Home Equity

How Much Does It Cost To Build A Prefab Home

By David Krug David Krug is the CEO & President of Bankovia. He's a lifelong expat who has lived in the Philippines, Mexico, Thailand, and Colombia. When he's not reading about cryptocurrencies, he's researching the latest personal finance software. 16 minute read

Despite the negative connotations associated with the term “prefab,” today’s prefabs (referred to as “building systems” by the National Association of Home Builders) are fantastic options. Buyers get a one-of-a-kind, eco-friendly home at a fraction of the cost of a traditionally built home.

Price per square foot for a prefab home is usually between $100 and $220, and it usually includes all the furnishings and appliances (though this is not always the case).

How Do Prefabricated Homes Work?

Prefabricated homes, also known as modular or manufactured homes, are constructed off-site at a factory and then assembled on-site in a fraction of the time.

Unlike prefabricated or mobile houses, which can be constructed in compliance with the federal building code maintained by the U.S. Department of Housing and Urban Development (HUD), prefab homes must be constructed in conformity with state or local construction laws (HUD).

Due to the fact that they are not usually subject to the same zoning limits that limit the location of prefabricated and mobile homes, they have become a commonly accepted form of new construction. To restate, prefab buildings must follow the same building requirements as traditional stick-built homes in order to be built in the same regions.

You also won’t have to come up with the total cost of the home up front because prefab homes are typically qualified for construction and home financing just like traditionally built homes. Moreover, many prefab home manufacturers are eager to assist you in securing finance (or even offer it themselves) so that you may get started on your new home.

Prefabricated Home Dimensions and Design

A prefab home can be any size the customer wants it to be. Small modular buildings, like those imagined by New Frontier Design, do exist. One such option is Blu Homes’ Breezehouse, which has a maximum of five bedrooms, five bathrooms, and over 3,000 square feet of living space.

The increasing demand for modular homes may be attributable to the fact that they are well-suited to the current preference for smaller residences. While it’s true that it’ll cost money to build a house of any size, those who are worried about their monthly utility costs can decide to go with a smaller, prefab modular home instead.

When building a prefab home, you’re free to choose whatever layout you like. Choosing the right prefab house plan might be the deciding factor.

  • Because modules are often manufactured in squares or rectangles and stacked or positioned onsite according to the building specifications, modular homes have a clean, contemporary, boxy appearance. Some modular buildings, however, can have their conventionally boxy appearance modified by the addition of panelized walls and roofs.
  • Panelized homes offer more personalization than stick-built homes do, letting homeowners make their ideal home a reality in exactly the way they want it. The dwellings may be erected on site according to specific design requirements, as they are modular.
  • There is a common style among prefab homes, especially those made from dome kits or log cabin kits. Which ones you get depend on the aesthetics of the set you choose. In fact, there is a huge variety of aesthetic options to consider.

A growing trend in the manufacturing industry is the hybridization of prefabrication methods, which allows for greater design freedom. For instance, Westchester Modular Homes uses prefabricated rectangular modules for the rooms and framework of the home, but alters the appearance of the house by adding panelized walls and roof trusses.

Features of the Household Package

It is vital that you understand everything that includes your prefab home package before making a final decision to purchase. Modular homes often (but not always) feature a full package of fixtures, appliances, windows, and flooring, whereas precut and panelized buildings typically just comprise the components needed for a wall, roof, or frame.

The walls and roofs in issue may or may not have insulation, electrical wiring, windows, doors, or drywall. If you’re willing to spend more, you may sometimes find homes where the walls are already up, but in most cases, you’ll need an on-site contractor to help you finish out the roof and walls.

As an example of the sort of features you may discover in a house, consider Stillwater Homes. They are helpful to customers since they provide both modular and panelized prefab options.

  1. Modular Residence

Potential returns for funding a Stillwater modular building include:

  • Architectural elements, plans, and design of the building
  • Structural engineering is used to ensure your home’s structural stability.
  • A state or municipal building permit is required.
  • Structure of the floor (not including foundation)
  • Roofing
  • Fixtures for lighting
  • Plumbing fittings
  • Windows
  • Siding
  • Trim and cabinets
  • Flooring\sCountertops
  • Appliances
  • Smart home automation system that allows you to remotely manage your power, lighting, and security systems.
  • Home construction on a prepared foundation

Some personalization and enhancement options are available, although they are limited. In order to achieve the desired aesthetic, you select one of three possible finish packages, which include appliances and fixtures, and the firm takes care of the rest.

