Prefab Homes: A Complete Guide on How to Buy a Prefab Home.

This post will show you everything you need to know about buying a prefab home, step-by-step.

Facing a housing shortage and skyrocketing prices? Or maybe you’re simply looking for a more efficient and Eco-friendly way to build your dream home? Look no further than prefab homes! Prefab, short for prefabricated, homes are becoming increasingly popular for good reason.

They offer affordability, faster construction times, and can even be built with sustainable practices in mind.

This guide will walk you through everything you need to know about how to buy a prefab home.

We’ll explore the benefits of prefab construction, delve into the key differences, and then provide a step-by-step guide to navigate the process of buying your very own prefab home. Get ready to unlock a whole new way of achieving home ownership!

What is a Prefabricated House?

Prefabricated houses, often called prefab homes for short, offer a unique approach to home building. Unlike traditional homes built entirely on-site, prefab homes are manufactured off-site in a controlled factory environment. This means the various components of your house, walls, floors, and even roofs, are constructed in advance with precision and efficiency.

Once the prefab home sections are complete, they are transported to your chosen building site. There, skilled workers efficiently assemble the prefabricated pieces to create your new home. This process can be significantly faster than traditional construction, potentially leading to shorter wait times and earlier move-in dates.

Types Of Prefab Housing

Prefab homes come in several designs and with several floor plans. The type you choose determines how the house is constructed and whether it’s transferred as a fully built home or in prefabricated parts.

• Manufactured homes: Manufactured homes are built in sections in a factory on a chassis and then assembled on-site. HUD has strict construction and safety standards for these homes to ensure longevity and security. Typically to get mortgage home financing on manufactured homes, they must be permanently affixed to the land, built on or after June 15, 1976 and have a HUD tag. FHA loans for manufactured homes require a foundation inspection according to the standards set by the Permanent Foundations Guide for Manufactured Housing. If you’ve had a prior inspection, that can be used to qualify.
• Modular homes: Modular homes are also built in pieces off-site and then put together on-site, but they’re not built on a chassis. Most builders allow more freedom with floor plans and home design with modular homes, and they are built on a permanent foundation. The house is delivered in multiple prebuilt pieces and assembled with a crane on site. When completed, it looks no different than a stick-built home.
• Kit homes: Kit homes come in already-built pieces that are put together on-site. They are known as “ready-cut” homes and are simple enough for homeowners to build themselves. The most common example of kit homes are log cabins, but recently tiny houses have become a popular type of kit home.
• Panelized homes: Panelized homes are built in sections and placed on a permanent concrete foundation on site. They usually come in a floor system, interior/exterior walls and roof trusses. The foundation is built first, then the home is shipped to the site and assembled.

The Average Cost Of Prefab Homes

The cost of prefab homes can vary widely depending on the home design, type of foundation and floor plans. On average, home-buyers pay $50,000 – $300,000 for a prefab home. This can be one of the cheapest ways to build a house because of the mass production of materials. This allows home builders to purchase home parts in bulk, paying much lower prices.

Other reasons prefabricated homes are so cheap include the following:

• Less construction work and labor required
• No weather delays because the new home is built indoors
• Bulk building parts of the home reduces the cost of parts and labor

Prefabricated Home Financing Options

Like any home, you likely need financing when buying prefabricated homes. However, unlike stick homes, your options may be more limited. Here are a few financing options.

• Manufactured home loan: Some lenders offer traditional financing for prefabricated homes, but not all. If you have excellent credit, money to put down and a low debt-to-income ratio, you might qualify for conventional or government financing, such as FHA or VA loans. It depends on the home’s classification and if it’s permanently affixed to the ground. Availability of manufactured home loans via traditional methods varies by lender.
• Construction loan: A construction loan has two parts. The first is the financing to build the prefab home. It covers the cost of materials and labor. Construction loans only require interest payments during construction, but you’ll need at least a 620 credit score and 20% down on the home to qualify. After the construction phase, the loan may convert to a permanent mortgage with principal and interest payments due like a standard mortgage, or else you’ll need to refinance into a permanent mortgage.
• Chattel mortgage: If you can’t find traditional financing for your prefab home, a chattel mortgage may be an option. This financing is used on other items, such as boats and cars, and is most common for homes considered mobile homes. They have shorter terms, but you don’t have to own the land the home sits on, making them a popular option for some.

Pros & Cons of PreFab Homes

Here are some pros and cons of prefab homes. This will help you decide if a prefab home project is the best option for you and your clients. Let’s start with the pros.

Prefab Home Pros

• Cheaper: Prefab homes are typically cheaper than homes a general contractor would build piece by piece on-site. It’s more efficient to build pieces of a home in a factory setting. There is usually less waste and workers aren’t at the mercy of the weather. Plus, if you’ve got the skills to assemble a kit home yourself, you can save loads of money on labor.
• Faster: Similar to the last pro, since most of the home is built in a factory, prefab home manufacturers can usually build an entire home kit in just a few weeks. Then, depending on how much was pre-built at the factory, assembly on-site can take as little as a few days.
• Customizable: Modern prefab home builders know that clients want to be able to customize their homes instead of just getting a cookie-cutter home. That’s why more home manufacturers are offering plenty of customization options. Most even offer clients the ability to customize parts of the floor plan as well as the finishes.
• Durable: In the past, modular and mobile homes have gotten a bad rap for being of low quality and less than durable. However, times have changed and it’s best not to judge all modern prefab homes in the same way. In fact, most prefab homes are just as durable as regular stick-built homes.

