Modular vs. Manufactured Homes: What’s the Difference?

Learn the difference between modular and manufactured homes.

what's a modular home?

The Balance / Tim Liedtke

For many, buying a home remains an important financial and life milestone. However, as you begin your search for the perfect home, there’s a good chance you’ll hear terms like "modular," "manufactured," and "site-built."

Knowing the difference between modular and manufactured homes can help you make a more informed decision about what you buy. Here’s what you need to know.

What Are Modular and Manufactured Homes?

As you might expect, these homes are different from site-built homes, which are built in place according to a plan. From the foundation to the roof, the whole thing is assembled on-site.

On the other hand, modular and manufactured homes are built in factories. Modular homes are built in sections and moved to the home site by a flatbed truck. Crews put them together according to a plan.

Modular homes can be customized, since they are built in sections. Typically, the sections that make up the homes are all the same size, but you can tailor them to your needs by combining the sections.

Manufactured homes, also called "mobile homes," are built in factories as well. However, they are finished before being transported on a chassis or frame to the home site. It isn't easy to customize mobile homes, but you can often have them delivered within a few days.

There are some key factors to take into account before you decide which one of these is right for you.

Pro and Cons of Modular Homes

Pros
  • Modular homes can be less costly than site-built homes.

  • They are sturdy and hold up well to weather.

  • Financially, they are in the same category as site-built homes.

  • The homes are often built more rapidly than site-built homes.

Cons
  • They might be more costly than mobile homes.

  • You don't have as many options to customize these like site-built homes.

  • Homes must meet the same local building codes as site-built homes.

Modular homes are treated similarly to site-built homes. The pre-built sections are placed on a traditional foundation and inspected. This means that they must adhere to local building codes.

You can customize a modular home to some degree, although you won’t have as many options as you’d get with a site-built home.

You can find many manufacturers that offer modular homes. Take the time to look at the options for size, layout, and how long they might take to deliver. Modular homes are titled “real” property, just like site-built homes. That means that buyers have the same financing options. Owners of these homes also receive the same legal rights and tax treatment. 

Pro and Cons of Mobile Homes

Pros
  • Mobile homes are less costly than site-built homes.

  • You can have them delivered to your home site within days.

  • You might be able move them to another home site.

  • These homes don't take a lot of time to set up.

Cons
  • There might not be an inspection to ensure structural soundness.

  • Homes are likely to lose value.

  • There are fewer financing options than with site-built and modular homes.

  • Covenants might prevent you from placing a mobile home where you want.

Mobile homes are built in a factory and then delivered to the home site on a steel chassis. The wheels are sometimes removed after transport, but the steel chassis isn’t. A mobile home can be placed on land you own or rent.

It’s important to understand the local laws about owning the land. If the land is yours, double-check to make sure it’s okay to add a mobile home. 

You can move your home to a trailer park or other land set aside for the purpose in some cases. In that case, you own the home, but you have to pay to lease the land. Before you decide to get a mobile home, make sure you understand all the charters, constraints, and details of owning the land.

When buying a pre-built home, it's important to know that many lenders treat them as a different property class than a site-built or modular home. Lenders do not like to finance mobile homes, due in part to the fact that they decrease in value. Since they are not as sturdy, they are more likely to be damaged beyond repair and to cause a lender to experience a loss.

Mobile homes are often titled as personal (or “chattel”) property, like TVs or cars, rather than as “real” property, like houses or apartments. That has implications for loans, taxes, and consumer rights and protections.

Finally, keep in mind that mobile homes don’t have to meet local building codes. Instead, they are built following rules from the U.S. Department of Housing and Urban Development (HUD). While some of the work involved (such as electrical) might be inspected, there is no requirement for structural inspection.

Choosing Among Pre-Built Homes

If you decide that you want a pre-built home instead of a site-built home, it’s important to consider your needs and preferences. 

Modular homes are generally sturdier and follow market trends similar to what is seen with more “traditional” site-built homes. However, they can be just as expensive as other homes and must meet local building codes. 

Mobile homes, on the other hand, can be much cheaper than other types of homes. However, they are rarely sit on a permanent foundation and might not be as sturdy as other homes. Plus, they might lose value and be harder to refinance in the future.

Weigh the pros and cons of each as you make your decision, so you can get the type of home that works best for your situation.