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If you’re thinking about tapping the equity in your home, you’re looking at either a home equity loan or a home equity line of credit, better known as a HELOC. Both may allow you to borrow a large sum at a relatively low interest rate and with lower fees than a mortgage refinance.

Either a home equity loan or a HELOC is a second mortgage, so you’re betting the house: Your home can be foreclosed on if you cannot make payments. But for homeowners who have a secure income, good credit, and a substantial amount of equity, either one can be an excellent way to fund big expenses like renovations and debt consolidation.

When looking at a HELOC vs. a home equity loan side by side, there are differences that mean one type of loan may make more sense than the other to you. Let’s take a deep dive into the two to help you decide.

What’s the Difference Between a HELOC and Home Equity Loan?

A HELOC is a revolving line of credit. You can take out money as you need it, up to your approved limit, during the draw period. You may be able to make interest-only payments on the amount you withdraw during that time, typically 10 years.

After the draw period comes the repayment period, usually 20 years, when you must repay any principal balance with interest.

Most HELOCs have a variable interest rate. Some have a low introductory rate, and some require minimum withdrawal amounts.

A home equity loan is another type of second mortgage that uses your home as collateral, but in this case, the funds are disbursed all at once and repayment starts immediately. It is usually a fixed-rate loan of five to 30 years, and monthly payments remain the same until the loan is paid off.

The main differences between the two are how the money is disbursed, how it is repaid, and how the interest rate works.

Key Differences

	HELOC	Home equity loan
APR	Typically variable	Typically fixed
Repayment	Repay only the amount borrowed, and may have the option to pay interest only in the draw period	Repayment starts immediately at a set monthly payment
When are funds disbursed?	Funds are disbursed as you need them	Funds are disbursed all at once
Loan type	Revolving line of credit	Installment loan

Comparing HELOCs and Home Equity Loans

Homeowners usually will need to have 15% to 20% equity in their home — the home’s market value minus what is owed — to apply for a home equity line of credit or home equity loan.

If you do, then how much home equity can you tap? Most lenders will require your combined loan-to-value ratio — combined loan balance / appraised home value — to be 90% or less, although some will allow you to borrow 100% of your home’s value.

Here’s what to look for when comparing a HELOC with a home equity loan.

Interest Rate

The interest rate for a home equity loan is typically fixed, while the interest rate for a HELOC is usually variable.

HELOC rates tend to be a little higher than home equity loan rates (but keep in mind that you may pay interest only on what you borrow from the credit line). The exception is a low teaser rate that may be offered for six months to a year before converting to a variable rate.

Keep in mind that Federal Reserve decisions affect the rates for both products. The prime rate, the rate given to low-risk borrowers for prime loans, is based on the federal funds rate set by the Fed.

Even as home equity loan rates rise, though, the rate for these secured loans will be lower than that of almost all unsecured personal loans and credit cards.

Recommended: What to Learn From Historical Mortgage Rate Fluctuations

Costs

Closing costs are essentially the same for a HELOC and a home equity loan — 2% to 5% of the total loan amount — but many lenders offer to reduce or waive them.

Lenders may have already baked their costs into your rate quote.

You’ll want to shop for the best deal, comparing rates, upfront costs, closing costs, and fees. Bear in mind that advertised rates are often reserved for well-qualified borrowers, so read the fine print.

Requirements

To qualify for a HELOC or home equity loan, lenders will look at your employment and credit history, income, and the appraised value of your home. In other words, you must:

•   Have enough equity in your home

•   Have enough income to cover the monthly payment on the home equity loan

•   Have a good credit score (typically 680 or over, though many lenders prefer 700-plus)

•   Have a debt-to-income ratio of 36% to 50%

Repayment

When it comes to repayment, HELOCs and home equity loans are very different.

With a home equity loan, the entire loan amount is deposited into your account at once. This also means you’ll start paying on the loan immediately.

With a HELOC, you use funds as you need them, up to the limit, during the draw period. Your payment may be just the interest charge for the amount borrowed. The revolving credit line means you can withdraw money, repay it, and repeat before the repayment period, when the draw period ends and principal and interest payments begin.

Money Disbursement

Funds for a home equity loan are disbursed immediately. Sums from a HELOC are withdrawn as needed.

Payments

Payments on a home equity loan begin immediately. Payments on a HELOC aren’t required until you start borrowing money from your credit line.

