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If you’re looking at lower-cost housing options, buying a manufactured home may have come up on your radar. Buying a new manufactured home or an existing one could be a good way to get into a home more quickly and at a lower cost than a site-built home.

Manufactured homes shed their mobile home and trailer rep in 1976. Since then, manufacturers have touted their quick turnaround times and high-quality materials.

If you’ve ever wondered how to buy a manufactured home, what financing options are available, and whether the titling of a home as real property or personal property makes a difference, read on.

What Is a Manufactured Home?

A manufactured home is built in a factory on a permanent steel chassis.

They often come in one, two, or three sections: single-, double-, or triple-wide. They must be able to fit on the highways, so the sections are limited to 16-foot widths in every state except Texas, which allows 2 extra feet.

Manufactured homes are not modular homes; nor are they considered mobile homes anymore. Manufactured homes are built entirely in a factory, whereas the components of a modular home are taken to the land and put together on-site. The two types of housing also follow different building codes.

Mobile homes are considered those built before June 15, 1976. After that date, manufactured homes were required to follow the HUD code, which covers manufactured home construction and safety standards. A manufactured home will have a “HUD tag,” a red metal certification label, on the exterior.

Why Should You Buy a Manufactured Home?

Manufactured homes are less expensive than site-built homes or modular homes, which must meet the same state and local building codes that stick-built homes do.

The average sale price of new manufactured homes nationwide was $86,500 for a single-wide and $158,800 for a double-wide as of August 2022, according to the Census Bureau’s Manufactured Housing Survey.

They have quicker build times than site-built homes, too.

Manufactured homes sold as part of a land package may hold their value much like a standard home, depending on upkeep and the local real estate market.

Speaking of land, if you’re a homebuyer and plan to lease the lot under you, beware of rising lot rents. Then again, if you’re looking for investment property, the ability to raise the lot rent could be a big draw.

Process of Buying a Manufactured Home

Buying a manufactured home is different from buying a site-built home. There are a lot of variables that you’ll need to know about.

Getting Financing for a Manufactured Home

Financing a manufactured home generally depends on whether the home will be attached to the land (real property) or consists of just the home (personal property, or chattel).

Financing Just the Home

It is possible to finance the manufactured home apart from the land. In this case, you’ll need to get a personal loan, a chattel mortgage, or dealer financing.

Another option is a government-insured home loan like an FHA Title I loan (which has loan limits) from an approved lender.

Financing the Home and Land

If you’re buying a manufactured home that’s permanently attached to a foundation on its own land, some lenders will finance the purchase with a conventional home loan.

An FHA Title I loan can also be used for just a developed lot or for a home-lot combo. FHA Title II loans are for buying a manufactured home and land whose price is above the Title I loan amount. Title II loans adhere to FHA loan limits, which are based on a percentage of the Federal Housing Finance Agency’s national conforming loan limits for conventional loans.

VA loans are available to eligible borrowers to buy a manufactured home that is permanently attached to the land.

And an option for low- to moderate-income buyers is a USDA loan if the home is in a USDA-eligible rural area.

Note: SoFi does not offer USDA loans at this time. However, SoFi does offer FHA, VA, and conventional loan options.

Recommended: What Is a Chattel Mortgage?

Searching for a Manufactured Home

In your search for a manufactured home, you’ll want to consider:

Manufacturer. Many companies build and sell manufactured homes. Keep your search broad at first, and ask friends and family for referrals. You may also want to keep a spreadsheet comparing the prices, incentives, and inclusions each company provides. Be mindful, however, that while some manufacturers are able to provide comprehensive services, the quality of their homes may be lower than that of another manufacturer who does not provide every service.

Model and layout. Tour models and figure out what you really need. Are there enough bedrooms? Do you prefer a separate kitchen and living room, or is an open layout more your style? Is there enough storage?

Customization. There are a lot of options when it comes to selecting custom design elements. Would you like patio doors? A fireplace? Separate vanities? The manufactured home builder will have a list of upgrades that you’re able to select from.

