Why aren't prefab houses more popular? See our answers to frequently asked questions about prefab houses

Modern prefabricated houses built today are very different from the prefab kit homes that started to show up in the 80s. Back then a prefab home often came in 2 halves on two trucks that were then stitched together on site. At least that’s all there is in my memory of them.

I remember the first time I saw one was in the early 80s when my aunt and uncle bought one in a small prefab housing development, and my young mind was suitably blown watching a house arrive on a truck. With my awe aside, even then I did remark that the design of all the houses in that development were not a whole lot more interesting than the portable classroom in my school yard.

But prefab houses are in the news a lore more lately for a number of reasons. The main reason is that compared to standard tract homes built on site, prefab homes can be built much quicker, more affordably and to higher standards.

With houses built in the controlled environment of a manufacturing facility, costs come down and speed of completion goes up. That is due to the assembly line nature of production we learned from Ransom Olds and Henry Ford.

Building homes in a factory is safer for workers, everything stays dry, material re-use is easy and organized, and with quality assurance the result is a product that is in general, superior to what can be accomplished on a building site.

The housing industry has been moving naturally towards prefabrication due to the logic of it and the higher profit margins it can bring due to fast build times of off-site construction and the modular building process. Pair that with the recent Build Canada Homes initiative (BCH) from the new Canadian government, and the prefab housing market is poised to grow quickly and exponentially. Recent events like the devastating fires in the US are also producing opportunities for fire-resistant ADUs and Homes in California .

Ramping up the training of workers and prefab home production facilities is one hurdle, and the next big hurdle is dispelling old myths about prefab homes. Granted there will still be some ‘junk’ houses in the market, so finding a reputable prefab home builder for a high performance home is essential.

By choosing a verified quality builder your expand your options to find more energy efficient prefabs with more eco-friendly construction, that meet high home building standards like LEED, Passive House or Net Zero. They are building code-compliant and offer an easy way to provide affordable housing solutions.

But you likely still need some convincing, so we have compiled a list of the most frequently asked questions about modular prefab homes to help you shed the image of cheap shacks arriving on truck that would not meet the standards of even the laziest of the three little pigs. Here we go from the basics:

1. What is a prefab or modular home?

A prefab (prefabricated) or modular kit home is constructed in whole or in sections, in a factory setting and transported to the building site for assembly. Prefab houses can easily meet or exceed building codes requirements - depending which one you choose. There is nothing in the concept of prefabricating houses that creates a particular 'look'; prefab houses can look like any other home.

2. How much does a prefab home cost?

The price for prefab houses in Canada and the USA will vary by size, by quality of design and their energy efficiency, and the level of completion you want. Turnkey ready to move in prefabs will cost more than those with partial completion, but generally price ranges are as outlined below. This does not include the soft costs like buying the land, bringing in services like water and power, nor does it excavation or even building a foundation to seat it on.

United States

Low-end/basic prefab or modular

• $100 – $150/sq ft
  Often simple single-section homes, economy finishes, minimal site work.

Mid-range prefab/modular

• $150 – $250/sq ft
  Better finishes, more architectural flexibility, common in suburban or urban infill.

High-end/custom prefab/modular

• $250 – $400+/sq ft
  Includes architect-designed homes, high-performance envelopes (e.g. Passive House), premium materials.

Canada

Low-end/basic prefab or modular

• $120 – $180/sq ft USD
  (approx. $160 – $240 CAD)
  Often shipped from Quebec or Ontario to nearby provinces.

Mid-range prefab/modular

• $180 – $280/sq ft USD
  (approx. $240 – $375 CAD)
  Includes insulation suitable for colder climates, customizable interiors.

High-end/custom prefab/modular

• $280 – $450+/sq ft USD
  (approx. $375 – $600+ CAD)
  Net-zero, Passive House, remote deliveries (e.g., BC islands, Yukon).

3. Are prefab homes customizable?

Yes, often, but not always, the option to modify floor plans depends on the prefab manufacturer you choose. Some prefab home suppliers build into their business plan either a selection of floor plans to choose from and you need to stick to it, but some will take plans you’ve designed and prefabricated wall sections and let you do a lot of the finishing on site.

4. How long does it take to build and install a prefab home?

The build time for prefab homes once you have ordered it and it enters the manufacturing process should be much quicker than site-built homes. Exactly how long that is depends on demand and were you fall in the queue. Reputable prefab companies building high performance homes may have a longer wait time, but the actual build time itself is certainly quicker. To generalize, the entire process from selecting a home model to a finished home being delivered to site can be as little as weeks, but more likely a couple of months.

