What are the financing options available for purchasing a modular home?

Here are the most common financing options for purchasing a prefab modular home or ADU, along with when each applies. Working with an experienced builder like California Modular Houses can help you navigate these loan programs and choose the best financing path for your project.

Common modular home financing options:

• • Conventional mortgages (Fannie Mae / Freddie Mac):
  Prefab modular homes that are permanently installed on owned land typically qualify for standard conventional home loans once completed. These often provide the best interest rates and long-term terms when the modular home meets lending and property requirements.

• • FHA loans (including HUD Title I):
  FHA-insured loans can be used for modular homes and ADUs in many cases, especially for buyers seeking lower down payments or more flexible credit requirements.

• • VA loans:
  Eligible veterans and active-duty service members may use VA home loans to finance prefab modular homes. These loans can offer low- or no-down-payment options when the property meets VA guidelines.

• • USDA Rural Development loans:
  In eligible rural and suburban areas, USDA loans can help finance modular homes with low or zero down payment for qualified buyers. This can be a strong option depending on your property location.

• • Construction-to-permanent (one-time close) loans:
  Many prefab modular home buyers use construction-to-permanent loans, which combine construction financing and a traditional mortgage into one streamlined loan. This is especially useful for new modular home builds on owned land. This is the most common method of financing.

  Note: These loan programs are a popular entry point for first-time modular home buyers though it’s hard to get a loan to purchase the land, deal with plans and permits, and get everything completed within the maximum 1 year time limit so we don’t recommend this approach. If you are in a financial position to do so, we recommend getting a “lot loan” to purchase the property and work through your plans & permitting to close the actual construction loan at about the same time as you get you permits.

Prefab modular homes and ADUs can be financed using many of the same loan programs as traditional site-built homes, along with specialized construction financing options. By working with an experienced company like California Modular Houses, you can simplify the financing process and confidently choose the best loan for your budget and timeline.