Exterior additions. When your home is placed, some exterior elements can make it feel like a site-built home. Porches, garages, and decks are a few examples.

Site. Do some research on what it takes to place a manufactured home on a lot. Do you want a lot in the country with a view? Are you able to pay for the cost to bring utilities to raw land? Would you prefer to lease land? Where you want to place your home will help you select the right one.

Buying Land for a Manufactured Home

Buying land comes in three forms:

•   Cash. You can buy land with any savings you have on hand.

•   Land loan. It is possible to finance land separately from your home, which is also the case with some tiny houses. You’ll have closing costs on both loans if you choose to finance separately.

•   Home and land. The easiest route is a manufactured home-and-land loan. Getting loan approval before searching for land or a manufactured home will allow you to see exactly how much you qualify for.

Site Prep

After buying land, it will need to be prepared for your manufactured home. This may include:

•   Soil condition tests

•   Making a plan for where the manufactured home is to sit

•   Clearing the area

•   Grading for proper drainage

•   Checking the holding capacity for ground anchors

•   Sewer or septic tank

•   Well or water connection

•   Driveway

Recommended: Typical Personal Loan Requirements

Delivery and Installation of Your Manufactured Home

After your land has been prepared and the home has been built, it can be transported to the site and installed. Your manufacturer will likely coordinate delivery and may be able to help you find contractors to install the manufactured home.

Getting Insurance

Homeowners insurance for manufactured homes usually covers the structure, personal belongings, and any other structures on the property. Some insurers require that a manufactured home be placed on a concrete or block foundation.

The coverage might also include liability insurance, which helps protect your finances if you’re responsible for damage or injury to someone else. A standard policy may not cover earthquakes or floods.

To figure out how much homeowners insurance you need, start by getting enough dwelling coverage to fully replace your home if it needed to be rebuilt. The replacement cost may be higher or lower than the home’s value.

Cost of a Manufactured Home

The cost of a manufactured home will vary by size, quality, customizations, and manufacturer. Not including the cost of acquiring and developing land, a new model may range from $86,500 to over $200,000.

There’s that mention of land again. As the Consumer Financial Protection Bureau says, “Manufactured housing is the largest source of unsubsidized affordable housing in the United States, but financing a manufactured home can be costly, especially for borrowers who do not own the underlying land.”

To ease the housing shortage, the Biden administration’s “Housing Supply Action Plan” aims to deploy new financing mechanisms for manufactured homes and accessory dwelling units (ADUs). The plan also prodded the Department of Transportation to modify its grant programs to favor cities that adopt zoning rules allowing dense housing and transit-oriented development.

The Takeaway

Buying a manufactured home is usually more affordable than a site-built or modular home, but it’s helpful to understand all the financing angles and the long-term stability that owning the land underneath you can bring.

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. 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.
3. 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 a mortgage lender, you won’t have to pay a mortgage broker’s commission, which is usually based on the mortgage amount.

Worried about rising mortgage rates? With SoFi, you can lock in today’s rates for 90 days while you look for a new home.

FAQ

How long do most manufactured homes last?

Manufactured homes that are regularly maintained can last for 30 to 55 years, according to HUD.

How do I pay for a manufactured home?

Financing a manufactured home largely depends on whether the home is permanently attached to the land or not. A home that is not may be financed with a personal loan, one kind of FHA loan, a chattel mortgage, or a dealer loan.

How do I cut down on costs for a manufactured home?

The cost of a manufactured home itself could be relatively low. The biggest expenses you’ll likely encounter will be purchasing land and preparing it. If you can find a lot that already has utilities, it may help.

How is a converted shipping container classified?

Shipping containers that are converted into housing units can be accepted as manufactured homes if they are provided with a permanent chassis, are transported to the site on their own running gear, and otherwise comply with the HUD code for manufactured homes.

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Photo credit: iStock/Marje

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.

