How California's Factory-Built Housing program works: the HCD insignia, who inspects what, and why it isn't a mobile home.
Factory-built housing is California's legal name for a home built in a factory to the same state building code as a site-built house, then set on a permanent foundation. HCD oversees it, each unit gets an HCD insignia, and your city inspects the foundation and hookups.
What is factory-built housing in California?
It's a home whose concealed parts "cannot be inspected before installation at the building site without disassembly, damage, or destruction" (Health and Safety Code § 19971). Nobody can open the walls on your lot, so the inspection happens in the factory.
Factory-built, manufactured, or modular?
Legally they're not the same. Factory-built homes follow California's building code (Title 24) and sit on a permanent foundation; manufactured homes follow the federal HUD code on a permanent chassis. In California, a closed-wall modular home is regulated as factory-built housing, and mobilehomes are excluded.
Factory-built, manufactured, modular, mobile: the 4 terms›
Factory-built (California): built to the California Building Standards Code (Title 24). No chassis, a permanent foundation, an HCD insignia, and a local building permit.
Manufactured (federal HUD code): built to federal standards (24 CFR Part 3280) on a permanent chassis, with or without a permanent foundation. Federal rules bar states from adding their own construction standards.
Modular (a building method): built in box-shaped modules. In California, a closed-wall modular home is regulated as factory-built housing, so for a backyard home the two usually mean the same thing.
Mobile home (before June 15, 1976): homes built before the HUD code took effect. State law excludes mobilehomes and RVs from factory-built housing.
How does it get to your lot?
Two sets of inspectors: a state-certified agency inside the factory, then your city on site.
The factory inspector attaches the HCD insignia before shipping. With it, your city doesn't re-review the house plans; it permits and inspects the foundation, utilities, and installation. Ask any builder: "Will my unit carry the HCD factory-built housing insignia?"
Is it cheaper?
Sometimes. HCD's own answer: "Benefits vary with each FBH project." Where budgets break is what the factory price leaves out.
Permits, foundation, delivery, crane, and hookups are often extra. From January 1, 2027, AB 2058 caps the city permit fee at 50% of the site-built fee, unless the city documents higher costs. Our price is one all-in number: $75,900 to $271,900.
Launch price through Dec 31, 2026. Everything from permits to keys. Not included: solar, furniture, upgrades. Full price breakdown
How long does it take?
A typical Bay Modular project takes 4 to 6 months in total, from first call to keys, permits included.
The city permit is usually the longest step; crane day takes one. Our homes are factory-built to HCD-approved plans (HCD #1585366) in our Lathrop factory.
Factory-built housing FAQ
Who approves and inspects it, step by step›
A Design Approval Agency certified by HCD approves each model's plans. A Quality Assurance Agency inspects the factory and attaches the HCD insignia before shipping. A unit with the insignia is "deemed to comply" with local building ordinances, so your city doesn't re-review the house plans. It still permits and inspects the foundation, utilities, and installation.
You still pay for a local permit for the foundation, site work, and inspections. HCD's handbook says your city may not charge plan-check fees for plans an HCD-certified agency already approved. For a backyard ADU, state law also gives your city 60 days to approve or deny a complete application (Gov. Code § 66317).
Ask any builder: "Will my unit carry the HCD factory-built housing insignia?" By our count of HCD's own list (April 2025, updated January 2026), 17 agencies are approved: 12 can approve designs and 16 can inspect factories.
Sources: HCD FBH 314 and FBH 315; Health and Safety Code §§ 19980, 19981, 19992.
What a factory price often leaves out›
Often extra: permits and city fees; foundation and site prep; delivery and crane; water, sewer, and electrical connections; solar (new detached ADUs generally need it); final inspection and occupancy. A quote that leaves rows blank isn't cheaper, it's less complete.
Our all-in price includes: lot check, design, permit drawings; city permit and plan-check fees for your site and foundation; site prep and foundation; the home built in our Lathrop factory; delivery, crane, water, sewer, power hookups; kitchen, bath, flooring, lighting; final inspection and a project manager. Not included: solar panels, furniture and decor, landscaping outside the work area, upgrades beyond standard finishes. Your price is fixed in the contract after we check your lot.
