Building and living in a modular home

What are modular homes?

Modular homes, sometimes called prefabricated or pre-fab homes, are houses assembled from multiple large pieces that are constructed off-site. Each piece is shipped from the factory to the building site using flatbed trucks, then lifted into place with a crane.

Once assembled, modular homes are permanent — you might find it hard to identify a house as modular after construction is complete. They come in myriad styles, and manufacturers offer various degrees of customization.

How are modular homes built?

Most of the process of building a modular home is just like building any home. First, you need somewhere to put it. Modular homes sit on foundations just like on-site builds, whether that’s a typical concrete basement or a slab.

The above-ground portion of the house is made of several large pieces (modules), which are built off-site in a factory. Those pieces are each sized to fit on a flatbed truck, which is how they move from the factory to the construction site. At the site, a crane lifts each piece into place, and builders fasten everything together permanently.

The modules arrive at the site unfinished. Drywall, siding, flooring, and other finishing touches occur after it’s assembled. The whole process generally takes about 8–12 months, though the modules can often be built in less than one month. There are many advantages to prefabricating sections of the house indoors, one of which is that it’s fast — the controlled factory environment eliminates weather delays, contractor issues, and other roadblocks that can stall an in-place build.²

There are many companies that build modular homes, each with its own offerings. Some companies focus on efficiency and cost, with a few set options to choose from. Other builders offer a wide range of styles and significant customization options.

Modular homes vs. traditional (site-built) homes

Once a modular home is put together, there isn’t a lot of difference from a traditional house; visually, they’re nearly indistinguishable. Most of the differences are in the construction stage:

• The construction time for a modular home is 30–50% shorter than that of a traditional home.¹ It’s faster largely because site prep and construction can happen simultaneously.
• The carbon footprint of constructing a modular home is smaller than an on-site build — as much as 38% smaller.³
• Constructing modules inside a factory allows for a level of quality control that’s difficult to achieve in a traditional build.

Another significant difference between site-built and modular homes is the price — something that merits its own section.

How much does a modular home cost?

In addition to better quality control and shorter construction times, factory-built homes benefit from lower production costs. Modular homes cost 10–20% less than site-built homes.⁴

However, like any construction project, the cost of building a modular house varies based on a wide range of factors. Some of the main factors that influence the final cost include:

• Size of the house. This includes total square footage and number of storeys.
• Delivery costs. A greater distance from the factory increases delivery costs, as does the size of the house. More modules means more truck trips, and in turn higher costs.
• Land preparation. Modular homes need foundations to sit on, so whether you go for a basement, a concrete slab, or something else, it will impact the cost. As will landscaping or clearing vegetation, if needed.
• Utility hookups. Presumably you’ll want electricity, water, and wastewater service in your new home. These costs can add up — for example, water and sewer hookups in Toronto cost $5,672 and $14,187 respectively.⁵
• Administrative fees. Building a house means securing building permits, of course. Depending on the location you might also need an environmental impact assessment, soil testing, and so on.
• Taxes. When you buy anything, you’ll pay sales taxes, and modular homes are no exception.

One can’t really estimate the cost of a modular home without knowing details about the above. But, depending on where you are in Canada, the Canadian Cost Guide lists the following price ranges for constructing residential single-family homes; expect most modular housing projects to fall within these ranges. Modular will often be at the lower end, assuming there aren’t too many custom features or unique challenges.

Vancouver	$190–320
Calgary	$175–255
Winnipeg	$170–245
Greater Toronto Area	$210–285
Montreal	$140–200
Halifax	$120–180

Costs per square foot. Source

Financing for modular homes

Even if modular homes are a little cheaper than traditional builds, they still cost more than most people can afford out of pocket. Fortunately, financing options are available.

As with most homes, a mortgage is the typical way to finance the construction of a modular house. Construction mortgages work a little differently than buying-a-house mortgages. Instead of getting the money all at once, construction mortgages are tied to milestones. The bank releases portions of money as the project hits each milestone, such as when the foundation is complete or the modules are installed on-site.

Aside from that, qualifying for a modular home mortgage is just like any other mortgage: you’ll need to demonstrate your ability to pay it, and you’ll get better terms if you have a high credit score. Your financing options may improve if you already own the plot of land you plan to build on, as well.

Depending on the cost and your financial situation, you might be able to build your modular home with a standard loan as well. Or, many modular home builders offer financing programs with competitive terms.

Living in a modular home

Once construction is done, living in a modular home isn’t all that different from living in a site-built home — in fact, you might not notice any difference at all. But there are a few things to keep in mind after you’ve moved in.