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A home equity loan is a way to finance a large purchase, complete home renovations, or consolidate high-interest debt by tapping into the equity of your home. Your home secures the loan, and funds are disbursed all at once.

With your home as collateral, lenders have reason to believe you’ll make on-time, full payments, so they offer a lower interest rate than they would on most unsecured loans. Failing to make the monthly payments could result in foreclosure, however.

Yet for borrowers who are confident they can make the payments, a home equity loan is one of the most affordable financing options on the market. Keep reading to learn more about home equity loans and whether or not one makes sense for you.

What Is a Home Equity Loan?

A home equity loan is typically a fixed-rate loan secured by a home in exchange for a lower interest rate.

Repayment terms are typically between five and 30 years.

How Do Home Equity Loans Work?

First, you’ll need to have sufficient home equity, which is the difference between the market value and what you owe. You may have built home equity by paying down your mortgage and by seeing your home appreciate.

You’ll go through an application process, and the lender will likely order a home appraisal to ensure that there’s enough value there to lend against.

You’ll have a lot more paperwork than some other loans and will sign mortgage lien documents that give the lender the right to start proceedings should you fail to make payments.

After closing on the loan, you’ll receive all funds upfront. Repayment starts shortly after.

Homebuyers also occasionally use a home equity loan to avoid PMI on a new home. An 80/10/10 piggyback mortgage, for example, consists of a conventional home loan, a second mortgage like a home equity loan, and a 10% down payment. Such buyers are able to put less than 20% down and avoid paying private mortgage insurance.

Types of Home Equity Loans

When you’re looking to use the equity in your home, there are two types of home equity loans to choose from — a home equity loan and a home equity line of credit (HELOC) — and a cash-out refinance.

•   Home equity loan: The loan is disbursed in one lump sum and paid back over time. The interest rate is typically fixed.

•   HELOC: With a home equity line of credit, money can be taken out as you need it, up to the limit you were approved for. HELOCs have a draw period, often 10 years, when you might pay only interest on money borrowed, followed by a repayment period, when principal and interest payments begin. The interest rate is usually variable.

•   Cash-out refinance: A third way of freeing up equity is cash-out refinancing. This means taking out a new mortgage at a lower rate that will pay off your current mortgage and give you a lump sum.

Home Equity Loan Requirements

Home equity loans are contingent on:

•   The amount of home equity a homeowner has

•   Income

•   Credit history

•   Debt-to-income ratio

How to Calculate Your Home Equity

Home equity requires basic math: Subtract the amount you owe from the market value of your home. If your home is worth $500,000 and you owe $350,000, you have $150,000 in equity.

You usually will not get a loan for the total amount of home equity you have, however. When it comes to how much home equity you can tap, many lenders allow a maximum of 90%, although some allow less, and some, more.

Another way of saying that: Your loan-to-value ratio shouldn’t exceed 90% in many cases.

If you’re taking out a second mortgage like a home equity loan or HELOC, your first mortgage and the equity loan compared with your home value is what is called the combined loan-to-value (CLTV) ratio.

Most lenders will require a CLTV of 90% or less to obtain a home equity loan, although some will allow you to borrow 100% of your home’s value.

combined loan balance ÷ appraised home value = CLTV

Example of a Home Equity Loan Payment

One thing that attracts a lot of borrowers to a home equity loan is the long repayment period, which is also why most homebuyers choose a mortgage term of 30 years.

A longer repayment period can make your monthly payment more manageable. For example, if you were to get a $75,000 home equity loan with a repayment period of 20 years, your monthly payment at 8% interest would be $627.33. If you had to repay that same amount in five years, your payment would be $1,520.73.

Here’s a chart comparing examples of monthly payments with different terms:

Loan amount	Interest rate	Term	Monthly Payment
$75,000	8%	5 years	$1,520.73
$75,000	8%	10 years	$909.96
$75,000	8%	20 years	$627.33

A lot of variables will affect the rate you pay, such as your credit score and how much home equity you have. Also, keep in mind that the longer the loan term, the more interest you’ll pay, despite the more affordable monthly payment.

