Modular or Manufactured home??

Mortgage and Lending with Cranbrook Loans NMLS #134090

Many of my referrals come from factory built home dealer/builders. Modular and Manufactured homes are great for the FHA/VA construction loan program. They save on construction costs and time (allowing you to save on interest during construction). They are built with quality materials, in a controlled climate, to very tight specs. There are lots of floor plans to choose from and some Modular factories can even take your plans for a site built home and turn it into a Modular home!


The first question I always have when speaking to a new client that is buying a factory built home, "is it a Modular or Manufactured home"? The most common response is silence, "I don't know" or "what's the difference". So let's take a moment to go over the difference. It's an important question that could affect your financing and appraised value, even your ability to get a building permit. Spoiler alert, it's all about the build code.


Manufactured homes are built to the Federal building code, which is also referred to as the HUD building code ( These homes typically come out of the factory in one section, also know as a "single wide" (which are not eligible for the FHA construction loan) or two sections, aka a "Doublewide" (which are eligible). They will have a 1" x 3" red HUD code tag on the lower, right hand of the exterior of each section and a metal undercarriage. They can be placed in "parks" where the land will be rented or on a permanent foundation on land that you own.

When the home comes out of the factory it is consider Chattel property (moveable, not attached to land). Because it's Chattel the ownership of the home is documented with a title similar to an automobile title. When the home is in this state any lien from financing the home is recorded on the title, just like an automobile. If the home is place on land you then have to go through the process of "retiring" the title. Each state has their own process for this. At that point the home is considered to be part of the real estate and any mortgage lien is filed with the local recorder's office.

Manufactured homes typically are built in a ranch style, have a lower roof pitch, and lower ceilings. If they are built on a basement you should be able to see the metal undercarriage that supports the floor. These homes are shipped from the factory by putting axles and wheels in the metal undercarriage. Before the home is set the wheels and axles are removed. The home is then typically "rolled" up and on the foundation. The foundation these homes are set on can be just like any other crawl space or basement foundation. They home can also be set on what is called a Pier Foundation, concrete posts that support the home. 


Modular homes are built to the state building code, just like stick or site built homes. For all practical purposes, this is a site built home that is built in a factory. They can have any number of sections and can be built to just about any style. Modular homes don't have an automobile type title. They are shipped from the factory on a flatbed truck and craned on to the foundation. They are almost always placed on crawl space or basement foundations. Most modular home dealers will offer to do all the site work needed to get your certificate of occupancy. Most manufactured home dealers will just want to sell you the home and have someone else do the site work. Typically the quality of a modular home is better than a manufactured home.

As a practical matter I greatly prefer to use the FHA construction loan program on Modular homes. The appraisals are easier since site built home sale comps can be used. On a Manufactured home the appraiser must be able to find other manufactured home sales, in the area, in the last 6 months. This is difficult in most areas and impossible in others.

There are certainly parts of the country were manufactured homes are common. Mostly in the south.


Modular homes will cost a little more but it's my experience they will hold up better through the years. If you can afford it, get a Modular home.  


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Comments (1)

David A. Weaver
Peoples Bank & Trust Co. - Scottsdale, AZ
24 years helping folks finance their dreams.

Good post, just want to throw my two cents in.  Modular homes are built to the same building code as any site built home, with the added bonus that during its construction the home is built inside a climate controlled factory and the building inspectors are on site every working day.  Modular homes are appraised straight up against any other site built residence of the same building code whereas Manufactured have a special designation for appraisals and their own form and constraints put on the appraiser i.e.: only manufactured comps to be used in most cases. 

In most states I have found that you cannot determine whether a home was built in the factory or on site as long as the appropriate UBC, ICBO, BOCA, SBCCI, or other State, County or City local building code used is the same.  Unlike a manufactured home which comes with a personal property vehicular title, like a car, truck or motor home, which has to be surrendered and an "Affadavit of Affixture" recorded to turn land and personal property into real property legally.  The Affadavit of Affixture is always a part of any title search so the buyer can tell that the home was built to a different code.  Since the true Modular is always real property and built to the same code as those constructed totally on site,  no such legal manouver is required as the buyer is always getting a site code built home.

The above info is also valid in every state of the Union not just in Delaware.  The manufactured HUD code is a federal code that governs construction in all states and in the USA the main codes in the West is the UBC along with the ICBO, BOCA and SBCCI.  And the local state, county, city planners get into the mix as well.  What I've found is that the Modular home builders are very aware of the local codes that come into play and they build to meet the requirements of the location where the home will be sited during final construction.

Manufactured home builders build to the federal HUD code and the local state, county, city planners dictate how the home must be sited and recorded as real property after is is in place.  If not done correctly the home is not eligible for financing by any than personal property lenders or individuals.

Mar 26, 2018 09:34 AM