Manufactured and modular homes can be a great options for affordable, quality housing. Here's everything you need to know about what these types of homes are, and what to consider when buying one.

Manufactured? Modular? Mobile?

Manufactured, modular, and mobile homes all refer to various types of homes that are constructed in a factory and shipped to their ultimate destination. This is unlike a site-built home (what we would generally call a "house"), which is constructed on the plot of land it rests on.

Manufactured Homes

A manufactured home is constructed entirely in a factory under federal building codes administered by the U.S. Department of Housing and Urban Development (HUD). These homes are built on a permanent chassis, allowing for transportation to the home site, where they are installed on set foundations. The land on which manufactured homes rest can be rented or owned by the owner of a manufactured home, which has implications on how the property is treated for loans, insurance, and taxation (more on this below).

Manufactured homes offer several advantages:

• Affordability: They typically cost less per square foot compared to traditional stick-built homes.
• Efficiency: Construction in a controlled environment reduces waste and improves quality control.
• Speed of Construction: These homes can be constructed, delivered, and installed much quicker than traditional homes.

These factors make manufactured homes cheaper to construct than site-built and, as a result, cheaper for the end home buyer. Roughly 6% of the US lives in manufactured homes, and manufactured homes constitute nearly one in nine new homes built in the US per year.

What Should I Consider Before Buying Manufactured?

Manufactured homes are generally considered personal property as opposed to "real property" - in other words, more like a car or boat than a house. Once a manufactured home is delivered to the lot it is to stay on and affixed to it, it can be considered or converted to real property (the process to do this varies according to local and state law).

This has several implications for potential buyers:

1. Unlike traditional homes, manufactured homes can depreciate in value over time, especially if not affixed to a permanent foundation. This is similar to how a car depreciates in value. Real estate property like a site-built home is less vulnerable to depreciation since it will always include the land the house is built on.
2. Securing financing for a manufactured home can be more challenging than for a traditional home. Lenders may consider the collateral (the home) to be weaker if it is personal property, since depreciation will be higher. This will mean higher interest rates on the loan. Insurance can also be pricier for the same reasons. Much of this hinges on whether the property is considered personal (a.k.a. chattel) property like a car or whether it is real property like a house.

A few other considerations for quality to consider:

1. Ensure the home meets all HUD standards, which govern the design, construction, strength, durability, transportability, fire resistance, and energy efficiency of the home. Checking the home’s HUD labels and data plate.
2. You’ll need to decide whether to place the manufactured home on rented or owned land. If the land is rented, it will very likely mean that it must be considered chattel property. This means mortgage interest rates and insurance rates will be higher.
3. Just like any major purchase, understanding the warranty and what it covers is crucial. Typical warranties cover the home's structure, but not always the included appliances.
4. The site must be prepared before the home arrives, which can include laying a foundation, installing utilities, and ensuring compliance with local building codes. This may require professional help.
5. Finally, prepare just like you would for any other home purchase. See our guide to preparing like a serious homebuyer for more.

Mobile Homes

You may be familiar with the term "Mobile Home". Mobile homes refer to manufactured homes built before 1976, before the HUD issued regulation standardizing the requirements of manufactured homes.

These homes were often installed on wheel bases and therefore portable by towing via a truck or tractor.

Today, "mobile home" is often used colloquially to refer to a manufactured home. Some manufacturers may advertise their products as mobile homes, but in reality they are building to the HUD manufactured home specification.

Modular Homes

A modular home is constructed in segments in a factory setting, following state or local building codes rather than federal HUD codes. These sections are transported to the building site, where they are assembled on a permanent foundation and joined to create a complete structure. Modular homes offer several advantages:

• Quality Control: Factory construction allows for rigorous quality standards and oversight, leading to high-quality homes.
• Customization: Modular homes offer a range of design options, allowing buyers to customize their home to their preferences.
• Efficiency: The factory setting minimizes material waste and weather-related delays, making the building process more efficient.
• Speed of Construction: The home can be made weather-tight within days of assembly on-site, reducing the overall construction timeline compared to site-built homes.

These factors decrease the overall cost and time to construction of a modular home substantially, while ensuring the end product may look similar or identical to a site-built home. About 1-2% of homes in the US are modular, but the segment is growing fast as a way to reduce building costs and environmental impact from construction.

Because modular homes are permanently affixed to the land that they rest on, the considerations for purchasing one are largely the same as those for a site-built home. Mortgage, insurance, and taxation should all be similar.

A few additional considerations:

1. Just like for a manufactured home, consider the reputation and quality of the manufacturer that is creating the modular home.
2. Ensure that the home you purchase meets all state and local specifications for the area you will affix the home.

Wrapping Up

The last piece to consider when buying modular or manufactured is valuing the home. Here's a full guide to understanding what you can afford and how to think about manufactured home pricing.