Both modular homes and manufactured homes (also known as mobile homes) are prefabricated structures, meaning they are either partially or fully constructed in an off-site factory.

From a legal standpoint, the primary difference between modular and manufactured homes is that modular homes are held to the same local, state and regional building codes required for on-site homes, while manufactured homes are held to a federal code set by the Department of Housing and Urban Development (HUD).

Admittedly, this legal distinction doesn’t tell us much in and of itself. So, what are the discernible differences between modular and manufactured homes? Let’s have a look.

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A modular home is a house that’s partially constructed in a factory and shipped to the homeowner’s lot, where it's pieced together, put on a foundation and then completed. Like traditional homes, modular homes are placed on a permanent foundation and often have full basements. The construction of a modular home must comply with local building codes and standards in the area where the home will be placed.

While the building process differs quite a bit from that of traditional homes, you’d be hard-pressed to identify a modular home just by looking at it. They can come in all sorts of floor plans and designs, from a sprawling ranch or Cape Cod to a two-story colonial.

Like traditional, site-built homes, modular homes have values that tend to go up or down right along with the rest of the housing market. Also, most banks and lenders offer financing on modular homes, meaning buyers will typically have a good range of mortgage options when it comes time to make a purchase. Quicken Loans® finances modular homes.

Manufactured homes, sometimes referred to as mobile homes or trailers, are houses completely constructed in a factory and built on a fixed, steel chassis (rather than a permanent foundation). These homes are also usually built with wheels, which are detached after towing to the home site, which is either privately owned or leased to the homeowner. Construction on a manufactured home must comply with building codes set up by the HUD. One of the primary ways to identify a manufactured home is by its HUD tag.

Newer manufactured homes don’t always look like the double-wide trailer you might be picturing. While they might not be as customizable as site-built or modular homes, manufactured homes can be built with a variety of architectural styles, floor plans and add-ons, such as decks and porches.

Another misconception about manufactured homes is that they are unsafe or poorly built. With the passing of the National Manufactured Housing Construction and Safety Standards Act of 1974, HUD began requiring stringent construction and safety standards for all HUD-certified manufactured homes. It’s important to note that manufactured homes built before June 15, 1975 – when the law went into effect – are not considered compliant with HUD code.

One disadvantage of buying a manufactured home is that it can be more complicated for home buyers to get a mortgage. Some dealers and local lenders may offer financing, but only a few lenders offer mortgages on this type of housing. While Fannie Mae and Freddie Mac do offer conventional loans for manufactured housing, government-backed loans (such as FHA loans) are a more common choice because of different underwriting standards.

Another disadvantage to manufactured homes is that they tend to depreciate over time.

Quicken Loans doesn’t offer financing on manufactured homes at this time.

The differences between modular and manufactured homes have serious implications when it comes to affordability, financing, long-term value, and a variety of other factors. Here’s a chart that breaks down many of the most important differences between modular and manufactured homes:

Multiple factory-made pieces assembled at home site

Single factory-made unit delivered to home site

Local, state and regional codes

Some home buyers opt for a manufactured home over a modular home on the basis of affordability alone. It’s true that manufactured homes tend to be less expensive overall, but the broader range of mortgage options for a modular home might offer qualified borrowers the ability to get into a pricier, better-quality modular home with a permanent foundation and more customizable design.

From the home buyer’s perspective, perhaps the most important difference between modular and manufactured homes is that while modular homes have the potential to maintain or even increase in value over time because they tend to follow local real estate market trends, manufactured homes are much more likely to lose their value. If a buyer wants to think of their purchase as an investment (as many buyers do), they’ll want to bear this distinction in mind when deciding between a modular home and a manufactured home.

If you have questions about financing a modular home, contact a Home Loan Expert.

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Victoria Araj is a Section Editor for Rocket Mortgage and held roles in mortgage banking, public relations and more in her 15+ years with the company. She holds a bachelor’s degree in journalism with an emphasis in political science from Michigan State University, and a master’s degree in public administration from the University of Michigan.