With rising real estate pricing and many consumers squeezed out of the traditional site-built marketplace, many are turning to mobile or manufactured homes as starter homes. Many consumers are pleasantly surprised by the range of choices and customizations offered by a new generation of manufactured homes.
According to manufacturedhousing.org, the manufactured housing industry produced 105,772 new homes in 2021, and approximately 9% were new single-family homes.
One Key Difference
Mobile and manufactured homes are the same. They are prefabricated homes constructed in an off-site facility.
Manufactured and mobile homes are regulated by the U.S. Department of Housing and Urban Development (HUD). The only difference between the two types of homes is the building date. A factory-built home before June 15, 1976, is a mobile home. Any structure built after June 15, 1976, is a manufactured home.
Unless the manufacturer built your home before that date, it is a manufactured home, not a mobile one.
Both manufactured homes and old-school mobile homes have some traits in common:
- The construction process: both are built in a factory and taken to the property, where they are set up
- Both may be made on a metal frame instead of having a crawlspace or basement
- Some will have tie-downs in place of a permanent foundation
All manufactured (mobile) homes are held to federal standards by the U.S. Department of Housing and Urban Development (HUD.)
What is a Manufactured Home?
Manufactured homes are often called mobile homes or trailers. They are constructed in a factory and built on a steel chassis instead of a permanent foundation. They are usually made with wheels, which are detached after the home is towed to the site. The land can be either privately owned or leased by the homeowner.
Manufactured home construction must comply with HUD building codes. A manufactured home will have a HUD tag. The Certification Label (a HUD tag) is a metal plate affixed outside the manufactured home. The tag certifies manufacturer built the unit to national standards, usually called the HUD code. It certifies the home’s construction requirements, fire safety, energy efficiency, and more. And this manufactured home’s certification label signifies that the mobile unit has been built to HUD code. Local building codes don’t matter.
Like traditional homes, manufactured homes also come in various architectural styles with diverse home designs and floor plans, with extra add-ons like decks, porches even fireplaces. There is any number of customization options. Some new homes even prioritize energy efficiency. Manufacturers can build custom homes ranging from 360 square feet to over 3,000 square feet and provide you with a manufactured, mobile or modular home to meet your style, floorplan, color preference, or budget.
Manufactured homes have an unfair reputation for being unsafe. The passage of the National Manufactured Home Construction and Safety Standards Act of 1974 required rigid construction and safety standards for all HUD-certified manufactured homes. All manufactured homes built before the law was enacted on June 15, 1976, are not compliant with the HUD code.
They can be an affordable housing option because you aren’t required to own the land your manufactured home is on, so you don’t need to buy a traditional site. Affordability, durability, and convenience are usually the key benefits of homeownership.
Getting a Manufactured Home Loan
In the current housing market, a manufactured home may seem ideal. It’s affordable, and demand isn’t out of control. But homebuyers may find that the most significant disadvantage of buying a manufactured home is that it can be more complicated to get home loans.
While some local lenders and dealers may offer financing programs, few lenders offer mortgages for this type of housing. Though conventional Fannie Mae and Freddie Mac loans are available for manufactured housing, government-backed loans like FHA and VA loans are more common because underwriting standards differ.
If you own the land that the manufactured home will sit on and is affixed like real property, you will have an easier time finding lenders with better and more financing options.
Zoning is a tool that most cities use to govern land uses. It establishes building standards and how buildings fit in with their surroundings. It breaks into categories: residential, commercial, retail, agricultural, etc.
You will need to research where you can place a manufactured home. Even a property that seems like it might be perfect for a mobile home may not have the proper zoning designation. If that’s the case, zoning restrictions might prevent you from placing your mobile home there.
There are some pros and cons when choosing a manufactured home over a traditional home. To learn about them, check out this video:
The Bottom Line
Home affordability and rising interest rates are pricing many Americans out of the traditional site-built homes. According to Habitat for Humanity, with home prices rising another 20.6% from March 2021 to March 2022 and rents jumping 12%, forthcoming data may show that unaffordability worsened even further in the past two years.
Manufactured or mobile homes may have had a stigma in the past, like grandma’s trailer, but the quality of homes in recent years has upgraded and made them more appealing to many. It puts affordability back into a tight market and can offer first-time home buyers some relief.
Modular homes are built off-site, usually in indoor, quality-controlled settings. Modular homes are completed in sections called modules, according to specific plans. These sections are then transported to the site, assembled by builders, and installed into the foundations.
Because of technological advancements, modular homes have improved significantly over recent years and can sometimes be even better quality than traditional stick builders. These homes are quick to build. Since these modules are on an assembly line, they are under intense quality control. All supplies needed come from the manufacturer and not 100 different vendors from around the country, which can pose several issues.
Modular homes don’t have to stop assembly when inclement weather pops up since they are mainly constructed indoors, so the weather isn’t an issue. Also, lumber sitting outside during a stick build can sometimes not be adequately protected from the elements, and problems can occur years later.
The Mobile Home Construction and Safety Standards Act of 1974 or National Mobile Home Construction and Safety Standards Act is a United States federal law establishing design, construction, installation and development safety standards for manufactured housing. It ensures prefabricated homes’ quality, durability, safety and affordability. The program also includes a dispute resolution component, and the buyer can file civil and criminal penalties for violations of the statute.
The Department of Housing and Urban Development (HUD) issues and enforces these standards and applies to all manufactured homes produced after June 15, 1976. They inspect factories and retailer lots and review records to implement the standards. The imposed guidelines prohibit selling and leasing manufactured homes that do not meet their standards.
No, you can also put it on leased land. But you will need to figure out if you want to put it on land you own or lease. When the manufactured home is set on owned land, you will get better financing options, mortgage lenders, and home appreciation. You can also refinance a manufactured home that’s located on rented land, but your loan options will be different.
If you are planning on renting the land, be aware of rent increases, and some communities will require that your mobile home is of a particular age. These rental parks will have rules concerning living matters such as the landlord’s right to access the interior of your home, parking restrictions, children’s behavior, the use of clotheslines, and others. Then there are rental parks with rules about the type, appearance, and size of allowable manufactured homes. Don’t buy a manufactured home you plan to locate on the rented ground until you thoroughly consider all of a prospective location’s rules and regulations.