HELOC vs Home Equity Loan: Pros and Cons

HELOC Pros and Cons

Pros:

•   Access up to 90% of your home equity and sometimes more

•   Flexible use

•   Only borrow what you need

•   Lower interest rate than most unsecured loans or credit cards

•   Some have low introductory APR offers

•   Loan interest may be tax deductible if the borrowed money was used to buy, build, or substantially improve your primary home (also true of home equity loans)

Cons:

•   May have a slightly higher interest rate than a home equity loan

•   Variable interest rate means your rate and monthly payment can change throughout the repayment period

•   Home is at risk of foreclosure if you’re unable to make payments

•   The repayment period could bring sticker shock

•   Paying off a loan balance early could trigger a prepayment penalty, and closing a credit line within a predetermined period — usually three years — could negate the waiving of closing costs

•   In a small number of cases, a balloon payment could be required at the end of the draw period
May include annual or inactivity fees

Home Equity Loan Pros and Cons

Pros:

•   Access up to 90% of your home equity and sometimes more

•   Funds disbursed at once

•   Fixed interest rate

•   Predictable monthly payments

•   Lower interest rate than unsecured loans

Cons:

•   Home is at risk of foreclosure if you’re unable to make payments

•   No flexibility in the amount of money you get

•   Limited to fixed installment payments

Which Is Better, HELOC or Home Equity Loan?

The better loan is the one that fits your life circumstances. A home equity line or loan can be used to buy a second home or investment property, pay medical bills, pay off higher-interest credit card debt, fund home improvements, and pay for other big-ticket items.

When a HELOC Is a Better Fit

HELOCs are more flexible than home equity loans. If you’re unsure how much money you need, don’t need to borrow immediately, or want flexible repayment options, you might want to think about applying for a HELOC over a home equity loan.

When a Home Equity Loan Is a Better Fit

A home equity loan is great for people who know how much they need to borrow and want the regularity of an installment loan with a fixed interest rate and fixed payments.

The Takeaway

Deciding on a home equity loan vs. a HELOC can depend on what you’re planning to use the money for. If you need a certain amount of money all at once, a home equity loan may be a good fit. If you want the flexibility to take out money as you need it, a HELOC may work better.

A HELOC brokered by SoFi may be just the right thing, right now for your situation. Access up to 90%, or $500,000, of your home equity for almost any need.

Say hello to a HELOC and start funding your dreams.

FAQ

Which is faster, a HELOC or home equity loan?

They’re tied, on average. It could take two to six weeks to get a HELOC or home equity loan.

HELOC or home equity loan for an investment property?

Investors may like the flexibility of a HELOC. A lump-sum home equity loan, however, could also be advantageous for renovating or buying properties.

HELOC or home equity loan for a home remodel?

If you know exactly how much you’re going to be spending on a home remodel and you’d like predictable payments, you can use a home equity loan. If you want more flexibility or are less certain about your costs, you may like the flexibility of a HELOC.

Can you have both a HELOC and home equity loan?

It is rare to have both a HELOC and a home equity loan. One would be a second mortgage and the other would be a third mortgage. Few banks are willing to lend money on a third mortgage, and for any that do, the interest rate would be high.

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Photo credit: iStock/Hispanolistic

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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Modular homes are increasingly capturing interest as a fast and affordable housing option. The global market for modular homes is forecast to grow from $82 billion in 2022 to $139 billion in 2029. These houses are built from factory-made components and are then constructed on a permanent foundation on a building site. They must meet the Department of Housing and Urban Development standards, as well as local guidelines.

Not to be confused with manufactured homes (previously called mobile homes), which can be moved from location to location, a modular home can be a good option to what are known as stick-built or traditionally constructed homes.

Could one be right for you? Here are the pros and cons of these structures, to help you decide if this might be your next home sweet home.

What Are Modular Homes?

Modular homes are constructed in a way that differs from a traditionally built home. Many of the components are made in a factory and then shipped to the property, where they are assembled on a permanent foundation.

The process is typically less expensive and faster than a stick-built home (meaning ones that are assembled piece by piece at the site).

As briefly noted above, modular homes are permanent structures and are subject to local and federal standards.

Recommended: Mobile vs. Modular vs. Manufactured Homes

How Are Modular Homes Constructed?

One of the biggest differences from a traditional home is the way modular homes are constructed. The house’s components are assembled in a factory and delivered to the homesite in one or more trips. The modules may be akin to three-dimensional boxes that are connected to one another and the foundation at the job site.

The benefit of constructing modular home components in a factory is the controlled environment. Because the parts are assembled under ideal conditions (perfect temperature, humidity, etc.), buyers can usually expect a consistent, high-quality build.

In addition, the actual build can move more quickly. Estimates of the time to build a modular home range from 16 to 32 weeks, depending on how customized the plans are and other variables.