Difference Between Home Equity Loans and HELOCs

Home equity loans and HELOCs both use your home as collateral on a loan. How they differ is in how you receive and repay the money.

Home equity loan	HELOC
Lump sum loan	Money as you need it
Start repaying immediately	Pay only on the amount you borrowed
Usually a fixed interest rate	Often a variable interest rate
Installment loan	Credit line

Advantages and Drawbacks of Home Equity Loans

Home equity loans have some advantages, but be sure to consider the drawbacks as well.

Advantages	Drawbacks
Large amounts of money can be borrowed	Home is collateral
Low interest rate	Repayment begins immediately
Flexible use	Loan amount is set, so if you need more money, you will need to apply for another loan

Home Equity Loan Quiz

What Can You Use a Home Equity Loan For?

The great thing about a home equity loan is the wide range of things you can use it for. Once the funds flow to your bank account, they’re yours to use for almost any purpose. Some common uses of home equity are:

•   Home renovations

•   Education

•   Medical expenses

•   Consolidation of high-interest revolving debt

•   Recreational vehicles

•   Vacations

•   Weddings

•   Purchase of an investment property

•   Building an ADU

•   Money in retirement

While you can pay for college tuition with a home equity loan, it might be better to find a student loan for that expense. And vacation expenses and wedding costs might be better addressed by saving and planning than by dipping into home equity.

Why? Because other loan types don’t put your home at risk if you’re unable to pay.

How to Apply for a Home Equity Loan

Step One: Assess your situation. Do you have enough equity to make this happen? How much do you need? Would you prefer a home equity loan or a HELOC? Do you have at least a “good” FICO® score?

If you have an idea of what type of loan you want, how much you want to borrow, and how much equity is available to tap, you’ll be able to shop for what you need.

Step Two: Ask multiple lenders for loan estimates. Getting loan estimates from different lenders can help you find the best terms and rates. Compare the APR of one 20-year loan to another, and so on. The APR will include the loan’s interest rate and any points and fees. Some lenders offer to waive or reduce closing costs on the loan.

All hard credit inquiries made within 14 to 45 days will be counted as one.

Step Three: Find a fitting loan and apply. Submit information about your income, current mortgage, insurance, and other details the lender requests. The lender may require an appraisal of your home.

Step Four: Close on your loan. If everything checks out — including your income, credit history on your credit reports, and home value — you may reach the closing table for your home equity loan. The Federal Trade Commission recommends reading the closing documents carefully and negotiating changes or walking away if something doesn’t look as it should.

Step Five: Receive your funds. Funds are disbursed around three business days after closing on the loan. You’ll receive the amount you were approved for.

Step Six: Begin repaying your loan. On a home equity loan when the funds are disbursed upfront and your interest rate is locked, the first payment will be due around 30 days after you close on the loan.

Is It a Good Idea to Take Out a Home Equity Loan?

Taking out a home equity loan is one of the least expensive ways to finance a large purchase. Because your home is used as collateral, lending institutions are willing to offer a relatively low interest rate on the borrowed amount.

For people who want borrowing flexibility and aren’t sure of the exact amount they will need, a HELOC might be a better option.

While a lower interest rate is great, you should always keep in mind that your home is at risk with a home equity loan. If you’re confident you can make the payments and have a need for a large sum, this may be a financing solution you’ll want to look into.

The Takeaway

With a relatively low rate and a repayment period that can be long, a home equity loan is an attractive way to finance a large purchase or consolidate high-interest debt. A home equity line of credit is a good alternative, and more flexible.

SoFi brokers a HELOC that lets homeowners tap up to 90%, or $500,000, of their home equity.

Need cash? Get a big sum, and then some, with a HELOC through SoFi.

FAQ

How much can you borrow with a home equity loan?

