Manufactured Homes: A Guide

Homeownership is the ultimate goal for many families, but a traditional home isn’t in everyone’s budget. Luckily, manufactured homes – previously known as mobile homes – offer a more affordable alternative while still including many of the amenities homeowners today want.

If you’re shopping for a home and haven’t found the right one within your budget, you might consider a manufactured home. In many cases, they are indistinguishable from traditional homes but at a fraction of the price.

Keep reading to learn more about what manufactured homes are, how they differ from other prefab homes, how much they cost and more.

What Is A Manufactured Home?

A manufactured home is a factory-built home that meets standards set by the Manufactured Home Construction and Safety Program of the Department of Housing and Urban Development (HUD). They belong to a class of prefab homes that also include modular and kit homes.

Manufactured and other prefab houses are different from other types of homes in that most people think of them as being built on-site. These more traditional single-family housing concepts are described as stick-built. Prefab housing can be more affordable because it takes advantage of mass production techniques.

Manufactured homes are built in a plant or factory and then transported to the location where they can be permanently affixed to the land or left on the chassis. Since a manufactured home is one of the many options you’ll have when buying a house, it’s important to understand its characteristics, as well as the pros and cons of living in one.

Manufactured Vs. Modular Vs. Mobile Homes

As we mentioned, manufactured homes are just one type of prefab home, but they’re often confused with others, such as modular homes and mobile homes.

First, while manufactured homes are built in a plant or factory and transported to the site in one piece, modular homes are moved to the site in multiple sections and constructed on-site according to local building codes. Unlike manufactured homes, modular homes aren’t subject to HUD national building codes.

Manufactured homes are also often used interchangeably with mobile homes, and it’s true that they’re essentially the same thing. However, according to HUD, a mobile home is one that was built before June 15, 1976, while a manufactured home is one built after that date. It’s easier to get financing on homes built after 1976 because they have to adhere to HUD safety standards.

How Much Are Manufactured Homes?

Anytime you’re considering building a home, whether it be a manufactured home or a traditional build, it’s important to understand the costs.

According to data from the U.S. Census Bureau from July 2023, the average manufactured home price is $118,000. The average single manufactured home costs $82,300, while the average double costs $150,200.

While manufactured home prices have increased by tens of thousands of dollars just in the past several years, they are still more affordable than traditional homes. For example, the median home sale price in the United States was $431,000 in the third quarter of 2023, according to the Federal Reserve Bank of St. Louis.

Manufactured Home Prices: Contributing Factors

There are several factors that can contribute to the price of a manufactured home, some of which may be more impactful than others.

Home Size

Because of the cost per square foot, the size of your home will certainly impact its cost. Manufactured homes generally come in three sizes: single-wide, double-wide and triple-wide homes. Triple-wide homes have the most square footage and the biggest price tags.

Cost Of Land

When you’re shopping for a traditional home, you’ll also get the land it comes on. But in the case of a new manufactured home, you’ll first have to buy the land it will sit on. Manufactured homeowners choose to either lease a spot in a manufactured home community or purchase a plot of land. It’s important to note that some lenders will require you to own, not lease, the land your home is on.

Taxes

As with any other major purchase, your manufactured home purchase may be subject to taxes, and it’s important to factor them into your budget. First, some states charge an upfront tax when you purchase a manufactured home. Additionally, you’ll have to pay property taxes once you complete the process of converting it to real property, which is also a requirement to obtain mortgage financing.

Customization

Just like traditional homes, manufactured homes may come with customization and upgrade options, such as an upgraded roof or siding or a customized interior. If you choose to customize or upgrade any part of your manufactured home, you should expect increased costs.

Foundation

The foundation of your home will also impact its cost. If you lease a spot in a manufactured home community, you’ll have little say over the foundation. However, if you own your land, you’ll have more options. Certain foundation options may cost you more than others.

Delivery

Because manufactured homes are built in a plant or factory, you’ll have to pay the delivery costs of getting the home to your property and having it installed. While a manufacturer may include this service in the price of the home, you're still paying for it, as the price is probably adjusted to build that cost in. On the other hand, some manufacturers don’t wrap in the cost of delivery and instead charge it as an extra fee.

How To Buy A Manufactured Home

The process of buying a manufactured home and getting a mortgage isn’t all that different from a traditional home. However, you may be subject to certain processes and requirements that don’t exist when you’re buying a traditional home.

Step One: Mortgage Preapproval

Just like when you’re buying a traditional home, it’s advisable to get preapproved for a loan ahead of time. Preapproval helps you ensure that you meet a lender’s borrowing requirements. And when you’re buying a manufactured home, it has some additional benefits. For example, not all lenders offer financing on manufactured homes. Getting preapproved ahead of time can help you narrow down your list of lenders to those that do offer manufactured home financing.