Some other modular house builders, such as Blu Homes, do offer a greater variety of finishing packages, allowing you more influence over the final look of your home, but these choices are still limited in contrast to what you can buy on your own.

You won’t be able to choose at random from the Wolf appliances the firm offers if they are only sold in sets. Appliances can be purchased as part of a bundle or selected individually from the options presented by the service.

  1. Prefabricated Panels

Panelized prefab homes, such as those built by Stillwater and other companies, often come with fewer amenities than stick-built houses. If you want to customize the style of your house by choosing the cabinets, countertops, and appliances yourself, panelized construction is the way to go.

When time is of the essence and just a limited number of plans are acceptable, however, modular building is the way to go. With each panelized house they create, Stillwater Dwellings includes:

  • All key framing elements (walls and roof)
  • The plans and design of architecture
  • Structural engineering entails ensuring that the panels and their placement on your foundation are structurally sound.

What is Usually Not Included

When shopping for a modular house, the term “all included” should raise red flags. You should be aware that the base price of a prefab home does not include many of the expenditures connected with building a home. You need to be financially prepared for the following possibilities:

  • Soil testing on the property where the home will be erected
  • Site inspection
  • If necessary, utility hookups (water, waste water, or septic), electricity, and cable
  • The planned foundation upon which the house will be erected — pier and beam framework or concrete slab
  • Landscaping
  • Sidewalks and driveways
  • Although some manufacturers may include a garage or carport,
  • A local builder or contractor to complete the interior of a panelized or precut house.

These prices vary widely due of variables including geographic location, property size, and even municipal restrictions and personal preferences. For instance, substantial landscaping might not be needed or wanted in the case of a rural building project.

If you’re building in the middle of the city or in a neighborhood with strict HOA bylaws, landscaping may be required.

Costs associated with acquiring the necessary authorizations, laying the necessary groundwork, and connecting to the necessary utilities may potentially reach six figures. Land that isn’t linked to public water and sewage services will be more expensive since a septic system and well will need to be installed.

Before settling on a home or a manufacturer, it’s crucial to ask plenty of questions to clarify what’s included and what you’ll be responsible for. Gathering specifics about each manufacturer’s goods and services is important to ensure fair comparisons.

When it comes to site preparation, for example, some builders provide a more all-inclusive service that includes everything from soil testing to foundation excavation. Turnkey solutions may have a larger initial price tag, but the difference in final expenditures may be negligible.

Options and Upgrades

It’s important to remember that a preselected modular home design may come with a base set of finishes, but that you may have the option to upgrade to fancier ones for a fee. Even while pieceHomes only offers a single finish package, you may upgrade certain elements, like the flooring, to more pricey materials like bamboo.

There are other manufacturers of modular houses that provide buyers more leeway in terms of design and functionality. Check out the configurator on Blu Homes to see what kind of personalization options you have.

Choose a floor plan and make adjustments to the paint, flooring, cabinetry, and appliance packages, among other things, to make a house that suits your budget and aesthetic choices in terms of size, layout, and external materials.

Despite having a wider selection than pieceHomes, Blu Homes still can’t compare to the customization you’d get from working with a designer or shopping online. Don’t forget that many of the optional features and luxuries may incur additional costs. If you’re strapped for cash, pick your improvements carefully.


As an alternative to conventionally built homes, prefabs are gaining popularity due in large part to their cheaper construction costs.

Modular Homeowners believe that the average cost of a finished home is $110 per square foot, without considering the cost of land (including taxes or fees), the installation of utilities, or any other outside touches (driveways, landscaping, and porches).

However, many manufacturers of prefabricated houses price closer to $220 per square foot due to the cost of upscale fixtures and fittings.

So, you may expect to pay between $27,500 and $55,000 on a 250 square foot home and between $275,000 and $550,000 on a 2,500 square foot home (not including land, site costs, or taxes). The overall cost of a prefab home is less than that of a site-built home due to one or more of the following:

  • Reduce waste. When many teams of contractors move supplies to a location and construct a house on-site, enormous quantities of surplus materials are created. Panelized or modular home building is more efficient and generates less trash than site-built homes.
  • Time and work saved. During a normal construction project, subcontractors such as plumbers, electricians, painters, and farmers arrive on the job site individually to do their specialized duties. Occasionally, the actions of other contractors hinder or slow down this activity. In a production environment, modules and panels benefit from reduced time and labor management.

Buying a modular prefab house also has the benefit of being a one-stop-shop. Even if not all the finishes are cheap, modular house builders may save money by acquiring them in bulk and passing the savings on to the buyer. You won’t have to go through the trouble and extra labor of choosing each and every one of your appliances and fixtures individually.

