, make sure you fully dig into the differences between modular and manufactured homes. Rocket Mortgage offers financing for modular homes.

Kit Homes

Kit homes are a “some-assembly-required” housing option. Pieces of the house arrive at your property in a kit and then must be assembled on-site by the homeowner or a contractor, whereas a manufactured home typically arrives completed. Rocket Mortgage doesn’t offer financing for kit homes.

According to the U.S. Census Bureau’s Manufactured Housing Survey, the average selling price for a manufactured house as of April 2023 was approximately $125,000.

Manufactured homes are often significantly less expensive than building a house because:

• Manufacturers purchase building materials in bulk and at lower costs.
• Indoor factory construction allows for more controlled costs and an efficient construction schedule.
• Construction time isn’t hindered by weather conditions or other delays.

As with more traditional housing, many different factors contribute to the total cost of a manufactured home. In addition to the unit price, the items below also influence the overall cost of the home.

Square Footage

Size plays perhaps the biggest role in determining your home’s cost. The cost per square foot of a manufactured home, on average, can be $40 – $80, significantly lower than that of a site-built home.

Buying Land

With a manufactured home, you have two options: Lease a spot in a manufactured home community or homeowners association (HOA), or purchase a piece of land on which to install your house. The price of land varies between the states, and as a rule, rural land is generally more affordable than in urban or suburban areas. A land loan can be used to purchase the land for your home.

Foundation

If the land you’ve built upon is yours to own, you may want to invest in a permanent foundation, as opposed to a temporary one. This can include having a basement, crawl space or other additions.

Taxes

Tax expenses can differ depending on the state in which you live. Whereas most states regard manufactured homes as property and charge a property tax if they are permanently affixed, other states may charge a vehicle or licensing tax if the manufactured home is not affixed to a permanent foundation.

Delivery And Installation

Delivery and assembly fees will depend on the manufacturer from which you buy your home. Delivery may be included in the price if the home’s location is within a certain radius of the facility – otherwise, an additional fee may apply.

Utilities

As with any type of home, configuring utilities like water, plumbing, heat, electricity, internet and cable add additional costs to the overall price of your home. Many manufacturers include home warranties that cover most of these utilities and even certain appliances.

While there are numerous benefits, no one type of home is right for everybody. Let’s look at the pros and cons of a manufactured home and see if it’s the right type of home for you.

Pros Of Manufactured Housing

• Manufactured homes are typically more affordable than site-built housing.
• It's possible to qualify for conventional financing at traditional mortgage rates if the home is converted to real property by affixing it to the land.
• The homes are reasonably customizable with various upgrades, features and amenities. Homeowners can also make improvements as with any type of home.
• Manufactured homes are known to be energy-efficient, durable, and built to meet the HUD Code.

Cons Of Manufactured Housing

• Loans for manufactured housing not attached to the land typically include higher interest rates than traditional mortgages.
• Zoning restrictions in cities may limit your location choices to more rural areas.

Existing homes can be found on listing websites or through a real estate agent, but manufactured homes are typically sold through retailers.

Manufactured housing models can be viewed on a sales lot, where you can choose customized features and apply for a home loan. The retailer will even arrange the home’s delivery and installation.

Let’s take a look at the steps for successfully buying a manufactured home of your own.

Step 1: Choose A Lot

Before you purchase your home, you'll need somewhere to put it. There are two main options when it comes to lots for manufactured homes:

• Manufactured home communities
• Rented or purchased land

Communities can vary as much as any neighborhood, so make sure you get a good feel for the area before choosing a spot to put your new home. If you'd rather buy your own land, check your local zoning laws to see what restrictions apply for manufactured homes.

Step 2: Select Your Loan Option

Rocket Mortgage offers financing on manufactured homes built on or after June 15, 1976, that are permanently affixed to the land (real property) and have a HUD tag. The following are several available loans for manufactured homes:

Government-Backed Mortgages

HUD-approved loans like Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) loans are available to those who qualify. The home must be converted to and taxed as real property, connected to utilities and permanently affixed per local code.

FHA loans for manufactured homes require a foundation inspection according to the standards set by the Permanent Foundations Guide for Manufactured Housing. If you've had a prior inspection, that can be used to qualify.

Conventional Loans

Freddie Mac and Fannie Mae both offer conventional mortgages designed specifically for manufactured homes but they have to be permanently affixed to the property. The home must be converted to and taxed as real property, connected to utilities and permanently affixed per local code.

Chattel Loans

Chattel loans are secured loans that put up your movable property, or “chattel,” as collateral. Loan terms commonly range between 10 – 20 years as opposed to a typical 30-year mortgage.

If affordability and speedy construction are what you desire, a manufactured home might be just the home for you. If you’re still on the fence because of financing and zoning issues, there are additional affordable home options to choose from, like modular or kit homes. In the end, where you feel the most at home is the most important.

Apply for a mortgage today with Rocket Mortgage. You can also give us a call at (855) 396-4613.