Sometimes, dream homes can become a reality much faster than you think.
Modular homes allow you to construct your dream home on a plot of land — often faster, cheaper and of equal or better quality than traditional stick-built homes. These dwellings can be ordered from standard plans or custom-made to your specifications.
What is a modular home?
Modular homes are factory-built homes, made off-site in large factories, then put together at the building site. The styles and layouts of modular homes can be as varied as your imagination, with soaring ceilings, window walls and more.
Modular homes aren’t the same as mobile homes, which can move from location to location (more on that below). Instead, it’s a home constructed in a factory and then pieced together on the permanent property by a builder.
The elements of the home are trucked to the site in large sections and are then assembled with cranes. This is a bit like a building with Lego blocks, but unlike mobile homes, modular homes can’t be moved after being secured to their foundations.
Are modular homes popular now?
Gordon Scott, co-founder of Connect Homes in Los Angeles, says modular homes are more popular now because traditional home-building and upgrades are expensive.
“The modern prefab movement started about 15 years ago, and it’s been gathering steam,” Scott says. “People are looking for innovative ways to build homes for less money and less headache.”
Scott says modular homes have been around in one form or another for many decades. While more popular in countries like Japan and parts of Europe, they’re starting to gain momentum in the U.S.
Pros and cons of modular homes
Modular homes are sometimes referred to as prefab (prefabricated) homes. While it might sound easy to design your dream home, it’s important to weigh the pros and cons first.
- Less time to build. Since they’re made in a factory, there is virtually no chance of weather-related setbacks.
- Flexible and custom specifications. You can build a home exactly the way you want it, and there’s few limits on sizes because while the elements have to fit on a truck they are combinable at the site.
- Reduced waste. Modular home construction is “green building.” It reduces material waste, transportation impact, energy use, and operational impact.
- Customization limitations. While you have the chance to create a home to your liking, you might run into some limitations. Your manufacturer will be able to help you realize your dream while still being structurally sound.
- Additional costs. While financing works like buying a regular home, there might be a few extra costs. Electrical, plumbing, and ductwork aren’t part of the original modular home pricing, so you have to pay to have this work done on site. You’ll also be buying the land as well as the cost of building the home.
- Preconceived notions. Paul Farmer, VP of marketing for Riverwood Cabins in Tennessee — a modular log cabin company — says a modular home might be harder to sell down the road. Some people falsely believe they aren’t as good or as sturdy as traditional homes built onsite.
Modular vs. manufactured homes
While modular homes are technically manufactured, they’re not the same as manufactured — or mobile — homes.
Benjamin Ross, real estate expert in Texas, says it’s in how they’re built. “Manufactured homes have a distinct look because they are not built on a foundation,” Ross says. “Modular homes and traditional stick-built homes can be difficult to tell apart from each other.”
It also comes down to what type of property it’s labeled as. Gordon Scott says modular homes are real property and mobile homes get classified as personal property.
- Come on a trailer and stay there for their lifespan.
- May be taxed and titled as vehicles, and depreciate as such.
- Are built to a different federal code than modular homes, which have the same code as onsite homes.
“Modular homes are permanently attached to their foundations and once they are installed they are effectively and legally no different from other site-built homes,” Scott says. “Manufactured homes can typically only go in areas where zoning allows — trailer parks or very rural areas.”
How does modular home financing work?
Like a home built onsite, you have a few different financing options for modular homes.
“[The] process isn’t much different from financing the construction of a typical home,” Scott says. “You get a construction loan, which can be rolled over into a fixed-rate mortgage.”
Farmer says people typically obtain a construction loan, which pays the builder. You can get the loan through the manufacturer or a bank, and the loan converts to a mortgage after the home is completed. You could find a traditional mortgage, but Farmer says you’ll have to find a way to pay the builder, who usually requires an upfront payment.
Who is a modular home right for?
Scott says there are different types of clients modular homes could work for:
- Empty-nesters looking to downsize.
- Couples looking for backyard units, like tiny homes.
- Families looking to upgrade their dated properties in nice but expensive neighborhoods.
According to Farmer, purchasing the land and necessary approvals can take four to six weeks. Designing the home can take more than two months and manufacturing can take upwards of three months, depending on your customizations.
“All in all, from start to finish, it will take anywhere from 14-31 weeks,” he says. Ross estimates a similar timeline, at 16-31 weeks.
But not all companies handle modular homes the same way. At Connect Homes, Scott expects four months of design and engineering, two months of handling local permits, four months of factory production, and two to four months to finish the house on-site. In total, about 12 to 14 months from start to move-in.
It all depends on the company you choose and how they handle the process.
When looking for modular home builders:
- Do your research. Find the ones that have built homes like what you’re looking for.
- Ask about price. What’s included and what isn’t included? What do you need to pay for upfront and what do you need at the end of the project?
- Find a lender. “Start with the lender,” Ross says. “you first need to know if you are approved and how much you are approved for. They will then direct you to various modular companies they have worked with in the past.”
Find other housing types:
|House Type||Who it’s right for:|
|Apartment||Apartments are suited for anyone looking to stay in a prime location for a cheaper price near shopping, restaurant and entertainment centers, often at a more affordable cost than buying a condo or single-family home.|
|Condominium||Condos appeal to those looking for a lower-maintenance living, home with a sense of security, opportunities to be social with neighbors, among other factors.|
|Townhouse||Townhouses are a particularly good option or first-time homebuyers or other budget-minded home buyers who want more space than typically afforded in a condo.|
|Modular home||Modular homes are enticing to empty-nesters looking to downsize, couples looking for backyard units, like tiny homes or families looking to upgrade their dated properties in nice but expensive neighborhoods.|
|Single-family home||Single-family homes are best for families who prefer a huge yard and plenty of room to spread out. Others still prefer a low-maintenance condo or townhome that includes benefits like landscaping, snow removal and exterior maintenance.|
|Multi-family home||Multi-family homes are best for those who are interested in getting into real estate investing and are comfortable with the added responsibility and time commitment that comes with being a landlord.|
|Bungalow home||At between 1,000 and 2,000 square feet, bungalows are a great option for young families looking for a starter home or retirees hoping to downsize in a home without stairs, or single homeowners who want the single-family home lifestyle without managing a huge property.|
|Ranch home||Ranch homes are ideal for anyone who prefers single-story living. Singles, couples and families with children can find something to love about a ranch home.|