5. Are prefab homes energy-efficient and suitable for Canadian and US climates?

Yes, prefab homes can be perfectly suited to the Canadian and US climate. Again this is about selecting the right home builder and choosing a high performance home model that meets the demands of your climate. A prefab home for Northern Ontario, for example, would need to be a whole lot better insulated that a prefab built for southern Ontario. Then consider the differences between Ontario and Florida - although the energy expenses are for cooling and dehumidifying more than heating, many of the principles are the same.

We always promote building to higher standards than the building code anyway, Code is not a goal to strive for, it just provides a bottom rung of home performance that nobody should dip below. So at risk of preaching – look for a prefab home builder that meets higher standards and you will get a better product. Basic building code in any area isn't a standard to strive for - it is literally the minimum standard a home can be built to be legally sold to anyone.

6. Do prefab homes require building permits in Canada and US?

All homes built in Canada, whether site built or delivered complete, must be permitted, and to do that they need to meet the standards of the national building code, and perhaps higher standards or regional building codes. Manufacturing facilities in Canada must comply with the CSA A277 (modular) or CSA Z240 (mobile home) standard for factory-built structures.

In the US Modular homes (treated like site-built) must meet state or local codes (often based on the International Residential Code, IRC) and manufactured/mobile homes must meet federal HUD code standards and will still require installation permits locally. Some states (e.g., California, New York) have their own modular housing regulatory agencies that inspect and certify factory-built homes before they're shipped.

7. Can I finance a prefab home with a mortgage?

Yes, there are financing options for prefab homes, either by the manufacturers themselves in some cases, or through normal banking institutions. That particular financing route may start with construction loan that transitions into a mortgage once the home is complete.  

Specifically, you can finance a prefab or modular home with a mortgage in both Canada and the USA, but there are important differences depending on the type of prefab home, whether it's on a permanent foundation, and whether land is included.

Canada

Modular homes on permanent foundations

• Yes, banks and credit unions offer mortgages similar to site-built homes.

• The home must be CSA A277 certified and installed on a permanent foundation.

• The land must be owned (or a long-term lease may be accepted by the lender).

Mobile homes or homes on leased land

• Often not eligible for traditional mortgages.

• Financing may require personal loans, chattel loans, or specialized lenders with higher interest rates.

• Some mobile home parks may partner with specific lenders.

Tip: CMHC (Canada Mortgage and Housing Corporation) can insure modular home mortgages, helping with down payments as low as 5%.

United States

Modular homes on owned land

• Treated like site-built homes and eligible for conventional mortgages, FHA, VA, and USDA loans.

• Must comply with local building codes (IRC), not HUD codes (HUD applies to manufactured homes).

Manufactured homes (HUD-certified)

• May qualify for chattel loans (like vehicle loans) or FHA Title I loans.

• To qualify for a traditional mortgage, the home must:

  • Be permanently affixed to land that the borrower owns,

  • Meet local building and zoning codes,

  • Be taxed as real estate.

8. Do prefab homes appreciate in value like traditional homes?

Prefab homes are the same or higher in quality than stardard homes, and they look like any other house, so it's pretty much business as usual in the housing market. There is no reason why a quality prefab house would not appreciate the same as a comparable home does. Remember that it met the standards of building code, and if the design is modern and well thought out and the performance is high, it's just like any other home. 

9. Can prefab homes be built in remote or rural areas?

Yes, prefab homes, or at least modular kit homes can be delivered and assembled pretty much anywhere you can build a house on site, with the exception of a location with absurdly difficult access or a long winding lane surrounded by trees (see how we struggled below around the 4min mark!) . Trucks need to deliver building materials, so If they can drop off a massive load of lumber then presumably they an also unload a prefab wall section. If you chose a lot where you need to carry 2x4s one at a time up the face of a mountain or something crazy then yeah, you may be out of luck for a prefab.

10. What is included in the base price of a prefab home?

That you would need to discuss with a prefab manufacturer, because you can find a builder to offer a turnkey ready to move in price, or one to just prefabricate wall sections. Here in our prefab home manufacturers listing you can explore company profiles and request to be matched and get information from ones that offer the kind of completion you’re looking for. In general, for a finished prefab house the base price would typically includes the completed structure, interior finishes and delivery to the site.

