Founder | BPI® Energy Auditor Certified Professional
Building a home is no small feat. It takes time, money, and patience to make your dream home come true, but even when you’re finally ready for the build, some tough decisions are still to be made.
For example, will you choose a modular, prefab or manufactured home?
This article goes in-depth on the differences between modular and manufactured homes. If you read to the end, you’ll know which option is best for you and your family.
Modular, Prefab, and Manufactured Homes
Ask any builder, and they’ll tell you that there are two types of homes: modular and manufactured. You may have also heard people calling them factory-built or panelized homes.
So what exactly are the differences?
Manufactured vs. Prefab vs. Modular Homes
Modular and prefab are essentially the same: they’re both traditional homes built in a factory. And you can choose the layout, style, and finishes. Manufactured homes are a bit different. You can think of them as temporary shelters that you can move to if needed.
Here’s a table to help you understand the differences and similarities between modular, prefab, and manufactured homes:
| Difference | Modular | Prefab | Manufactured |
| Construction method | Sections | Sections | Complete house |
| Permits needed | Same as traditional homes | Same as traditional homes | Building permit plus certificate of occupancy |
| On-site construction time | Reduced by 50% | Reduced by 50% | Reduced by 80% |
| Design flexibility | Very flexible | Very flexible | Not flexible |
| Building code | Local | Local | HUD |
| Cost | High | High | Relatively low |
| Insurance | Same as traditional homes | Same as traditional homes | Personal insurance (expensive) |
| Mortgage | Eligible | Eligible | Not eligible |
| Longevity | Durable | Durable | Durable |
| Foundation requirements | Permanent | Permanent | Not permanent |
| Long term value | Appreciates | Appreciates | Usually depreciates |
As you can see, modular and manufactured homes are quite different. So when you’re considering a factory-built home, make sure you understand which type is right for you.
Construction Type
The construction type is the most significant difference between these homes. Modular homes are built in sections in a factory, then transported to the building site and assembled with the help of a crane. This process is similar to assembling a large piece of IKEA furniture.
Prefab homes are just a smaller form of modular. They use the same construction method but on a smaller scale. The components are built in a factory, then transported to the building site for hand or crane assembly.
Manufactured homes are built and assembled entirely in a factory, then transported to the building site. These homes are constructed on a chassis so they can be moved. These are great for people who want to move frequently or live in a remote area.
You can still have a manufactured home sit permanently on a piece of property, but this isn’t what they’re built for.
Foundation Requirements
One of the main differences between modular and manufactured houses is that modulars are built on a permanent foundation, while manufactured ones are not.
If you want to move your manufactured home, you can do so relatively easily. However, moving a modular home is much more complex and expensive, as you would need to disassemble the entire house and then reassemble it at your new location.
A manufactured house comes with a chassis that the house rests on, and this chassis can be transported using a large truck. Imagine trying to move a traditional home that way—it would be nearly impossible!
We have also seen people move their modular homes, but it is not common. The cost of moving a modular home is also much higher than moving a manufactured one, as you would need to hire a professional company to do it for you.
Permits Needed
When it comes to permits, modular homes take the cake. A modular home builder will apply for all necessary permits before construction begins. These include the building, electrical, and plumbing permits.
In some cases, the local building inspector will visit the factory during construction to ensure everything is up to code. However, most prefab factories go beyond the minimum requirements, so there should be no problems.
Permits are still needed for a prefab home, but they are typically obtained by the general contractor overseeing the project. This professional will also apply for the certificate of occupancy from the local jurisdiction.
This process is different from a manufactured home which needs both a building permit and a certificate of occupancy. These are obtained from the state or local government where the house will be located.
On-Site Construction Time
The construction timeline is another big difference between these types of homes. Modular homes are typically built faster than stick-built homes. In fact, construction time is reduced by up to 50%.
We have seen a small house put together in one day, but the average modular home takes about a week to assemble with the help of a knowledgeable team. However, if you opt for DIY construction, it might take longer.
The construction timeline for prefab homes is similar to modular homes. These homes are also built in sections in a factory, so they can be put together quickly on-site.
Manufactured homes have the shortest construction timelines. They are built in a matter of hours if you already have the foundation in place. After that, hook up the utilities, and you’re ready to move in!
Design Flexibility
If you’re looking for a home that can be customized to your specific needs, modular homes are the way to go. Builders usually construct these structures on demand, so homebuyers can easily customize them to their liking.
You can add or remove walls, windows, and doors. You can also choose the type of siding, roofing, and flooring. If you change your mind after the home is built, no problem! The sections can be disassembled and reassembled to your new specifications. The same applies to prefab homes.
Manufactured homes aren’t as customizable, but you can still choose from various floor plans. If you want to make changes, you’ll have to settle for an extension, not a remodel.
Also, the sections aren’t as easily disassembled as modular structures since the home’s stability is tightly tied to the initial design.
Building Code Regulations
All three types of homes are subject to building code regulations, but there are some differences.
Modular homes are built to the same code as stick-built homes. However, they often exceed these requirements because modular home factories are subject to additional inspections by state or local officials.
For example, most modular builders use a glue and nail combination for all wood-to-wood joints. This method has been tested and proven to withstand hurricane-force winds.
Prefab homes share the exact code requirements as modular homes. However, it’s essential to do your research before starting the construction process.
The federal government regulates manufactured homes, and the Department of Housing and Urban Development (HUD) is responsible for setting these standards. The HUD code covers wind resistance, fire safety, and energy efficiency.
The HUD has a set of minimum requirements for manufactured homes, but some states have adopted stricter standards than the HUD code. Some builders also exceed the minimum requirements so the clients can have more trust.