Energy efficiency

The carbon footprint of a modular home construction project is generally smaller than that of an on-site build. However, many modular homes often fall under the category of energy-efficient homes after they’re built, too

Since a builder re-uses designs, they can be continually tested and improved. Plus, building the modules in a factory allows for more control. The upshot is that many modular homes have tighter building envelopes than site-built homes. That makes it more efficient to heat and cool them.

Some modular homes even have energy efficiency certifications like Energy Star or R-2000.

Expansion or renovation

You can expand or renovate your modular home just as you could a traditional build. However, if you decide to do any significant changes, work with a contractor familiar with modular builds. Some elements, like load-bearing walls, are different from site-built structures.

Aside from that, renovating a modular home is very much like renovating any home. Make sure the people doing the work are qualified, and don’t forget to keep your home insurance provider in the loop.

Insurance considerations

There aren’t many special considerations for modular homes when it comes to home insurance. Most providers, including Square One, can easily insure modular homes. They’ll generally treat them just as they would a traditional, site-built home.

When you’re applying for home insurance, the provider may not even ask whether your home is modular. If they do, make sure to answer correctly — they will use this information to calculate an accurate rebuild value of your home. Given that modular homes are generally cheaper to build, they may be slightly cheaper to insure (though rebuild value is just one of hundreds of insurance pricing factors).

Worth noting is that mobile homes can be harder to insure. Given that “mobile” and “modular” are sometimes used interchangeably, there can be some confusion. But owners of actual modular homes should have no trouble finding insurance.

Commonly asked questions

Are there hidden costs to modular home construction?

Once you’ve bought the land and engaged a builder, you should have a reasonably good idea of the total cost of your modular home. In fact, there are likely to be fewer hidden costs with a modular home compared to a traditional on-site build, as you’ll get a detailed quote from the builder beforehand. With less construction happening on site, issues like weather delays or labour shortages are less likely to impact your modular build.

Nevertheless, like with any construction project, there can be unexpected hitches that drive up the final cost: difficulties with site prep or module transportation, for example.

Additionally, remember that you’ll be paying for sales taxes, building permits, and other routine administrative costs. These aren’t “hidden” per se, but you may overlook them during the early planning phase.

How do modular homes stand up to extreme weather?

Once built, a modular home will stand up to wind, hail, snow, and other weather just as well as traditionally constructed home — possibly even better. As with any building, the quality of construction materials and workmanship have more impact on the building’s resilience than the fact that it’s modular.

Modular houses, however, are constructed with one specific difference in mind: they have to survive transport on a flatbed truck. That means they typically have stronger resistance to deformation, which can help them resist heavy winds or other physical threats.

What are stackable modular homes?

The term “stackable” may refer to two types of structure that are different from typical modular homes:

1. Some companies have developed methods for building large-scale buildings (like apartments or even hospitals) by stacking many modules together. The prefabricated sections are brought to the building site where they are stacked and fastened together to form the building.
2. Stackable homes may also refer to small, temporary modules that can be easily transported to and from a site. Such modules are often used where a large number of people must be housed temporarily, such as the 2022 Qatar World Cup.

Sources

1. Khaustovich, Vlad. “Prefabricated Home Manufacturing in Canada – Market Research Report (2014-2029).” IBISWorld, Nov. 2024, www.ibisworld.com/canada/industry/prefabricated-home-manufacturing/397/.
2. Adeyemi, Abiodun Benedict, et al. “Integrating modular and prefabricated construction techniques in affordablehousing: Architectural design considerations and benefits.” Comprehensive Research and Reviews in Science and Technology, 2024, 02(01), 010–019, DOI: doi.org/10.57219/crrst.2024.2.1.0030.
3. Kawecki, Leonard R. “Environmental performance of modular fabrication: calculating the carbon footprint of energy used in the construction of a modular home.” Arizona State University, Dec. 2010, hdl.handle.net/2286/R.I.8739.
4. Herbert, Christopher, et al. “Comparison of the Costs of Manufactured and Site-Built Housing.” Joint Center for Housing Studies Harvard University, Jul. 2023, www.jchs.harvard.edu/sites/default/files/research/files/harvard_jchs_pew_report_1_updated_0.pdf.
5. City of Toronto. “Water Rates & Fees.” toronto.ca, www.toronto.ca/services-payments/property-taxes-utilities/utility-bill/water-rates-fees/. Accessed 5 May 2025.

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