11. What types of foundations are suitable for prefab homes?

You can seat a prefab home on any foundation you can build a site-built home. Some prefab models may be better suited to certain types of foundation, so again this is something to discuss with each manufacturer. Aside from the standard basement foundation most people are used to seeing are a few options, such as:

Prefabricated insulated slab on grade kits for prefab houses. An aside myth to quickly dispel about slab foundations – they work fine, and even better it can be argued, in cold climates like Canada or Northern USA. You do NOT need to throw dirt against your house to keep it standing, that is a myth! Read more here about choosing between a basement and a frost protected shallow foundation.

Prefab houses on helical piers: this is an affordable option, and can be a smart move with smaller prefabs. One homeowner that bought fully completed prefab home delivered on a truck dropped it on helical piers and even left the original shipping straps in the walls but tucked away in case he ever wants to pick it up and move it.

Prefab houses on crawl spaces: yes, you can put a prefab on a crawl space, but are you sure you want to? There is not much appealing about a crawlspace for any type of home as far as we are concern, but if you want to you can. First read here about how to insulate a crawl space properly and avoid mold, so that if you go ahead with building one you will at least know how to avoid the heat loss and mold issues that plague crawl spaces. 

12. Can prefab homes be relocated after installation?

Some prefab homes can be picked up and moved after the initial installation, such as the one we mentioned above. But there are a very limited number of home designs that relocation make sense with, so that’s another topic to cover when you’re selecting a manufacturer.

13. What maintenance is required for prefab homes?

All homes need basic maintenance, and prefab homes are no different. Eavestroughs need cleaning, roofs need to be recovered, wood needs painting, and hVAC systems need regular cleaning. Prefab houses will not let you get away with skipping out on home maintenance, but it also won’t mean any more than normal. If you’re new to being a homeowner and need more details on what sort of home maintenance you have a head of you, Learn about basic home maintenance and keeping your home efficient here.

15. What permits are required to build a prefab home in Canada or the US?

Building a prefab home in Canada typically requires several permits, most of which apply to site-built houses such as:

1. A standard building permit authorizing construction.
2. An Occupancy permit.
3. Utility connection permits for electrical hookup as well as water, sewer and gas lines.
4. Transportation Permits for some prefabs if they exceed the allowable size for highway transportation

Those are the typical permit requirements you may face but they can vary by municipality, so be sure consult local authorities very early in the planning process.
 

Permits required to build a Prefab Home in the U.S.

The permits required depend on whether you are building a modular home or a manufactured (mobile) home. Both types require permits similar to traditional site-built homes, but there are key differences:

Modular homes (built to state/local building codes)

These are treated like traditional homes once installed on a foundation.

Typical required permits:

1. Building permit – From the local building department, covering compliance with building and zoning regulations.

2. Foundation permit – May be part of the building permit or separate depending on the jurisdiction.

3. Plumbing, electrical, and mechanical permits – Even if partially pre-installed, local inspections and approvals are still usually required.

4. Site plan approval – Needed to show the layout, access, drainage, and placement of the home on the lot.

5. Septic or sewer connection permit – Required if not connecting to a municipal sewer.

6. Driveway or road access permit – If new access to a public road is created.

7. Certificate of occupancy – Issued after final inspection to confirm the home is safe and legal to occupy.

Manufactured homes (built to HUD code)

These are federally regulated and treated differently depending on how and where they’re installed.

Typical required permits:

1. Installation permit – For proper setup on a temporary or permanent foundation.

2. Anchoring/tie-down permit – Especially important in areas prone to wind or seismic activity.

3. Utility connection permits – For water, gas, electricity, and sewer hookups.

4. Transport permit – If the home is being delivered across state lines, check state Department of Transportation requirements.

5. Zoning compliance – Some jurisdictions restrict where manufactured homes can be placed or require special conditional use permits.

Local pequirements

Permit needs can vary widely from one municipality to another. Always:

• Contact the local building or planning department.

• Ensure your prefab builder provides stamped plans certified by a licensed engineer or architect.

• Confirm your land’s zoning status and whether manufactured or modular homes are allowed.

16. Do prefab homes come with warranties?

The warranty terms and coverage that come with a prefab home will also vary by builder. This is a good chance to weed out quality builders as you learn how much they stand behind their work. At the very least you should look for warranties covering basic materials and workmanship.