💡 Quick Tip: Don’t overpay for your mortgage. Get your dream home or investment property and a great rate with SoFi Mortgage Loans.

The Pros and Cons of Modular Homes

As with most things in life, there are pluses and minuses to modular homes. Consider these points to decide if one could be right for you. First, the upsides:

•  Modular homes are typically 10% to 20% less expensive than traditionally built homes.

•  They can be built up to 30% to 60% faster than stick-built homes.

•  Depending on the builder, they may be customized to suit your needs, both in terms of layout/square footage and finishes. You can get a very basic home or a truly luxe, mansion-like one.

•  They can be more energy-efficient than traditionally built houses, and the materials and building process may be more environmentally friendly as well.

•  They are considered better able to withstand environmental threats (flooding, hurricanes) than traditionally built homes.

That said, there are some disadvantages to modular homes to consider:

•  You need to add in some costs to your home-buying budget: the cost of the land, the foundation, and other related expenses. Yes, you are paying for those things when you buy a stick-built house, but it’s already rolled into the price.

•  You will need to investigate how to finance your home. If it’s an already built home, then a home loan will work. But if you are building from the ground up? Rather than getting a mortgage (since you aren’t buying an existing home from a seller), you may want to look into construction loans. Some modular home companies offer their own financing and lending programs.

•  Depending on the modular home company, you may not be able to get every last detail you want. Shopping around can help you find the top features you want in your home.

Modular Home Risks

There are a couple of considerations prospective modular homeowners should be aware of:

•  Finding land can be difficult in some areas. If you love modular homes but want to live in a suburb that has a hot housing market, you may be hard pressed to find a lot that works for you.
(You also may need a land loan to purchase your property if you do find a lot you love.)

•  It may be difficult to make changes once construction has started because so much of the home is pre-built.

•  Bias exists. Some people confuse modular homes with manufactured or mobile homes, which don’t have a foundation, and may therefore avoid them. This could mean a real estate agent might not show buyers a modular home that’s for sale, for example, due to this misperception.

How to Find Modular Homes for Sale

You can shop for pre-existing modular homes on major real estate websites like Realtor.com and also on specialized sites that list this type of home.

To construct a modular home, you can look at such sites as modularhome.org and modularhomeowners.com. Also, with the growing popularity of modular homes, you may well be able to get a word-of-mouth referral from someone in your circle.

How to Choose a Modular Home

When considering a modular home builder, much will depend on the following factors:

•  Do you like the style of the houses they build? The floorplans?

•  Are their prices lining up with your budget? Do they offer financing, if you need it?

•  Where are they located? If their factory is somewhat close to you, which can help reduce transportation expenses?

•  Are you impressed with the quality of their work? Their customer service?

•  Which brands do they partner with? Many manufacturers work with certain vendors for windows, doors, appliances, etc.

💡 Quick Tip: A home equity line of credit brokered by SoFi gives you the flexibility to spend what you need when you need it — you only pay interest on the amount that you spend. And the interest rate is lower than most credit cards.²

How to Finance a Modular Home

Financing a modular home will take different paths depending on whether the house is already constructed or you’re building it.

•  For already built homes, you may look into conventional mortgage loans, FHA, USDA, and VA loans, just as you would for any other property you are interested in.

•  If you are building your own modular home, then you will probably need to apply for a construction loan to have the funds to get your house over the finish line.

•  Some modular home companies offer financing options.

•  You might also see if a personal loan could help you afford a modular home. Some lenders will allow you to buy a property with the funds; check with your lender, and understand the interest rate you will be charged.

Are Modular Homes Worth It?

Whether a modular home is worth it is a very personal decision.

For some people, there may be no greater satisfaction than working with a modular builder to specify their dream home and seeing their home come together, usually more quickly and less expensively than other building methods. They can collaborate with their builder and find a house plan that checks off all (or most) of the items on their home wish list.

Many people are thrilled with the eco-friendly aspects of these homes as well.

However, there are also people who find a vintage home more appealing or who would rather walk through an already built home and know exactly what they are buying.

Recommended: How Much Does It Cost to Build a House?

Modular Home Tips

If you’re set on buying a modular home, here are things to consider:

•  Style of home. Modular homes come in various styles, from contemporary to log cabins. It can be wise for buyers to shop around and work with a modular home manufacturer that suits their taste.

•  Manufacturer location. The cost of transporting a modular home can be high. It may be essential for the budget-conscious modular homebuyer to work with a manufacturer close to the home’s final destination.

•  Custom builds. Some modular home manufacturers may offer more customizable options, from floor plans and finishes. Do your research, and find a builder who can check off most of the priorities on your wish list.

