Many hopeful homeowners may get confused by the terms “modular” and “manufactured” when it comes to property types. And while modular and manufactured homes tend to get used interchangeably, they are actually very different. Technically, both types of homes could be considered “manufactured,” since they are both built in a factory or manufacturing facility, but when it comes to manufactured and modular homes, it’s important to know the difference, especially when talking about financing.

Manufactured Homes

Constructed completely offsite and transported to their location, manufactured homes are also often called mobile homes or trailers. While they can come in a handful of different sizes, the most common are single- or double-wide. They can be located in a trailer community or on owned land, but manufactured homes are not on permanent foundations.

Lower in price, manufactured homes typically do not appreciate in value at the same rate as other types of homes. Because of this, it can be very challenging to find a mortgage lender who will finance the purchase of a manufactured home.

Modular Homes

Also called prefab homes, modular homes can come in a variety of shapes, sizes, styles and price ranges. Unlike manufactured homes, modular homes have comparable pricing to traditional site-built homes, and are similar in appearance, too. Sometimes modular homes can look exactly like site-built homes, due to the advances in modular construction and the wide variety of building styles that are available today.

Although modular homes can look just like traditional single-family homes, they are actually built in segments and then put together at the home site. Unlike manufactured homes, modular homes are constructed on a permanent foundation and are considered permanent structures.

Modular homes can be very cost effective and construction on them can be very efficient. Modular homes have to adhere to all state and federal building codes and must have the same kind of inspections as a regular site-built home. By contrast, manufactured homes only have to adhere to the standards set forth by the Department of Housing and Urban Development (HUD), which tends to have more lenient rules and regulations.

Finding affordable financing for a modular home purchase or refinance isn’t nearly as difficult as it is for manufactured housing, so if you need a mortgage, a modular property is the way to go.