Buyers and even some listings use "mobile home," "manufactured home" and "modular home" almost interchangeably, and that habit causes real underwriting confusion. All three describe homes built substantially or entirely in a factory rather than on site — the label alone does not tell you how the mortgage will be structured. What actually decides that is whether the home is permanently affixed to the land and set on a permanent foundation, or whether it remains a movable structure that could, in principle, be relocated.
CMHC's own Prefab Plus program draws exactly this line: a prefabricated home — the program explicitly covers both modular and manufactured homes — that is permanently affixed to the land and placed on a permanent foundation is eligible under CMHC's standard underwriting criteria and secured by a conventional mortgage. A prefabricated home that is not permanently affixed to the land is financed differently, through CMHC's chattel financing option, secured by a chattel mortgage loan rather than a conventional real-property mortgage.
A conventional mortgage registers against real property — land and everything permanently attached to it. A structure that is not permanently affixed is, legally and practically, closer to a large piece of personal property than to real estate, even if it looks and functions exactly like a house. Financing it the same way a lender finances a car or a boat — through a chattel loan against the structure itself, rather than a mortgage against real property — reflects that legal reality, not a judgment about build quality.
This is also why relocating a home, or leaving it eligible to be relocated, has financing consequences that have nothing to do with how well it was built. A beautifully constructed factory-built home sitting on blocks on a rented pad, ready to be moved if the tenancy ends, is financed as chattel; a comparable home permanently set on a foundation on land the owner holds title to is financed as real property.
Where a prefabricated home qualifies for standard underwriting, the same down payment structure applies as any other insured homeowner property: a minimum 5% down payment on 1-to-2-unit properties, or 10% on 3-to-4-unit properties, alongside the usual borrower eligibility of Canadian citizens, permanent residents, or non-permanent residents legally authorized to work in Canada. The property also needs to be suitable and available for full-time, year-round occupancy — including having year-round vehicular access, which matters for a factory-built home going onto a rural or remote lot.
Construction and installation on these homes can also proceed in stages, with funds released at points such as site preparation, delivery of the unit, and post-installation — a structure worth knowing about when a client is comparing timelines against a resale purchase, since it does not move at the same pace as buying an already-completed home.
Separately from the affixation question, factory-built homes in Canada are generally manufactured to a recognized national construction standard, and many provinces require that certification before the home can be installed and occupied. Confirm the specific certification a given home carries and what your provincial building authority requires before assuming a factory-built home is treated identically to a site-built one for permitting and insurance purposes — this varies by province and by the type of factory-built structure involved, and is worth verifying directly rather than assuming.
The practical takeaway for a broker is to ask two separate questions on any factory-built property: is it permanently affixed to a permanent foundation on land the borrower will hold title to, and does it carry the certification your local building authority requires? The first decides the type of financing; the second decides whether the property can be legally occupied at all.
Two homes are both factory-built and both look similar. One sits on blocks on a rented pad in a land-lease community and could be relocated; the other is permanently affixed to a permanent foundation on land the owner holds title to. What is the key underwriting difference?
Permanent affixation to a permanent foundation is the dividing line CMHC's own prefabricated-home program draws between standard mortgage underwriting and chattel financing — how the home was manufactured is not the deciding factor. The tempting wrong answer treats identical construction as proof of identical financing, which ignores that a mortgage secures real property, and a home that isn't permanently affixed to land isn't functioning as real property yet.
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