•  Timeline. Some modular homes go up relatively quickly, while other manufacturers could be dealing with back orders. If time is of the essence, choose your builder carefully.

The Takeaway

Modular homes are growing in popularity. Components (modules) are factory-built and then assembled on a foundation; this process can be faster and more affordable than buying a traditionally built home. They also often have environmental benefits.

However, they aren’t for everyone: Building your own home is very different than hitting the open houses, and financing a modular home likely takes you on a path that involves a construction loan. If, however, you fall in love with an already built modular home, then you can usually apply for a mortgage from a number of lenders.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

Is a modular home a good investment?

A modular home can be a good investment. They often offer energy efficiency which is a selling point. However, a modular home’s value will be dependent on the housing market in your area, just as it would be with any other kind of home.

Are modular homes dangerous?

The dangers of modular homes are minimal. As long as the assembly of the modular home complies with local building codes, modular homes are as safe as a traditionally built home.

Is the value of modular homes decreasing?

Modular homes appreciate and depreciate in a way that’s similar to traditional builds.

Where can you get financing for modular homes?

Among the possibilities from various lenders are a construction loan, financing from your builder, or a personal loan.

How long will a modular home last?

With proper maintenance and high-quality materials, a modular home should last as long as, or longer than, any traditionally built home. Some of the first modular homes, built in the early 1900s, are still standing today.

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Photo credit: iStock/turk_stock_photographer

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

^²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.
You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.
In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Building a home could take an average of nearly eight months, but a contractor- or owner-built house could stretch the timeline beyond a year.

It’s not as simple as buying a plot of land and heading to Home Depot. Construction permits, financing, and even the weather can lengthen your timeline.

Average Time to Build a House

Despite the extra time it takes to build a home from scratch rather than buy an existing home, it’s no surprise that many Americans are opting to build a home.

Why? To customize a home to their tastes, for one thing. And the narrowing gap between the average cost to build a house and the cost of buying an existing home.

The average cost to build a house, including the land, was nearly $450,000 in May 2022, the National Association of Home Builders reported. The median cost to buy an existing home was a bit over $414,000.

So how long does it take to build a house?

According to the U.S. Census Bureau’s latest home building statistics, from 2021, the average time to build a one-unit residential building is 7.6 months. Here’s the breakdown.

Construction Purpose	Average months
Built for Sale	6.7
Contractor Built	12.6
Owner Built	14.3

This time frame encompasses the entire home building process, from obtaining building permits to picking out the design.

Factors That Affect How Long It Takes to Build a House

As with everything, the devil is in the details, so let’s look at factors that influence how long it takes to build a home.

Type of House

The type of home and design will have a significant impact on the construction timeline.

If you’re buying new construction, it will fall into one of these categories:

•   Tract homes. These go up in a new development. The buyer chooses the design features and lot.

•   Spec homes. With these move-in-ready homes, the buyer still might be able to choose some of the finishings.

•   Custom homes. A builder customizes a house to the buyers’ specifications on their land.

Predesigned home packages likely accelerate the construction timeline, while custom homes are likely to extend it. After all, custom designs require more coordination between architects, engineers, and contractors.

House Size

Naturally larger homes take longer to build than smaller homes.

If you’re planning on a particularly ornate design, make sure you budget extra time (and money) for the project.

Larger properties with complex layouts are also more likely to encounter greater engineering challenges than simpler layouts. It’s also likely that unanticipated issues will arise during the build.

Location

While scenic, remote areas are attractive to many people seeking to build a primary or vacation home, the locale will heavily affect the ease of transporting materials, workers, and equipment.

Rocky terrain will also be more expensive and difficult to excavate and prep for construction. Installing common utilities will be more difficult.

Weather

Unless you’re looking into a modular home vs. a stick-built home, inclement weather can severely delay construction, as many parts of the process cannot be completed in rain or snow.

Your worksite may get flooded due to lack of completed drainage, and building materials may be damaged if not properly protected.

Financing

Homeowners with sufficient equity in their home could apply for a home equity line of credit to fund their new home.

But many people will seek a construction loan. Obtaining a construction loan comes with its own complications.

Expect underwriting to take longer than it does for a typical mortgage, as the lender will want a detailed plan, budget, and schedule for the construction. The lender may also need to approve your builder.

Permits

Construction permits and zoning approval for home building can be significant time drains and are often beyond your control. A good contingency is to find a contractor who is familiar with the local application process.

