Guide
Financing, Loan Options and Resale Value of Modular Homes
Modular homes deliver factory-built efficiency with site-built quality. This guide explains property classification for financing, compares major loan programs and down-payment ranges, and addresses resale value and appreciation.
For a deeper budgeting and draw‑schedule breakdown, see the modular home financing and affordability guide.
Property classification: modular vs manufactured homes
When modules are set on a permanent foundation and meet local codes, modular homes are treated as real property, like site-built houses. Manufactured homes on leased land or titled like vehicles can be treated as personal property. Classification affects financing, title, appraisals, insurance, and taxes.
How classification changes your experience
| Area | Real property (typical modular) | Personal property (typical manufactured) |
|---|---|---|
| Financing | Conventional, FHA, VA, USDA mortgages | Chattel loans; higher rates/shorter terms |
| Title & ownership | Transfers with a deed | Transfers with a title |
| Appraisals & value | MLS comps; real estate market driven | Fewer comps; closer to vehicle-like depreciation |
| Insurance & taxes | Homeowner’s insurance; assessed as real estate | May be taxed/insured like a vehicle |
Source highlights: triadfs.com, thetexaslandagent.com.
Why the confusion?
Both modular and manufactured homes are factory-built. Manufactured homes follow the HUD Code, are transported on a frame, and may remain mobile—often financed as personal property. Modular homes are permanently assembled on site to meet state/local building codes (e.g., IRC) and, once installed, are considered real estate and qualify for standard mortgages.
Loan programs for modular home buyers
Financing often includes a construction phase and a permanent mortgage. Options include construction-to-permanent, conventional, FHA, VA, USDA, and in some cases personal loans.
Construction-to-permanent (one-time-close) loans fund land and build, then convert to a long-term mortgage. If you already own land or have separate financing, a construction-only loan can cover the build.
Conventional mortgages
Suitable for modular homes permanently affixed to land and up to code. Strong-credit buyers with savings for down payments often secure competitive construction and permanent rates; underwriting mirrors site-built loans.
Construction-to-permanent loans
One closing, rate lock early, then roll to fixed, adjustable, FHA, VA, or jumbo once complete.
FHA loans
Flexible eligibility and competitive fixed rates. Minimum 500 credit score; 580+ may qualify for 3.5% down. Mortgage insurance applies under 20% down.
VA loans
For eligible service members/veterans. Often 0% down and lower rates. Some use a short-term construction loan, then refinance into a VA mortgage at completion.
USDA loans
For qualifying rural properties. 0% down options and flexible credit standards for eligible areas.
Personal loans
Fixed-rate and faster, but typically higher interest and shorter terms than mortgages. Consider only if traditional options are unavailable and the payment is comfortable.
At-a-glance: common loan traits
| Program | Typical down | Rate tendency | Notes |
|---|---|---|---|
| Conventional | 5%–20%+ | Market-based | No MI at ≥20% down; strong credit rewarded |
| Const-to-perm | 10%–20%+ | Market-based | Single close; funds land + build |
| FHA | 3.5% (≥580) / 10% (500–579) | Generally lower | MI applies under 20% down |
| VA | 0% possible | Lower | Funding fee may apply |
| USDA | 0% possible | Lower | Area and income limits |
| Personal | Varies | Higher | Shorter terms; faster approvals |
Down payments and interest rates
Requirements vary by program and credit. Construction-to-permanent loans commonly require 10–20% down. FHA allows 3.5% down at 580+ credit; 500–579 typically requires 10% down. VA/USDA may allow 0% down. Larger down payments lower rates and can eliminate mortgage insurance.
Lenders price based on credit score, debt-to-income, payment history, and down payment size. Rates change with the broader economy and have risen recently compared with prior years.
Resale value and appreciation
Modular homes appreciate similarly to site-built homes because they are permanently attached to land and built to meet or exceed local codes. Appreciation depends on location, condition, and market trends—just like any real estate. Manufactured homes classified as personal property often depreciate.
Navigating the financing process: tips for buyers
- Confirm classification: Real-property status expands mortgage options and tax benefits.
- Choose experienced partners: Builders and lenders familiar with modular financing add flexibility.
- Prepare documents: Income, employment, bank statements, tax returns.
- Budget for deposits and contingencies: Builders may require deposits; lenders may hold reserves.
- Plan inspections/appraisals early: FHA, VA, USDA include stricter reviews—avoid delays.
- Include land costs: Site prep, utilities, permits, and infrastructure can be significant.
- Stay involved during construction: Monitor draws, change orders, logistics, and inspections.