Differences Between Manufactured Homes and Modular Homes: A Lending Perspective

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Some people use the terms “manufactured home” and “modular home” interchangeably. However, it is important for customers to know the differences before shopping for a new home. The differences between manufactured homes built to the HUD code and modular homes built to the IRC code by the same manufactured home builder are similar. Features and construction quality are near equal with modular pricing being slightly higher due to code requirements. We will, therefore, discuss the differences between a HUD manufactured home and an IRC modular home built by a modular only builder.

Manufactured homes are built in a climate-controlled building facility utilizing assembly line construction technology. Manufactured homes are completed in sections, usually two or three, on a steel frame and chassis, and then are transported (towed) to the home site with no assembly required at the site except mating of the sections, hooking up to utilities, carpet installation, etc.

Modular homes are shipped via flatbed trucks in sections called modules and assembled by a builder on site, often requiring crane service to lower modules onto the foundation. Manufactured home sections are a maximum width of 16 to 18 feet and 70 to 80 feet in length with height restrictions dependent on highway transport requirements that differ from state-to-state, thereby limiting manufactured homes to single story construction and minimal exterior elevations. Modular homes partially constructed on site are available in any exterior design and configuration.

Modular homes are always built to be attached to private property and classified as real property and therefore qualify for conventional home mortgage financing. On the other hand, manufactured homes are usually placed, but not attached, to private property or sited in land-lease communities, and thereby do not qualify for residential financing. However, manufactured homes installed on private property using an approved foundation system may also qualify as real estate with conventional mortgage financing. Manufactured homes and Modular homes have one fundamental thing in common: each is built to standards equal and sometimes superior to comparable site-built homes, and priced considerably less. Manufactured homes are up to 50% less expensive and modular homes are about 15 to 20% less, after factoring in the onsite assembly expense.

Lending options for these two types of homes differ slightly, but both offer more options and sometimes higher lending amounts than that of stick-built residential structures. This is due to their factory built nature, and the special rules and regulations that give these homes an advantage in the green building landscape and energy efficiency. These mortgages are plentifully available from conventional lenders, mortgage companies, banks, savings & loans, credit unions, etc. Also, they’re available through special government programs like those offered by the FHA and VA. Use manufacturedhomeloans.com as your trusted source for all manufactured home lending news!

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