Cost of Construction
The cost of construction is another big difference between the types. Modular homes are typically 20-30% cheaper than stick-built homes. This difference is because modular builders can order materials in bulk and get discounts from suppliers.
Labor costs are also lower because the construction process is more efficient—since modular homes are built in a factory, there’s less waste.
For example, a 1,000 square foot (92.90 sq m) modular home might cost around $50,000 to $200,000. That’s about half the price of a stick-built home of the same size.
Of course, the cost of land and any site work you need will also affect the overall cost of your modular home. Then there are utilities, permits, and other fees.
The cost of prefab homes is similar to modular homes. Like modular homes, prefab builders can order materials in bulk and get discounts from suppliers. The construction process is also more efficient.
Manufactured homes are the most affordable option. These homes are also built in a factory and then transported to the building site, eliminating the need for on-site construction, which can be costly.
For example, a 1,000 square-foot (92.90 square meter) manufactured home might cost around $40,000 to $100,000. That’s considerably cheaper than a modular home of the same size.
The only cost you have to worry about with a manufactured home is the price of the land. Since these homes are typically smaller than modular and prefab homes, they’re more affordable to maintain.
However, connecting the home to utilities can be a real hassle, especially if you live far from the nearest connection point. In addition, this might require special permits and additional materials, which can add to the cost.
Insurance Costs
When it comes to insurance, modular and prefab homes are typically treated the same as stick-built homes because they are built to the same code. They are also permanent structures, so they qualify for the same type of insurance as stick-built homes.
On the other hand, manufactured homes are usually insured through a personal property policy. This type of policy is different from a homeowners policy. It’s important to understand the difference before you buy a manufactured home.
A personal property policy covers the home’s structure, but it doesn’t cover the land. So if you have a manufactured home, you’ll need to buy two policies—one for the home and one for the land.
You may be able to get a discount if you buy both policies from the same company. It’s essential to compare rates and coverage before buying.
Mortgage Financing
Modular and prefab homes are usually financed through a conventional mortgage. This type of loan is available from most banks and credit unions, and it’s the type you would use to buy a stick-built home.
We are talking about mortgages, the same ones you would use to purchase a stick-built home. The only difference is that you might have to put down a larger down payment.
With a conventional mortgage, you can usually finance up to 80% of the home’s purchase price. So if you’re buying a $100,000 home, you’d need to put down $20,000.
However, with a modular or prefab home, the lender may require a larger down payment. That’s because these homes are often considered “non-conforming” loans.
Homebuyers can finance manufactured homes through a personal property loan, also known as a chattel loan. This type of loan is available from some banks and credit unions. It’s essential to shop around and compare rates before choosing a lender.
You may also be able to finance your manufactured home through a government-backed loan program. The most common program is the Federal Housing Administration (FHA) program.
The FHA loan program offers low down payments and favorable terms for manufactured homes. But you’ll need to meet the program’s eligibility requirements like credit score, income, and employment history.
Long-Term Value
The long-term value is an important consideration when buying a house.
Modular and prefab homes typically appreciate at the same rate as stick-built homes because they are built to the same code requirements.
We have a friend who owns a modular home, and she says that it has appreciated at the same rate as her neighbors’ traditional homes. She can even list it for more than some of the older homes.
Manufactured homes can appreciate, but it depends on the location. If you live in an area where manufactured homes are popular, your home is more likely to enjoy a better resale value.
So, modular and prefab homes typically have a higher resale value than manufactured homes because they are considered permanent structures. If you’re looking for an investment property, a modular home may be a better option than a manufactured home.
Home Site Preparation
Builders can assemble modular and prefab homes on various foundations, including crawl spaces, basements, and slabs. However, this versatility means you have to take your time to make a solid concrete foundation like you would for a traditional home.
Manufactured homes can also be built on various foundation types, but these homes are designed to be placed on a pre-existing foundation like a concrete or asphalt pad. They also have to be hurricane-strapped to make them safe in light of environmental factors.
So, if you’re looking for a home that’s deeply rooted to the ground, modular or prefab homes are a good option. Manufactured homes are better suited for people who want something that needs minimal site preparation.
Weather Resistance
Modular and prefab homes are built to the exact code requirements as stick-built homes, so these homes are just as resistant to severe weather as traditional homes.
Manufactured homes are also built to strict code requirements, but they aren’t solidly connected to the ground. This characteristic means they’re not as resistant to severe weather as modular and prefab homes.
So, if you live in an area with severe weather, such as hurricanes or tornadoes, you may want to consider a modular or prefab home.
Benefits of Owning a Modular Home
So, now that we’ve covered the main differences between modular, prefab, and manufactured homes, let’s talk about the benefits of each.
One of the main benefits of a modular home is that they are built to last. Most modular homes come with a 10-year warranty.
Another benefit of modular homes is that they appreciate at a similar rate to stick-built homes. As a result, if you ever decide to sell your modular home, you will likely get a good return on your investment.
Modular homes are also built on a permanent foundation, which gives them a sturdier feel than manufactured homes. And, if you ever want to move your modular home, you can do so—although it will be expensive.
Benefits of Owning a Manufactured Home
The main advantage of manufactured homes is that they are more affordable than stick-built homes and modular homes. They are also easier to move, as they can be transported using a large truck.
If you are looking for something affordable and impermanent, a manufactured home might be a good choice. That said, manufactured homes are still a viable option for more permanent living situations.
Final Thoughts
So, there you have it—the differences between modular, prefab, and manufactured homes.
It’s essential to research and compare the different modular and manufactured home characteristics and brands before deciding. But hopefully, this post has given you a better understanding of the distinctions between these construction technologies.