Most lenders limit the amount to 90% of your home equity, though that is not always the case. The loan amount also depends on your income, debt, and creditworthiness.

Can you have multiple home equity loans at the same time?

Yes, but you’ll want to consider all your options before getting another loan that puts your home at risk.

Are home equity loans tax deductible?

Interest on home equity loans is tax deductible if the money is used to buy, build, or substantially improve the home that secures the loan.

Are there costs to getting a home equity loan?

Closing costs for a home equity loan are typically 2% to 5%, but some lenders don’t charge any closing costs.

How do you pay back a home equity loan?

Repayment begins shortly after the funds are disbursed, and monthly payments are made until the loan term ends.

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Photo credit: iStock/VioletaStoimenova

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.

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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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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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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If you’re seeking home affordability, you may be looking at the cost to build a manufactured home. A new double-wide sold for an average of $159,400 in late 2022, whereas a new single-family home went for an average of $543,600 around the same time.

With such a gap, it’s easy to see the allure of manufactured homes. Yet the price of a manufactured home doesn’t tell the whole story. The land, site prep, any exterior additions, and financing all add to the cost to build a manufactured home.

If you want to take a serious look at what a manufactured home is really going to cost you, here’s what you should know.

What Is a Manufactured Home?

A manufactured home is built entirely in a factory and attached to a permanent chassis. Once construction is complete, it is moved to a lot of the owner’s choosing. The wheels are removed and the chassis is placed on a foundation; pier and beam is most common.

Assembly is completed by attaching the different sections, connecting utilities, adding any exterior elements, touching up the interior, and installing tie-downs.

Manufactured homes were called mobile homes before June 15, 1976, when Department of Housing and Urban Development (HUD) building standards began. The HUD code regulates home design and construction, strength, durability, fire resistance, and energy efficiency.

Standard dimensions make them easier to mass-produce in factories, resulting in quick construction timelines and lower costs.

Are these modular homes? No. Modular homes are also built in factories, but a modular home must meet the same building codes as a site-built home and has a permanent, standard foundation.

The Cost of Manufactured Homes by Size

Manufactured homes typically come in three sizes: single-wide, double-wide, and triple-wide. Each section is designed to fit down a highway, with the maximum width set at 16 feet, except in Texas, which adds 2 feet. A single-wide runs 66 to 80 feet long.

Here’s what you can expect to pay for a new manufactured home as of September 2022, according to the U.S. Census Bureau and HUD’s Manufactured Housing Survey:

•   Single-wide. New single-wide homes usually range from 400 to 1,200 square feet and have an average price of $95,800.

•   Double-wide. Double-wide manufactured homes typically range from 1,000 to 2,000 square feet and average $159,400.

•   Triple-wide. With 2,000 to 3,000 square feet, these homes start at $200,000.

Anything smaller than 400 square feet may be considered a tiny house or a park model. Both are often classified as recreational vehicles, not meant for full-time living.

Additional Costs to Consider When Building a Manufactured Home

How much a manufactured home costs may look deceptively low. There may be costs beyond the sticker price, especially if you want to place the home on raw land and need a land loan.

In addition to the home, you might have to pay for utility connections, exterior additions, taxes, delivery, and setup.

You’ll also want to pay attention to rates and terms of loans you qualify for. Owning the land, or a plan to do so, almost always opens the door to more attractive financing options.

Related: How Do Construction Loans Work?

Land Expenses

With a manufactured home, you have the option of renting or purchasing the lot.

•   Rent the lot: Expect a monthly rate of $100 to $1,000. This doesn’t include additional fees from the homeowners association.

•   Buy the lot: $0 to $1,000,000. Land costs depend on size and location; if you inherit land, you may have no cost at all. You might buy a small lot in a resident-owned park, but if it’s a co-op, you’re buying a share in the community.

If you’re buying unimproved land, you may also pay for site clearing and prep, a driveway, drainage, and porch, garage, deck, or other exterior additions. These can add quite a bit to the cost to build a manufactured home.