Materials and Labor

Volatility in material prices and availability made it hard for contractors to plan projects in 2022. As lumber and plywood prices settled down, cement and diesel costs rose. Shortages in cement and concrete products were expected to endure.

The availability of labor slowed construction starts in 2022 and was expected to remain the top challenge for most contractors.

In general, contractors are particularly busy during the spring and summer, so contracting with a builder before those seasons could be a good idea.

The Process of Building a House

Here’s the typical home construction timeline:

•   Buy land and obtain financing

•   Obtain building permits and approvals

•   Excavate the land and prep the foundation

•   Build the framework and install utilities

•   Put in walls, floors, and roof

•   Install fixtures, appliances, and finish the exterior/interior

•   Landscape, pave driveways, and prepare the grounds

•   Get a final inspection from authorities

Shortening the Time It Takes to Build a House

While much of the home building process is outside your control unless you’re actually building the house yourself, there are ways you can mitigate the chance of complications.

Here are a few ways you can shorten the average time it takes to build a house.

Avoid Deviating From the Plan

One of the best ways to avoid lengthening a construction timeline is to ensure that you have building plans finalized well before you break ground, and sticking to them.

Making last-minute changes is anathema to construction timelines.

Communicate

Avoid being the bottleneck when it comes to decision-making. The construction team will likely take their cues from you. So if you’re late answering an email, design query, or request for approval, your contractor will often be unable to proceed without your input.

Reduce Complexity

Keeping things simple will probably lead to a faster build, if that’s a priority. More complex plans clearly lead to lengthier construction times and introduce a greater likelihood that unforeseen problems will arise.

Craft the Contract With Care

The construction contract should contain a deadline for completion and what will happen in the event of a delay.

It’s common for a contract to specify that “substantial completion” must occur by a certain date, and to define that. A clause can express that extensions can be given for unforeseen delays.

When a change is made after a contract is signed, it’s referred to as a “change order.” The change order might specify a deadline extension or new completion date.

Builders who breach the contract may be responsible for damages.

The Takeaway

How long does it take to build a house? It could take seven to 14 months. A construction contract will typically contain a deadline and what will happen if a delay occurs. Allowing for a reasonable schedule can help ensure that your project finishes on time.

3 Home Loan Tips

1. Traditionally, mortgage lenders like to see a 20% down payment. But some lenders, such as SoFi, allow home mortgage loans with as little as 3% down for qualifying first-time homebuyers.
2. Generally, the lower your debt-to-income ratio, the better loan terms you’ll be offered. One way to improve your ratio is to increase your income (hello, side hustle!). Another way is to consolidate your debt and lower your monthly debt payments.
3. When building a house or buying a nontraditional home (such as a houseboat), you likely won’t be able to get a mortgage. One financing option to consider is a personal loan, which can be faster and easier to secure than a construction loan.

FAQ

How long does it take to build a house by yourself?

For the ambitious home builders among us, it takes over 14 months to build a house, on average. The timeline can easily stretch out to two years or longer, depending on your experience and whether or not you choose to employ any assistance.

What causes delays when building a house?

Plenty of factors can delay a build. They include:

•   Owner-caused delays

•   Contractor-caused delays

•   Weather

•   Logistics

•   Obtaining permits and approvals

•   Size and scale of the project

•   Communication

Can I get a loan to build a house?

You can apply for a construction loan or if you already have a home, a home equity line of credit, home equity loan, or cash-out refinance to fund the new home. A personal loan could be used for at least part of the build.

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Photo credit: iStock/acilo

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

This article is not intended to be legal advice. Please consult an attorney for advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Many manufactured homes take just a week to build. (Yes, a week!) Manufactured homes can be built so quickly because they’re made in a factory — a controlled environment. All of the materials and tradespeople are on hand, and the standard sizes of manufactured homes make for quick and easy builds.

The time it takes for the manufactured home to be placed on land is much longer, however. In this article, you’ll read about:

•   The basics of new manufactured homes

•   The timeline for building and delivering a manufactured home

•   Factors that affect the building timeline

What Is a Manufactured Home?

A manufactured home is built in a factory according to HUD standards. The home, which usually has one, two, or three sections, is transported to a dealer, plot of land, or manufactured home community.

Manufactured homes average a lower cost and shorter construction timeline than traditional homes, but homebuyers should be aware that manufactured homes may depreciate. Then again, depending on the local housing market and the home’s setting, a manufactured home might appreciate.

How much does a new manufactured home cost? The average price nationwide was $130,400 in late 2022, with a single-wide averaging $95,800 and a double-wide $159,400, according to the Manufactured Housing Survey conducted by the Census Bureau and sponsored by HUD.

