Can You Finance a Modular Home on Raw Land? Here's What to Know
One of the most common questions we get from landowners is some version of: "I have the land — can I actually finance the home?" The short answer is yes, and in more ways than most people realize. Here's a plain-language breakdown of your main options.
Option 1: Construction-to-permanent loan (most common)
Also called a "temp-to-perm" loan, this is the most widely used financing path for modular homes on raw land. It works in two phases: first, the lender provides a short-term construction loan that covers the cost of the home and any site work. Once the home is delivered and set, the loan automatically converts to a standard long-term mortgage.
Because modular homes meet state and local building codes — the same as any stick-built home — most conventional lenders are comfortable financing them this way. Your creditworthiness and the appraised value of the completed property are the primary underwriting factors.
One practical note: if you own the land outright, lenders will often credit its value as your down payment, which can significantly reduce how much cash you need to bring to the transaction.
Option 2: Land + home package loan
Some lenders offer a single loan that covers both the land purchase and the home construction. This can simplify the process if you're acquiring raw land and placing a home at the same time. Approval timelines can run 60+ days since lenders are underwriting both you and the project, so plan accordingly.
Option 3: Pay cash for land, finance the home separately
A strategy many investors use is to purchase the land in cash — either outright or through a short-term bridge — and then finance the modular home as a standalone construction loan. The land equity counts toward your down payment, and you can often move faster since you're not waiting on a combined approval.
Option 4: Personal loan for smaller ADU placements
If you're placing a smaller unit — like our Wasatch Studio as an ADU — some lenders offer personal loans up to $100,000 with no down payment required, amortized over a shorter term. These don't underwrite the property itself, just the borrower, so approval can be faster. The tradeoff is a shorter repayment window and typically higher rates than a mortgage.
Key takeaway: The most important thing to confirm early is whether your lender has experience with modular construction loans specifically. Not all lenders do, and working with one who understands the modular build process will save you significant time and frustration.
What about FHA, VA loans or a HELOC?
Modular homes on permanent foundations are eligible for FHA and VA financing, the same as any site-built home. If you qualify for either program, these can be excellent options, particularly VA loans for qualifying veterans, which require no down payment.
A HELOC is also a great option for a homeowner who is looking to place a home in their backyard as a detached ADU. A HELOC allows you to tap into your existing home’s equity, and borrow money to pay for renovations or additions to your home.
The bottom line
Financing a modular home on raw land is well-trodden territory. The loan products exist, lenders are familiar with the process, and the fact that modular homes are classified as real property, not personal property. This makes the whole process cleaner than most buyers expect going in.
If you're working through financing options for a specific parcel, we're happy to point you toward lenders in your area who specialize in modular construction. It's one of the first conversations we have with serious buyers.
Ready to talk through your options?
Fill out our contact form and we'll walk you through financing paths for your specific land and goals.