Financing Factory-Built Homes: What Investors and Buyers Need to Know

Factory-built homes are increasingly reshaping how we develop and own housing, but navigating financing for factory-built homes can feel unfamiliar to both buyers and investors. Whether you’re considering a home purchase, a community investment project, or planning a development, understanding financing options and barriers is essential. This guide breaks down what you need to know to move forward confidently.

Factory-built homes, including modular and manufactured homes, are constructed in a controlled environment and then assembled on-site. That efficiency saves time and often reduces costs, but it also affects how lenders view these homes compared to traditional site-built houses. For buyers and investors, financing determines affordability, potential returns, and the growth of equity over time.

Traditional and Emerging Financing Options

Conventional Mortgages

Modular homes are typically treated like site-built houses when they’re placed on land and permanently affixed to a foundation. That means buyers can often qualify for traditional conventional loans, with competitive rates and long terms. These loans work much like standard mortgages and can offer down payments as low as 3–5%, depending on credit and lender terms. Conventional lending helps buyers build equity, just as with a traditional home purchase.

For manufactured homes (built to HUD code), new conventional loan programs offer expanded financing options. These programs allow eligible factory-built homes to qualify for conventional financing, with features similar to those of site-built houses, including down payments as low as 3% and cancellable mortgage insurance once a set equity threshold is reached.

Government-Backed Loans (FHA, VA, USDA)

Government loans can make homeownership more accessible. FHA loans are known for lower credit requirements and down payments as low as 3.5%, making them appealing for first-time buyers or buyers with less robust credit. VA loans offer zero-down financing to qualified veterans and service members, while USDA loans offer attractive options for rural properties with low- or no-down-payment requirements. These programs reduce upfront costs and help more buyers qualify for long-term financing.

Construction Loans

When financing a modular build rather than buying a completed home, construction loans can bridge the gap between land purchase and permanent financing. Known as construction-to-permanent or single-close loans, they cover the building process and convert to a standard mortgage after completion. This type of financing streamlines timelines and often lowers overall borrowing costs, especially with shorter factory build timelines.

Chattel Loans

Some buyers, especially in communities where land isn’t owned outright, use chattel loans, which finance the manufactured home itself (but not the land). While easier to qualify for in some cases, these typically have higher interest rates and shorter terms, which can mean buyers pay more over time.

Challenges and Misconceptions

Despite the expanding options, barriers still exist, especially for manufactured homes that aren’t affixed to land. A Pew research report shows that manufactured home loan denials are still significantly higher than those for site-built homes, in part because many are financed as personal property rather than real estate, which falls outside many traditional loan products.

On the investor side, understanding the regulatory and appraisal differences between modular and manufactured housing is crucial. Appraisals for factory-built homes may require comparables and additional documentation, especially in newer markets. But because modular homes meet local building codes and sit on permanent foundations, lenders treat them much like any other house.

Why This Matters for Buyers and Investors

For individual buyers, accessible financing makes homeownership a reality, especially in markets where traditional site-built homes remain out of reach. Conventional, government, and specialized programs help reduce barriers and offer competitive terms.

For investors, understanding financing dynamics can improve project planning. Shorter construction timelines and predictable builds can reduce interest costs on construction financing and improve cash-flow models. Factory-built approaches also often lead to stronger appraisal performance because these homes can qualify for standard real estate lending.

Financing for factory-built homes has evolved. Today’s buyers and investors have more options than ever, from conventional loans and government programs to innovative mortgage products designed specifically for manufactured housing. These options make attainable homeownership more accessible while opening opportunities for investors to participate in community-focused development projects. 

Understanding the nuances of each financing path helps you make better decisions, whether you’re buying your first home or evaluating a development investment. 

As lending continues to adapt and expand, factory-built homes will play an increasingly important role in creating affordable, investable, long-term housing solutions for families and communities alike.

This content is for informational purposes only and should not be considered financial, legal, or lending advice. Loan programs and terms vary by lender and borrower circumstances and may change. Always consult qualified professionals before making financing or investment decisions.