That helps to show why manufactured housing is gaining in popularity. A recent National Association of Realtors® report shows that manufactured homes account for 8% of home purchases. It’s the second most popular home type, after detached, single-family homes.

Recommended: What Is a Modular Home?

Timeline for Building a Manufactured Home

How long does it take to get a manufactured home? From placing an order to moving in, it could take two to four months. That compares with 9.4 months for a traditional contractor-built home.

The site can be prepared, if needed, while the manufactured home is being built. If you need to develop raw land (i.e., put in your own utility connections, clear the land, or install a driveway), the process could take much longer.

Process of Building a Manufactured Home

Several factors help determine how long it takes to get a manufactured home, start to finish. Keep in mind that sales centers for manufactured homes may be able to offer help or coordinate the process.

Design, Model, and Floor Plan Selection: 1-3 Weeks

You’ll most likely start your manufactured housing journey by choosing your home model, floor plan, design, finishes, exterior elements, and other details of the home. This process can take a week or more.

It’s a good idea to start here, because you may have to wait until the factory is available to build your home. If you choose a model that has already been built, you can save some time.

Financing: 4-8 Weeks

Before construction can begin on your manufactured home, you’ll need to get approved for a loan for the home and, if applicable, the land. You’ll submit your personal information, your income and employment, specs on your chosen manufactured home, who you’re purchasing the home from, and information about where you’re going to place the home.

Most of the time, mobile home financing options depend on whether the home is real property or personal property.

Some manufactured homes qualify for conventional home loans. An option is a government-backed home loan. In most cases, the home must be permanently attached to a foundation and on land that you own or will own: That makes it real property.

An exception is an FHA Title I loan, for the purchase of a new or used manufactured home on land you do or do not own. There are loan limits.

It’s also possible to finance a manufactured home with a large personal loan.

And a chattel mortgage may be used to finance a home that will not be permanently affixed to the land.

Recommended: Credit Score Needed for Personal Loans

Site Selection: 1-4 Weeks

When it comes to placing your manufactured home, you’ll typically be faced with two options: Lease or buy land. It could take time to find the proper setting.

Lease the land: With leased land, you’ll pay a fee — usually between $100 and $1,000 per month — to place your manufactured home on a lot. Lots are typically close together and include utility connections and some community maintenance. Some may feature community amenities like a swimming pool or park.

Purchase land: Many lenders offer financing for a manufactured home with the land. A lot in a community may already have a paved pad and utility hookups. If you need to install your own utilities, you may need to find a contractor to coordinate the exterior elements. Your manufactured home sales center may also be able to help with some of these details. A land loan on its own could take around a month to secure.

Permitting: 1 Week to Several Months

Setting a manufactured home on land requires a permit. Requirements can be found from your county or city. The permitting process can take a few days or a few months, depending on your locale, but be sure to submit all required documents and plans so you don’t face additional delays.

Site Preparation: 1-4 Weeks

Site preparation for raw land can include tree and rock removal, land grading, a driveway, well or water connection, sewer connection or septic system, and other utilities.

Minimal site prep can be completed in less than a week, while more extensive site prep can take up to a month.

Construction: 1 Week

The factory environment makes for quick construction: a few days to a week. Materials, tools, and craftspeople are located in the same factory to increase efficiency. Standard sizes and finishes also account for the short construction timeline.

The manufacturer tests the mechanical systems, such as electrical or plumbing, as your home nears completion.

Transport and Installation: 1-4 Weeks

After construction is complete, you may be wondering how long it takes to set up a manufactured home. While transporting your manufactured home will likely only take a few days at most, you may have to spend more time on the installation of the home.

Once the home has been transported to your site, it is attached to ground anchors and utilities are connected. Then, if you desire, additional exterior elements such as a porch or a garage can be added. Customizations like this will take several weeks to complete.

Factors That Affect the Building Timeline

Type of Manufactured Home

The size and type of your home will affect the building timeline. A triple-wide manufactured home, for example, will take longer to build and will also require more site development. A larger septic system, for example, would be required for a larger manufactured home.

Features of the Home

Some custom features like French doors will take additional time to build into your home. But manufacturers say these features usually add only a little time to the process.

Backlog

Although the actual construction of your home may only take a week, you may need to wait for months for the manufacturer to begin construction due to a backlog.

The Takeaway

Financing, permitting, and finding and developing land all take much more time than the construction of a manufactured home. It could take two to four months from the time you order a manufactured home to move-in day.

3 Home Loan Tips

1.    Traditionally, mortgage lenders like to see a 20% down payment. But some lenders, such as SoFi, allow mortgages with as little as 3% down for qualifying first-time homebuyers.

