The Pros and Cons of Prefab Homes - SmartAsset

30 Jun.,2025

 

The Pros and Cons of Prefab Homes - SmartAsset

If you can’t find a house you want to buy you may be tempted to build your home yourself. In that case, you’ll need to choose between a stick-built house and a prefab home. Stick-built means your home is built the old-fashioned way, with a crew of workers on site for months raising the home and fitting it with plumbing and electricity. A prefab home, on the other hand, comes in pre-built parts.

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Do you have questions about how a home purchase fits into your overall financial plan? Speak with a financial advisor today.

What Is a Prefab Home?

The term “prefab” is the abbreviation for prefabricated, which is all you need to know about prefab homes. These houses are manufactured in a factory setting and transferred immediately as full build. As you might expect, this type of home is extremely easy to make and move in comparison to a traditional home.

Prefab homes come in three main iterations: manufactured, kit and modular. Here’s a brief breakdown of each:

  • Manufactured homes: A home in this category is built in sections and pieced together by professionals and heavy machinery at its final site. These must follow HUD requirements, though.
  • Kit homes:  These homes are much simpler than a manufactured home, though they follow a similar style of building. In fact, most homebuyers can build a kit home themselves.
  • Modular homes: These homes feature much more personalization, companies will often let you customize the floor plan of your purchase. However, unlike manufactured and kit homes, modular homes have an immovable foundation.

The Pros of Prefab Homes

Exceptional Energy Efficiency

One of the benefits of prefab homes is that they tend to be highly energy efficient. Their tight seams and state-of-the-art windows keep heat in and reduce your energy bills in the process. As a bonus, modular homes’ tight construction gives them a reputation for being able to withstand natural disasters. If you ask many people “What is a prefab house?” they’ll assume it’s the same as a mobile home. Not true. Prefabricated (aka modular) homes go into a foundation like any other home. They can be high-quality, modern and elegant houses perfect for those who want a lower carbon footprint than the typical American suburban home has.

Fast Construction

Fast construction is one of the big advantages of prefab homes. Because the parts of a prefab home come ready, all you have to do is assemble them and hook up the home to utilities. Hence the name “modular.” The prefab goes up much faster because it arrives partially constructed. That means fewer days with laborers on site and less vulnerability to weather delays and illnesses that can extend the construction process by days and weeks. Still, there’s more to consider than just the construction time. Site preparation, including obtaining permits, can be a lengthy process.

Affordability

Building a prefab home is generally less expensive than building a comparable stick-built home. Nice, right? Part of the savings has to do with labor. It takes fewer laborers working over the course of fewer days to make a prefab move-in ready. That saves you money. Plus, as we mention, heating and cooling tend to be more affordable with prefab homes than with regular ones. If you’re open to buying an existing home, compare the costs of what’s available on the market with the cost of building a prefab. And remember that various levels of fittings and customization can raise or lower the cost of your prefab. Talk to the manufacturer about cost-cutting strategies available to you.

The Cons of Prefab Homes

Land Costs

If you want to put up a prefab home you’ll need to own the land underneath it. If you don’t already own land you’ll need to buy it. You’ll also need to make sure that you’re able to put up a prefab home on that land, and that you can hook it up to electricity, water and sewer. And don’t forget soil testing on the land you’re planning to call home. Securing the land, inspections and permits can add up in terms of cost, time and trouble. Some companies that sell prefab homes will help you with this process, securing permits on your behalf and rolling their expenses into the cost of your modular home.

More Up-Front Payments

If you buy an existing home you can make a down payment of around 20% and pay off the rest of your mortgage over time. While financing and construction loans are available for many prefab homes, you’ll need to pay for the home’s construction before you move in. Your contract will include a schedule for paying in installments while your home is under construction. This pay-as-you-go feature of prefab homes means you need to be extra sure you can afford the prefab before you commit to buying it and putting it up. On the other hand, paying more up front saves you money in interest.

Utilities Might Be Tough to Find

One of the disadvantages of prefabricated houses is that it can be tough to arrange for utilities and other site details. If your site is uneven you’ll need to have it leveled. Then you’ll need to lay the foundation and arrange for sewer strikes and electrical connection, not to mention connecting to city water or finding well water. If this all sounds a little too daunting, look for a prefab home that comes with the option to have the prefab home company take care of these details for you.

Bottom Line

The cost of a prefab home will vary depending on how much you’re willing to do yourself and how much you outsource to others. Some ambitious home purchasers prefer to buy a prefab home as a kit and assemble it themselves, with the help of a few friends. Others are happy to spend the money to have the details of construction and permitting taken out of their hands. Wherever you fall on the spectrum, make sure you understand what you’re getting into before you go the prefab route.

Tips for Buying a Home

  • Buying a home is a major financial undertaking. So much so that after it’s completed, you’ll want to work it into your long-term financial plan, which a financial advisor can help with. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • At closing time, there’ll be many fees you’ll likely incur. Use SmartAsset’s closing costs calculator to learn more.