Prefab Home Cons

• Damage Risks: Since prefabbed parts of the home need to be transported from factory to site, there’s always the risk that something gets damaged in transit. Some can also worry that the structural integrity of large sections could be compromised on long trips.
• Delivery Limits: A lot of prefab builders have delivery limits. So if you’re looking at a specific manufacturer, be sure to check to see if the property is within their delivery limits. If it’s not, you’ll have to go with another manufacturer.
• Limited Options: If you live in a rural area, it could be difficult to find prefab home companies that deliver to your property. This could limit your options when it comes to quality and customization.
• Differing Standards Among Manufacturers: There are few standards as far as what it means to build a kit or modular home. Each manufacturer offers different options with their homes so be sure to research thoroughly to understand exactly what you’re getting. Some offer move-in-ready homes while others just offer prefabbed wall panels that don’t even include drywall.
• Can Sometimes Be More Expensive: In certain areas, once you factor in delivery costs and labor as well as land and utility connections, a prefab house may cost the same or even more than a normal home.
• You Still Need a Foundation and Utility Connections: When calculating the overall price of a new prefab home, don’t forget to get quotes for site prep including excavating, foundations and utility hookups.

So those are some of the advantages and challenges of buying prefab homes. Let’s expand on those a little more in the next section.

5 Things to Know Before Buying PreFab Homes

Let’s dive a little deeper into several factors you should keep in mind when looking at prefab homes for you or your clients.

1. Time Frame

So how long does it take to go from purchase to moving in? There are a lot of factors to consider.

If you…

• Already have a property
• That property doesn’t require a lot of excavation and site work
• You’re opting for a simple foundation without a basement
• And are purchasing a manufactured or modular home with limited customization

…then you can expect it to take anywhere from a few weeks to several months.

If you’re content with a standard floor plan package, some manufacturers may even have mobile or modular homes built and waiting to be transported to a property.

But in most cases, you’ll have to wait 3-4 months for it to be built. If you plan well, while the home is being built at the factory, you can be doing the site works at the property.

Then, it will take anywhere from several days to a month or two to assemble the home on the property.

2. Expect to Pay More than Just the Base Price

It’s easy to get enamored with the low prices some prefab home companies offer. It’s common to see simple 1 and 2-bedroom prefab homes as low as $60-70,000. So make sure you read the fine print and know exactly what you’re getting.

First, understand exactly what the prefab home manufacturer is offering.

• Is the price for a move-in-ready home?
• Does it include finishes like flooring and paint?
• What about lighting and bathroom fixtures?
• How much does it cost to upgrade to better-quality finishes?

Next, get some quotes for foundations and utility hookups. Even a simple concrete foundation without a basement will likely cost $10-15,000 or more.

And if your home isn’t connected to the city sewer lines, don’t forget to calculate the price of your home’s septic system. That could easily cost $5-10,000 or more depending on which type is required in your area.

3. Prefab Homes Come in all Shapes and Sizes

Try not to have any preconceived ideas about prefab homes. As you start looking at different options, you’ll see that the possibilities are endless and you’ll likely be able to find an option that suits you or your clients.

• If speed is your preference, then go with a manufactured or modular home. They’ll be faster to build and faster to assemble on-site.
• If sustainability is at the top of your priority list, then go with something like a prefabricated shipping container home.
• If you or your clients are looking for a budget-friendly, energy-efficient home, then go with a prefab tiny home.
• And if you’ve got the skills and means to build a home yourself, a kit home gives you the exact pieces you need. You just provide the labor.

*Are you looking for a way to showcase your prefab home designs? Cedreo home design software lets you create an entire set of 2D and 3D plans in as little as two hours. Create realistic 3D visualizations that impress clients and help you sell more homes!

4. Customize Your Prefab Homes

If you or your clients want to customize a prefab home, don’t wait until after it’s built to start remodeling it. Check with the manufacturer to see what customization options are available during the building process.

More and more people want to express their personalities through their homes and prefab home manufacturers are stepping up to the challenge by offering more customization options than ever.

While the customizations do add an extra expense to the initial cost of the home, it’s cheaper than remodeling it later to fit your needs.

5. Modular Homes Can Have a Bad Rap

Although modern modular homes can be just as well-built and durable as regular homes, keep in mind that some people still think of “modular” homes as “mobile” homes.

So if you plan on selling your modular home in the future, be prepared to explain to some buyers how your house was built and why it’s just as good as a regular home.

Prefab Home FAQs

Prefab homes are popular and affordable for home buyers. Here are some common questions people ask regarding them.

Conclusion

With their budget-friendly price and customization options, modern prefab homes are only going to grow in popularity. Consider researching reputable prefab builders in your area to explore the possibilities and see if a prefab home is the right fit for you.