2.    Not to be confused with prequalification, preapproval involves a longer application, documentation, and hard credit pulls. Ideally, you want to keep your applications for preapproval to within the same 14- to 45-day period, since many hard credit pulls outside the given time period can adversely affect your credit score, which in turn affects the mortgage terms you’ll be offered.

3.    When building a house or buying a non-traditional home (such as a houseboat), you likely won’t be able to get a mortgage. One financing option to consider is a personal loan, which can be faster and easier to secure than a construction loan.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

How do you speed up the process of building your manufactured home?

If you want to build a manufactured home faster, you can shop builders to check on their availability and get your finances in order. Know which loans apply to the home’s setting, leased or owned land, and consider getting preapproved. You can also select a manufactured home that is already built rather than design your own custom home.

Are manufactured homes cheaper?

Manufactured homes are usually cheaper than traditional homes. The average sales price for a new double-wide manufactured home (not including land) was $159,400 in late 2022, compared with the median sales price for a new single-family home, $442,100, around the same time, according to the U.S. Census Bureau and HUD.

Do manufactured homes take a shorter time to build?

Manufactured homes take much less time to build than other forms of housing. Because the homes are built in a controlled environment, manufacturers can avoid weather delays and supply shortages and can schedule trades (like plumbing) more efficiently. Everything is in one spot, and the standard dimensions of manufactured homes make construction efficient.

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Photo credit: iStock/uptonpark

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Buying a home is exciting, but coughing up the down payment can be a downer. That’s where down payment assistance enters the picture. Government and nonprofit programs help unlock the door to homeownership for qualified buyers.

It makes sense to put down as much as you can comfortably afford on a down payment. The more you put down, the less you’ll be borrowing, which translates to lower monthly payments and less interest paid over the life of the loan. But many people put down less — in some cases far less — than 20% of the home’s purchase price, the amount often recommended to buyers.

In an April 2024 SoFi survey of 500 people intending to purchase a home, almost a third of respondents (30%) said they were planning to put down between 11% and 20%. Almost one in five (19%) said they would put down 6% to 10%. Ten percent of buyers were aiming for a 5% down payment or less, and fully 7% of people were exploring no-down-payment options. First-time buyers who finance their home are especially likely to have a lower down payment, according to data from the National Association of Realtors®.

Down Payment Defined

Depending on their financial situation, homebuyers may qualify for down payment assistance from the government or a private entity.

Down payment assistance programs come in several forms. Some offer homebuyers loans and grants that can be applied directly to down payments and, in some cases, help with closing costs, too.

The down payment — which covers the upfront “out of pocket” cost of getting a mortgage — is usually made at the mortgage closing and can be paid with a check, cashier’s check, or electronic payment.

The down payment covers a reasonable percentage of the total home purchase price, with the mortgage covering the remainder. Lenders typically won’t approve a mortgage loan unless the borrower pays upfront cash — anywhere from 3.5% to 20% in most cases — against the total price of the property.

💡 Quick Tip: Thinking of using a mortgage broker? That person will try to help you save money by finding the best loan offers you are eligible for. But if you deal directly with an online mortgage lender, you won’t have to pay a mortgage broker’s commission, which is usually based on the mortgage amount.

Homebuyer Assistance Programs and Qualifications

If a first-time homebuyer can’t afford a down payment, that opens the possibility of financial assistance.

The programs that tend to provide the most financial assistance to homebuyers — state and federal governments and local, regional, and national nonprofits — will likely need an applicant to clear hurdles in order to qualify for down payment help.

These criteria usually lead that list:

•   The three-year rule. The buyer must not have owned a home in the past three years. In most scenarios, government agencies and private charities deem anyone who hasn’t owned a home in the previous three years, even a repeat buyer, a “first-time home buyer.”

•   Must be for a primary home. Homebuyers should be clear if the money is going to the purchase of a primary residence. If the home is an investment property designed to draw rent, financial assistance providers usually won’t issue a green light on funding.

•   Income limits. First-time homebuyers may have to meet income limits. The buyer may also have to keep the home price below a specified limit.

•   Funding caveats. Depending on the funder, the first-time homebuyer may have to take a homebuyer education course and may be asked to contribute some money to the down payment.

New homebuyers looking for financial help — and who qualify for that help — can get financial aid from a variety of sources, both public and private.

The help can be substantial.

According to a report from the Urban Institute, up to 51% of potential homebuyers residing in the report’s U.S. metropolitan areas studied would qualify for some form of home down payment assistance. Upon applying, those homebuyers would be in line to receive between $2,000 and $39,000.