Loans, taxes, insurance›
Mortgage. For loans sold to Fannie Mae, factory-built housing gets "the same treatment as site-built housing" when it's real property on a permanent foundation (Selling Guide B2-3-02, Feb 2026).
Property tax. Only the new ADU is added at market value; your house keeps its assessed value (R&T Code § 71). Expect one or two supplemental bills.
Insurance. Say "HCD-insignia factory-built housing on a permanent foundation," not "prefab" or "container," so you're quoted for the right product.
What changed in 2026: AB 1815, AB 2058, solar›
Two laws signed in September 2026 make factory-built homes easier and cheaper to permit, starting January 1, 2027. AB 1815: cities generally can't apply stricter local building rules to factory-built housing. AB 2058: the city permit fee is capped at 50% of the site-built fee, unless the city documents higher costs. 2025 Energy Code (2026): new detached ADUs generally need solar.
When it's not the right choice›
No truck or crane access. Placement may cost more or not work. A site visit tells you. You want a one-off design. Big custom changes may need a new design approval. You have a garage to convert. That can cost less than any new building.
About Bay Modular homes›
We build backyard ADUs as factory-built housing to HCD-approved plans (HCD #1585366) in our own factory in Lathrop, from steel modules, all-electric, with closed-cell insulation. Steel doesn't burn the way wood framing does, and termites can't eat it. We're a licensed California contractor (CSLB #1112074). Tour the factory
Is factory-built housing the same as a modular home?›
Mostly, yes. In California, a closed-wall modular home is regulated as factory-built housing under Health and Safety Code § 19971. "Modular" is the building method; "factory-built housing" is the legal term.
Is a factory-built home a mobile home or trailer?›
No. California law excludes mobilehomes and recreational vehicles from factory-built housing. It has no chassis, sits on a permanent foundation, and needs a local building permit.
Do I need a building permit for a factory-built ADU?›
Yes. Your city issues the permit for the site work and inspects it. It doesn't re-review the house plans an HCD-certified agency already approved (§ 19981).
Can I get a regular mortgage on a factory-built home?›
Often, yes. Fannie Mae gives factory-built housing the same treatment as site-built housing when it's real property on a permanent foundation and meets local codes. Check with your lender.
We check your lot and your city's ADU rules, then call with the models that fit and the all-in price. You decide after that.
About Julia B. Julia B is a marketing specialist at Bay Modular, a licensed California ADU builder (CSLB #1112074) with its own factory in Lathrop. She writes about what ADUs really cost and how to avoid surprises.
Sources and more guides
More: Models · Building in San Jose · Building in San Francisco · Building in Sunnyvale · How much does an ADU cost in California? · San Francisco ADU guide · San Jose ADU guide
- California Health and Safety Code, Factory-Built Housing Law: § 19971, § 19981 (also §§ 19960, 19980, 19992, 19993). Checked October 24, 2026.
- AB 1815, Chapter 782, Statutes of 2026 and AB 2058, Chapter 783, Statutes of 2026, filed September 29, 2026. Checked October 24, 2026.
- California Revenue and Taxation Code § 71; BOE Publication 29 (March 2025).
- HCD, Factory-Built Housing program and List of Approved DAA and QAA Agencies (April 2025, file updated January 26, 2026). Checked October 24, 2026.
- HCD, Factory-Built Housing Handbook, FBH 314 (rev. 11/20), and FAQ pamphlet, FBH 315 (rev. 11/20).
- HCD, Accessory Dwelling Unit Handbook, March 2026 (Gov. Code §§ 66313, 66317).
- eCFR, 24 CFR § 3280.2, § 3282.8, and § 3282.11.
- Fannie Mae Selling Guide B2-3-02 (February 4, 2026) and B2-3-04 (October 8, 2025).
- California Energy Commission, 2025 Energy Code and ADU FAQs. Checked October 24, 2026.
- Bay Modular, Pricing & Financing and FAQ, October 2026 (prices, all-in list, 4-6 month timeline).
General information, not legal, tax, or financial advice. Confirm details with your city and your lender.