The good news is that you’ll have several loan types to choose from when you’re getting preapproved for a manufactured home. Conventional loans and government-backed loans can both be used for manufactured homes, depending on the lender.

Step Two: Mortgage Application

Mortgage preapproval is when a lender verifies that you qualify for a certain loan amount based on a preliminary look at your finances. However, it doesn’t guarantee ultimate approval. Once you’ve been preapproved for a loan and have found the home and land you plan to purchase, you can complete your official loan application.

The mortgage application process requires underwriting, which is when the lender takes a deep dive into your finances to assess your income, creditworthiness and other factors to ensure you’re eligible for a loan.

Step Three: Appraisal

An appraisal is an important part of any home purchase, including when you’re buying a manufactured home. The appraisal determines the fair market value of the home. Lenders use this when setting maximum loan-to-value ratio (LTV) amounts. The higher the home’s appraised amount, the higher the loan amount you can qualify for.

Step Four: Down Payment

Just like when you’re buying a traditional home, you’ll have to provide a down payment to qualify for a mortgage. The down payment you’ll need depends on the type of loan you apply for. Conventional loans require down payments of at least 3% of the purchase price. Government-backed loans each require their own down payment, ranging from 0% – 10% of the purchase price.

Step Five: Closing

The final step of buying a manufactured home is the closing. At the closing, you’ll sign your loan documents and officially purchase your manufactured home. You’ll usually arrive at the closing with a check for your down payment and closing costs and leave with the keys to your new home.

Pros And Cons Of Manufactured Homes

Now that we’ve gone over the basics, let’s discuss some of the upsides and downsides of manufactured homes.

Manufactured Homes: Pros

• Affordable: The Manufactured Housing Institute’s most recently released report shows the average cost of a manufactured home is just $85 per square foot, compared to $167.87 for site-built homes.
• Many options: There are a variety of styles and features available from various manufacturers. You really have the ability to customize what you want on the interior and exterior while finding a home that also fits your budget.
• Environmentally friendly: All homes certified by HUD must be compliant with regulations regarding energy efficiency. Some manufacturers even choose to go above and beyond the standards.
• Quick construction: While other houses might take as long as a year or more to build, manufactured homes can be completed in a matter of months or weeks. Because they work off of models, have incorporated practices from mass production and assembly lines, and don’t have to deal with weather, the process tends to move fairly quickly.

Manufactured Homes: Cons

• More vulnerable to depreciation: In order for the home to hold its value and rise and fall over time in conjunction with the overall housing market, you need to own the land on which your home rests. Otherwise, manufactured homes lose value like vehicles because they just get older.
• Don’t do as well in extreme weather: There are federal standards for the body, frame and many other safety aspects of the home. However, these are often smaller homes and they may not hold up as well in hazardous conditions.
• Loan options may be limited: Not all lenders offer financing for manufactured homes, and those that do often require they be permanently affixed to the land and have a HUD tag – this is the requirement to get a loan on a manufactured home through Rocket Mortgage^®. FHA loans and other government-backed loans have their own requirements. For that reason, some borrowers must use a personal loan or chattel mortgage.

Manufactured Home FAQs

If you’re considering buying a manufactured home, it’s important to understand how it works. Here are a few more things you may need to know about the process.

What is the difference between a mobile home and a manufactured home?

In many ways, manufactured homes and mobile homes are one and the same, but they technically have different definitions. A mobile home is one that was built prior to June 15, 1976, which is when the Department of Housing and Urban Development safety standards went into effect. A manufactured home, on the other hand, is one built after that date and meets HUD requirements.

What does “manufactured” mean when referring to a home?

The term manufactured refers to the process by which this type of home is built. According to the Department of Housing and Urban Development, a manufactured home is built in “the controlled environment of a manufacturing plant.” It’s only once the house is complete that it’s transported to its final destination.

Is double-wide the same as a manufactured home?

A double-wide is one type of manufactured home. Manufactured homes can generally come in three sizes: single-wide, double-wide or triple-wide. A double-wide manufactured home would be larger than a single-wide but smaller than a triple-wide.

Do mortgage lenders finance manufactured homes?

Many mortgage lenders offer financing on manufactured homes, but only if you meet certain requirements. For example, many lenders require that the manufactured home be permanently affixed to its foundation to qualify for financing. You may also be required to own the land the home sits on.

Can manufactured homes gain equity?

Manufactured homes gain home equity in the sense that as you repay your loan, your ownership of the home rises. However, because some manufactured homes depreciate, especially if they aren’t on a privately owned plot of land, you may not actually see your equity increase as you would on a traditional home.

The Bottom Line

Most people are already familiar with the concept of a manufactured home, though you may have known it as a mobile home. These homes offer a unique opportunity to buy a custom home that offers many of the amenities of a traditional home but at a fraction of the price, helping to make homeownership more accessible and affordable.

If you’re considering buying a manufactured home or any other type of home, apply online today to start your home buying journey.