Modular homes are built section-by-section in a factory, then shipped and assembled at the home site. Modular homes are one of the most misunderstood forms of housing, but the industry is working hard to educate consumers. Comparing home prices for modular and traditional homes may not be straightforward, but modular home costs are generally less than the cost of traditionally built homes. Like all housing, there are downsides to consider before buying a prefab home.

Read on to find out if the benefits outweigh the risks of going modular.


What is a Modular Home?

Sometimes called prefabs or prefab homes, modular homes are houses that are built section-by-section off-site via an assembly line process in a controlled factory setting. These sections are then shipped to the prepared home site. Modular houses are often incorrectly referred to as manufactured homes or mobile homes. The difference lies in the foundation: modular homes have a permanent foundation, whereas manufactured and mobile homes are attached to a steel chassis and are considered temporary or moveable housing.

The other key difference is that modular home builders must adhere to the International Residential Code (IRC), which requires compliance to state and local building codes and regulations. Stick-built, or standard homes, are built following the same IRC codes as prefabricated homes. Manufactured homes follow the U.S. Department of Housing and Urban Development (HUD) guidelines.

Modular homes are 80-90% complete when delivered and are installed onto a prepped home site atop a basement or crawl space foundation. The separate building modules are lifted from a big rig with cranes and are pieced together like a puzzle. Once the house is assembled, crews complete the installation with utility hookups and inspection.

Modular homes are 80-90% complete when delivered, and are installed onto a prepped home site atop a basement or crawl space foundation.

Debunking Myths Around Modular Homes

Modular homes have been misunderstood and stigmatized over the years. Although the market is seeing growth, claims that modular housing is unsafe, is made from cheap materials, and is generally the type of home to stay away from still persist. Many of those claims are just not true. Here is a closer look at some of the more persistent myths surrounding modular homes.

Prefabricated Homes are Unsafe

On the contrary, modular homes need tight seams and sturdy construction to withstand the transportation process and installation at the final site. The durable construction also allows them to resist fire, hurricanes, and other natural disasters and, sometimes, better than traditionally built homes.

Modulars are not Energy Efficient.

The tight seams and state-of-the-art windows keep heat in and cold out, helping reduce your energy bills and carbon footprint. Some builders claim modular homes are 30 percent more efficient than stick-built homes. Many companies boast LEED (Leadership in Energy and Environmental Design) certification, a worldwide green building rating system, indicating environmentally responsible modular construction practices.

Cheap Materials are Used in Modular Homes

Modular homes may be “cheaper” to build, but that only refers to pricing. Prefabs can cost less (per square foot) than a comparable standard home, but it has nothing to do with the materials. Modular homes are constructed with the same high-quality building materials as other homes. The fact that they’re just built in a climate-controlled construction site means weather conditions do not impact the building schedule and quality control is easier to monitor. Thus, the lower cost comes from efficiency and shorter build times, not lesser quality materials or construction. A typical build time for a modular home is one and a half to two and a half months versus four to six months for a stick-built home.

Prefabs All Look the Same

Modular homes can be designed just the way you like them. Although modular builders offer an inventory of off-the-shelf home designs, there is no limit on what your home can look like. Most builders also provide designers who can sit with you and create the floor plan and custom home design you like.

Considerations When Buying a Modular Home

Modular home builders want Americans to know that modular homes are not much different from traditional homes, but there are some obstacles to purchasing a modular home. Here are some of them.

Some builders claim modular homes are 30 percent more efficient than stick-built homes.


One of the biggest challenges to moving forward with new construction on a modular home is purchasing the right property. Obviously, the property or lot must be large enough for the home, but it must also have access to water, sewage, and other utilities and appropriate zoning. Due to the unique assembly of the homes, some jurisdictions ban or have tight restrictions for modular homes. You may want to work with a realtor who understands modular home requirements.


Financing options may be the biggest con to buying a modular home if you don’t have the cash. Costs will include the property, construction of the home, and site prep. Ask the home builder if site prep is included in the total cost. You will probably need a construction loan instead of a home mortgage. Expect to make a 20-30 percent down payment for the cost of the property. Although modular homes appreciate and depreciate similar to stick-built homes, some lenders find modular risky. Find a lender who understands the specific financial requirements of factory-built homes.

What’s the Right Choice?

Like everything in life, there is no easy answer. Buying a new home is personal, and it’s also a big investment. Some people predict modular homes are the wave of the future and more homeowners are choosing them. The rise in demand means more options are becoming available every day. Pay special attention to the pros and cons that are most important to you, and do what works best for you and your budget.

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