Modular Homeowners estimates that you may save 10% to 20% by opting for modular construction over conventional site-built construction for your new house. It is estimated that a panelized home will save less money than a stick-built one because of the longer construction period and the ongoing requirement to pay a contractor to finish the home once it is erected on-site.

Building a Prefab House

Understanding the jargon used to describe a prefab house is one thing, but putting one together is another. The good news is that it’s just like building any other house—only faster.

Getting the Right Land Before You Start

Perhaps though prefab construction is widely recognized as a superior technique of home-building, the incorrect land acquisition might add thousands to your ultimate cost or even derail your plans completely. Consider the following factors before making a purchase in a residential area:

  1. Local or municipal building codes

Research local and regional building rules to ensure that you can build a prefab house, and more specifically the sort of prefab house you wish to create.

For example, some neighborhoods have regulations in place that specify the minimum square footage of dwellings and the maximum age of buildings that can be developed there. You probably shouldn’t put your geodesic dome in a neighborhood full of ranch houses.

  1. Simple Access

Modules, panels, and kits will arrive on a huge truck, so please plan accordingly. A crane is used to lift the modules onto the foundation.

If your home’s plot is only accessible by narrow, twisting roads or if your building site is hidden behind a forest, you may be in for a rude awakening when it comes to the cost of site preparation.

My husband and I had to spend an extra $3,000 to have the cedar trees removed from our building site so that construction equipment could access the site. Three thousand dollars that I might have put to greater use elsewhere. If you’re lucky enough to find a prime plot of property near a major thoroughfare, you may save a ton of money over time.

  1. Soil Experiment

Before purchasing the land, you might ask the current owner if you can do some preliminary digging and/or a soil survey. The quality of the soil under your home’s foundation can have a significant impact on the final cost of laying a sturdy foundation.

Building a house on clay soil or on top of a massive rock, for example, will significantly increase the cost of the foundation. Substrates composed of fine clay expands when wet and contracts when dry.

Cracked drywall, moved windows and doors, and loosened utility connections are all possible results of drywall that has settled unevenly. In order to prevent the home from sinking if the ground moves, builders must take extra measures while constructing on clay, such as compacting the soil before building the foundation.

However, if your site consists of an excessive amount of rock, drilling through it to build a level foundation might be rather expensive. The three days it took a drilling firm to dig through the rock where our septic system was built contributed to the $13,000 price tag of installing our septic system.

There is no such thing as the “best” soil for building, but it is crucial to know what the soil is like on any specific piece of ground.

  1. Utilities

Get in touch with the city hall or county planning department in your area to find out where the utility hookups are for things like water, gas, and electricity in relation to the site you have in mind.

Costs to join these networks might be expected. If you don’t fall under a city’s zoning regulations, your only other option is to install a pricey well or septic system. It’s important to have a thorough understanding of what needs to be done and how much money will be required to make your house fully functioning.

How to Finance and Choose a House

Choosing a home and having your mortgage application accepted are two sides of the same coin. It’s tricky because you need to know your budget before you can choose a house builder or a piece of land, but you can’t close on your financing until you sign a contract with a builder.

Thankfully, financing a prefab home is not wildly different from financing a conventional home. There is still the possibility of obtaining a conventional mortgage loan. Include not just the purchase price of the land and the house, but also the costs of site preparation and construction when talking to banks about possible mortgages.

Keep in mind that the initial investment for a custom-built house will be more than that of a similar prefabricated house. A minimum 20% down payment is often required when constructing a home. Obey my instructions if you wish to secure a loan.

  1. Obtain Pre-approval

Banks will pre qualify you for a construction-to-permanent mortgage loan based on your income and credit history. Finding the best loan will be easier if you get at least three different quotes.

It only takes a few minutes using Credible*. The interest rates on these loans are often somewhat higher than the average rate on a 30-year mortgage.

  1. Identify Your Property

If you haven’t already, now is the moment to settle on a building location. The purchase of land may be a prerequisite to securing construction funding. Talk to your bank about your options in this predicament. There may be a need for loans not only for the purchase of the property, but also for the construction of the dwelling.

Financing options exist, but they often have higher interest rates and require a greater down payment to be made on a piece of property. You may be able to roll the cost of buying the property into your construction finance if you haven’t already done so and the landowner has signed an intent to sell paperwork stating the price of the land.