Utility Connections

If you’re thinking of buying or building a house on raw land, you’ll need a way to connect to utilities. Common costs:

•   Water or well: $3,750 to $15,300.

•   Electric: $0 to $10,000. Some power companies can hook you up for free, while in other areas the cost can be $10,000 or more.

•   Septic: $4,500 to $9,000. Manufactured homes in rural areas will need a septic system if there’s no sewer connection.

Delivery and Setup

Most manufactured home dealers include the cost of delivery and setup when you purchase a home. Some, though, leave delivery and installation for the customer to arrange and pay for.

At a minimum, setup for a manufactured home may involve:

•   Hooking up utilities

•   Testing connections

•   Touching up interior elements, such as where two sections meet

•   Adding skirting

Exterior Additions

If you want a garage, porch, deck, or other exterior structure, you’ll need to add these costs as well. Prices are national averages, as per online cost guide service provider Fixr.com.

•   Porch: $15,000 to $35,000, but can be as low as $5,000 or as high as $50,000.

•   Garage: $23,000 to $45,000

•   Deck: $9,000 to $20,000

•   Landscaping: $8,000 to $15,000

•   Driveway: $3,460 to $6,910

Taxes

You may need to pay sales tax on a manufactured home purchased from a dealer.

That is in addition to property tax you will need to pay each year if you own the land your manufactured home sits on.

Should You Build a Manufactured Home?

Proponents of manufactured homes tout their affordability, quality, and quick construction. It’s possible to build a manufactured home that is much less expensive than buying new construction of a traditional home.

The Consumer Financial Protection Bureau points out that whether the homeowner owns the underlying land affects many aspects of the financing “and can have major implications for the homeowner in terms of cost and security of tenure.”

If you plan to lease the land but feel comfortable absorbing any lot rent increases, then a new manufactured home could be a suitable choice. Some communities are downright upscale, offering pools, tennis, pickleball, golf, fitness centers, clubs for every interest, security, and camaraderie.

Do manufactured homes depreciate? Homes that are not high quality or affixed to a permanent foundation often lose value. A depreciating value also means homeowners may not be able to refinance.

But some data shows that well-maintained manufactured homes in attractive locations actually appreciate in value.

You might want to compare the expected total costs of different types of houses — including a townhouse, condo, and detached single-family home — with a used or brand-new manufactured home.

Financing Costs

When financing a manufactured home, you’ll likely run into several options offered at the sales center. Just be aware that mobile home financing may be different from lending for other kinds of homes.

For one, manufactured homes typically have a repayment period of 25 years or less instead of the 30-year loan that you can obtain for a traditional home. This translates into higher monthly payments.

A new manufactured home attached to a foundation on land you own will be treated like a traditional home as far as financing is concerned. Lenders take into consideration how the manufactured home is titled and deeded. If it’s considered personal property, you may need a large personal loan.

A chattel mortgage is another option for personal property.

An FHA Title I loan could be another possibility. These loans are used to purchase a manufactured home, the lot the home will reside on, or both. There are loan limits.

See also: Mortgage Calculator

Dream Home Quiz

The Takeaway

How much does it cost to build a manufactured home? Much less than a traditional home, but be sure you’re looking at all the costs involved. A lot of the total expense of owning a manufactured home will depend on whether or not you own the land.

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.    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 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 cut down on costs for a manufactured home?

Buyers can cut costs by choosing a standard floor plan, requesting less customization, or opting for a manufactured home that is already built.

How do you pay for a manufactured home?

Manufactured homes can be paid for with a personal loan, a chattel mortgage, a conventional mortgage, or a government-backed loan, depending on the homebuyer’s situation.

What are the best customizations for a manufactured home?

Popular custom finishes include coffered ceilings, fireplaces, built-ins, kitchen islands, upgraded appliances and fixtures, rain showerheads, freestanding tubs, and upgraded lighting.

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Photo credit: iStock/Marje

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.

SOHL0122009

Read more