getting a loan for a prefab home: what to know before you apply

How prefab financing works

Financing a prefab can mirror a stick-built mortgage, but details matter. Lenders distinguish modular homes from HUD-code manufactured units; the former typically qualify for standard conventional or government loans when set on a permanent foundation and titled as real property. Many buyers use a single-close construction-to-permanent loan that funds the build and converts to a fixed mortgage at completion.

What lenders look for

Underwriters check credit, debt-to-income, documented down payment, land ownership or lease, approved plans, and a signed installation contract. Appraisers also need comparable sales for similar factory-built homes and confirmation of utilities, access, and zoning.

• Compare lenders experienced with prefab.
• Verify permanent foundation and real-property title.
• Ask how appraisal covers site work.
• Include utilities, crane, and permits in budget.
• Confirm builder/manufacturer approval and rate-lock terms.

With the right structure, rates and fees can closely match traditional builds. Start early, keep documentation organized, and coordinate timelines with your factory and lender so draw schedules, inspections, and delivery dates align without costly delays.