5 Questions About Building a Custom Prefab Home

When people are looking for sustainability, long-term cost savings, and beauty a custom prefab home is often the best way to go.

Custom prefab home building isn’t new. For generations now, there have been prefab home builders offering an alternative to the increased costs and time required for a stick-built home. Whether it was the

From the popular Sears Catalog Homes of the early to mid 20th century to the much-admired and coveted Usonian Automatic concrete homes of Frank Lloyd Wright, prefab homes have a long and rich history. Prefab building made serious gains in the s as architects and builders dialled into the fact they could save building time and materials and labour costs if they took most of the building process into a factory.

The resurgence in demand and popularity of custom prefab homes should come as no surprise. Given the ever-increasing costs of housing and concerns around climate change and how to live more sustainably, prefab home building – assembling a dwelling from components produced entirely off-site – offers a very attractive home-building alternative.

1. What is a custom prefab home?

If you look at conventional residential home-building, you see the home built piece-by-piece – stick-by-stick – on the building site. This wood framing process is referred to as a stick build and is often used in large residential developments.

In contrast, prefab homes are built from components constructed first in a factory and then delivered to the building site where it is then assembled. Custom prefab home designers and manufacturers – yes, like us! – can claim longer-term cost savings, enhanced sustainability and a much shorter building time than traditional homes. And, the claims are spot-on!

To customize a prefab home, there are a variety of different finish packages and upgrades, as well as different layout configurations.

So, if you’re looking to build a new home and are reviewing the range of options available, consider how a custom prefab home might better meet your needs (and then some!). Let us answer a few common questions about building prefab:

2. Is there a choice of types and styles

As prefab refers to the building process, not necessarily a single or specific style of home, there are a variety of choices of home styles available. And, they’re beautiful!

Yes, when you think of prefab, you probably imagine a basic, boxy structure. And, in the early days, they were. But, over the years, as architects and builders innovated both their designs and building methods, just about any style of home that can be stick-built on-site, can now be pre-built in a factory. Just ask us!

Prefab homes ought not to be confused with manufactured, or often commonly known as mobile, homes. Manufactured homes, while factory-built before delivery tend to be of lower quality and offer fewer design options, so it’s an important distinction to make.

Yes! Much more than conventional stick-built construction. For Mandala Custom Homes (MCH), prefab building allows us to design and create beautiful panelized structures. We create beautiful round home designs through an innovative faceted, panelized technique.

A panelized home is constructed with whole wall panels that are delivered to the building site where they are quick to assemble. Far faster, in fact, than conventional stick-built construction on-site.

MCH panelized construction is not only fast but highly exact. The plans for each MCH home are sent directly from the designer’s computer to the panelization shop floor, ensuring that every MCH custom prefab home is built with accuracy and efficiency.

A typical prefab home is often complete in only four to six months. As opposed to a conventional build, which on average, takes about eight months. Keep in mind, depending on the market, a custom home build can sometimes drag on for years.

Each of our home packages begins with the home’s essential structural components built in a climate-controlled facility ensuring the quality and integrity of the materials throughout construction. Once delivered to the building lot, assembly is very fast – constructed to lock-up and weather-tight in only a matter of days. A stick build on-site, on the other hand, can be exposed to the elements – sun, heat, rain, snow, and more. A new, prefabricated home is kept safer and dryer, with significantly reduced incidents of damage – warping, mould, mildew, and squeaking – that exposure to adverse weather can cause.

The build can be up to 50 per cent faster. Building most of the home components in a factory limits weather delays and makes construction overall simply more efficient. It also makes the home delivery date very predictable. Order changes and labour schedules are less of a problem, too.

Generally speaking, prefab construction is less expensive than stick-built construction – as much as 10 to 25 per cent. Why? Factory assembly means reduced construction time and material waste. Prefab homes require far fewer hours on the building site which translates into savings on labour costs.

BONUS: The money saved thanks to factory assembly allows for more resources available to spend on upgraded finishes and fixtures.

5. Why is prefab the more sustainable choice?

Prefab is a more sustainable, environmentally sensitive choice than traditional stick-built homes.

One of the first ways prefab building promotes sustainability is that the process produces less waste. Many people deliver vast amounts of materials to a building site, where excess is inevitable. Factory building is inherently more efficient. Reusing and recycling excess is more likely in a prefab home building facility than on-site.

With greater precision in construction, prefab home parts and components tend to have tighter seams. This helps with efficiency in energy consumption – heating and cooling. In the case of MCH, panelized prefab home construction is an inherently green way to build, recognized in the green building certifications Mandala has achieved, including the ICC 700 National Green Building Standard. 

MCH has been building ENERGY STAR certified homes for almost 20 years. Our prefab designs provide an airtight envelope. This wraps the home in a blanket of insulation that creates a very comfortable energy-efficient home. It’s a building system that prevents hot and cold from entering through the framing. As a result, it limits air exchanges to as low as .52 air exchanges per hour.

We can also provide a passive solar design. Solar allows the sun to heat the home in the colder months and shades the sun from entering through the windows in the summer.