Yet in SoFi’s recent survey, only 38% of potential homebuyers who said not having an adequate down payment was their biggest challenge had explored down payment assistance programs. Actively looking for down payment assistance could be a good move. When that search begins, the following funding sources may be a good place for homebuyers to start.

Recommended: First Time Homebuyer Guide for 2023

HUD, the Gatekeeper

A good source for state and nonprofit home down payment assistance is the Department of Housing and Urban Development, or HUD.

HUD is a federal gatekeeper, steering homebuyers to various state and nonprofit programs and offering home buying and down payment advice from HUD home assistance counselors.

Each state may have different rules and requirements, so it’s a good idea to talk to either the state agency directly or to a qualified advisor through the HUD housing counselor portal.

Federal, State, and Local Government Grants

Government grants might be the optimal form of down payment assistance, as it’s free money. Grants usually come from federal, state, or local governments and nonprofit groups.

Each government agency or charitable group has its own rules for down payment assistance grants, but in general, you have to pass an eligibility test (the common criteria are listed above) to qualify.

Again, HUD does not offer direct grants to individuals but works through local governments and nonprofit organizations to make financial assistance and counseling available.

💡 Quick Tip: Not to be confused with prequalification, preapproval involves a longer application, documentation, and hard credit pulls. Ideally, you want to keep your applications for preapproval to within the same 14- to 45-day period, since many hard credit pulls outside the given time period can adversely affect your credit score, which in turn affects the mortgage terms you’ll be offered.

Federal Government Loans

While technically not deemed direct down payment assistance, U.S. government-insured housing loans consist of low-interest loans to new homebuyers that enable them to make lower down payments, thus making it easier to afford both a home loan and a down payment.

Federal home loans usually come from three agencies:

The Federal Housing Administration. The FHA provides loans from private lenders to qualified homebuyers. The primary qualifier is a FICO® credit score of 580 or above. A borrower with a credit score of 500 to 579 who brings a 10% down payment to the table may also qualify for an FHA loan. In SoFi’s survey, only 49% of homebuyers had heard of FHA loans, yet these can be a great solution for buyers.

U.S. Department of Agriculture. The USDA offers direct home-buying assistance to rural homebuyers. Loans enable qualified homebuyers to purchase a home with no down payment. The home must be in a qualified rural area, and borrowers’ adjusted annual income cannot exceed 115% of the median income in the area, among other criteria. These loans, too, can fly under the radar with shoppers. In SoFi’s survey, only 4 in 10 buyers (41%) had heard of USDA loans.

There is no minimum credit requirement for a USDA loan, but applicants with a credit score below 640 are subject to more stringent guidelines to qualify.

Department of Veterans Affairs. The VA provides home purchasing assistance to current members of the armed forces, military veterans, and eligible spouses of deceased U.S. military members. Similar to a USDA home loan, a VA loan requires no down payment.

Applicants must meet the VA’s — and the lender’s — standards for credit and income, and be purchasing a primary home.

Forgivable Loans

These loans come from lenders, usually in two forms: deferred payments and forgivable loans.

Forgivable loans are basically second mortgages that borrowers don’t have to repay if they remain in the primary home for a specific time period (for example, 10 years).

Forgivable loans usually have a 0% interest rate, making it easier to afford a home down payment.

State Down Payment Assistance

Assistance programs vary by state. Still, some commonalities exist — especially the urgency to help economically struggling homebuyers afford a home down payment.

These states are examples of that:

Arizona. By and large, homebuyers in most Arizona counties can apply for home down payment assistance through the state’s Department of Housing Home Plus Program.

Homebuyers will need a FICO® credit score of 640 or higher and an annual income of $126,351 or less. Additionally, the purchase price of the home can’t be higher than $371,936.

Florida. The Sunshine State offers home down payment assistance programs via Florida Housing Finance Corp.

•   HFA Preferred and HFA Advantage PLUS Second Mortgage. These down payment and closing cost programs offer 3%, 4%, or 5% of the total loan amount in a forgivable five-year second mortgage.

•   Florida Assist. Eligible homebuyers receive up to $10,000 through an interest-free second mortgage. The money doesn’t have to be paid back unless the homeowner sells or refinances the property.

Recommended: Guide to Buying, Selling, and Updating Your Home

The Takeaway

Government and nonprofit funding are the primary vehicles for down payment assistance, but homebuyers may also seek down payment help from family and friends, retirement and investment funds, or even microlenders.

However a buyer approaches home down payment assistance, the keys are planning, research on available programs, and a disciplined approach to budgeting.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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