  1. Choose a producer.

When you’ve settled on a plot of land, it’s time to pick a manufacturer. Look for producers that have created a body of work that speaks to you, who have experience, and whose ideas are fresh.

Get in touch with your top manufacturers and have in-depth conversations with them before making a final decision. Any other costs that aren’t covered by the initial estimate must be broken down separately.

  1. Select a general contractor.

You’ll have to find your own local general contractors if the prefab home firm you’re working with doesn’t recommend any. Get a professional who is familiar with prefab houses and site preparation to help you “button up” the project after delivery.

The general contractor you choose is primarily responsible for ensuring that your home is constructed correctly, placed correctly, and finished appropriately in line with all relevant building codes.

Spending so much time at work with a potential partner means that you should give them significant thought. After choosing a general contractor, compile their bid to provide your loan application.

  1. Finish Your Loan.

You should visit your preferred financial institution with the land contract or buyer’s letter of intent to purchase, as well as the contracts with the general contractor and prefab home builder. You can use a draft contract to demonstrate the bank you intend to close if your house builder is hesitant to sign a contract before you have a loan.

Your job history, tax records, character references, and credit report will all be scrutinized by the bank. The bank should provide you with a detailed list of the information and documentation they want.

  1. Establish a Payment Plan

You need to contact the maker, the builder, and the bank to set up a payment plan. Until the bank has confirmed that the agreed-upon job has been completed, it will often withhold the requested monies.

  1. Complete the Loan and Build the House

The construction process may begin after the loan is finalized. You should realize that most banks are ready to grant a construction loan that changes into a permanent mortgage once the house passes final inspection because you are building from the ground up.

During the course of a building project, it is usual practice to pay only the interest on a loan. After converting your adjustable-rate mortgage into a fixed-rate mortgage, you will continue to make principal and interest payments on a regular basis.

Keep in mind that if your loan is structured as a construction loan, you will likely be required to make a 20% down payment on the whole construction loan (which may or may not include the cost of your property) (as it likely will be if you are buying land).

Financial institutions are more hesitant to offer low down payment options for construction mortgages than they are for traditional mortgages because of the increased risk associated with building projects.


Although it is possible to build a prefab home in a matter of days or weeks, this has nothing to do with the actual time it takes to build. If you’re well-prepared and organized, the full process of building a modular home may be completed in approximately four months, as stated by Modular Homeowners.

Modular and panelized home manufacturers often advise allowing at least two to three months for the creation of the home, thus the entire process might take anywhere from four to six months.

According to the Census Bureau’s 2022 Survey of Construction, the average amount of time it takes from the time a building permit is issued to the time a single-family home is finished is seven months, and for homes built on the property of the owner, that number rises to eight months.

Choosing to build with prefabricated materials can cut construction time by as much as four months, depending on the specifics of your design. There are normally three stages involved in constructing a prefab home:

  1. Planning

The planning phase is notoriously difficult to time estimate. This is because it might take time to find a suitable building site, apply for and receive the required permissions, complete the design of your home, interview and select a general contractor, and eventually close on your mortgage.

Assume a minimum of a month to complete this section. It’s important to remember that many prefab builders will handle everything for you, particularly when it comes to securing the required building licenses. If you’ve already decided on a prefabrication firm, you can knock out a few of these tasks simultaneously.

  1. Production and site setup

Time spent in manufacturing and site preparation is likely to be comparable regardless of which manufacturer you choose. When compared to what Modular Homeowners suggests, the timeline suggested by many modular manufacturers, such as Hive Modular, is often two to three months longer (6 weeks for the build and prep).

Consider how the schedule of your general contractor will affect this juncture. Even after your prefab house is finished, your timetable might still be pushed back if the contractor runs into problems with the site prep because of bad weather or other unforeseen circumstances.

  1. Construction

At this stage, your new home should have arrived and be ready for occupancy. You could think you’re done, but that’s no guarantee. Even though it may only take a few days to transport and assemble a modular home, there is still site cleanup and final touches to do.

Waterproofing is required, for instance, to prevent rain from seeping in between the modules. Utilities in the residence must be connected to the grid, and vice versa. Internal wall protection is a must. What’s more, there’s the problem of audits.

A panelized or precut home requires more labor to get into livable condition. All the interior fixtures and finishing touches must be fitted immediately. This step will take at least six weeks before you can move in.

Bottom Line

A conventionally built house takes more time and money than a prefabricated one. Do your research and talk to the many vendors you’re considering before letting them build your home for you. Those who would prefer to sit back and let someone else do the labor should not consider building a home, prefab or otherwise.

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