Modular Home Financing in Tennessee

Modular vs. manufactured: a critical distinction

Both modular and manufactured homes are built in factories, but they are regulated differently and financed differently:

Manufactured homes are built to the federal HUD Code (the Manufactured Home Construction and Safety Standards). They are transported to the site on a permanent chassis and may be placed on a permanent foundation or remain on the chassis. They are titled as personal property until converted to real property.

Modular homes are built in sections in a factory and transported to the site, where they are assembled on a permanent foundation. They must comply with the same state and local building codes as site-built homes — not the HUD Code. They are titled as real property from the start.

This distinction matters enormously for financing. Modular homes are treated as site-built homes by lenders and appraisers.

Financing options for modular homes

Because modular homes meet state and local building codes and are titled as real property, they qualify for the same financing as site-built homes:

• Conventional: Standard guidelines apply; no special modular home requirements
• FHA: Available; the home must meet FHA's minimum property standards
• VA: Available for eligible veterans
• USDA: Available in eligible rural areas

Appraisal for modular homes

Modular homes are appraised using the same methodology as site-built homes — comparable sales of similar properties in the area. The appraiser will note the modular construction in the appraisal report, but this does not automatically result in a lower value. In markets with limited modular home comparables, the appraiser may use site-built homes as comparables with appropriate adjustments.

The key is that the appraiser must be able to support the value with market data. In rural areas where modular homes are common, this is generally straightforward.