Prefab and modular homes are getting a policy reboot — but will this cycle reach typical home buyers, like you?
The federal government’s Build Canada Homes agency is pushing mass-produced housing again, decades after the concept sped up post-war builds. Here’s what it could mean for affordability, real estate access, and home equity.
Prefab homes once helped Canada tackle a massive post-war housing shortage — guided by the CMHC’s early housing design catalogues, which standardized plans and sped up construction.
Now, Ottawa is reviving the concept through the Build Canada Homes (BCH) agency with a new Housing Design Catalogue, pairing pubic funding with factory technology to accelerate builds and cut costs.
The big question is: Will these prefab and modular homes be available for purchase through traditional mortgage channels, as past ones were, or be limited to non-market, subsidized, and co-op housing programs?
Here's how this initiative might impact Canada's housing crunch and first-time homebuyers' access to real estate markets.
Canada has done this before.
After the Second World War, the CMHC (Canada Mortgage and Housing Corporation) produced national housing catalogues from the 1940s to the 1970s (here's an example from 1947), offering standardized home designs that utilized precut materials and some prefabricated parts to help more former military personnel and everyday families achieve ownership quickly.
Home builders were encouraged to modify designs as needed to fit the aesthetics and conditions of a new neighbourhood, saving time and money in the process. And so, these early prefab examples dotted new suburbs across the country for decades, many of which still stand today as quiet proof that a faster approach can work.
CMHC estimates Canada needs 3.5 million additional homes built by 2030 to restore affordability. The housing catalogue is suddenly back in vogue, with a modern twist — a digital 2025 Housing Design Catalogue featuring pre-approved blueprints not for single-detached homes, but for increased density, such as accessory dwelling units (such as laneway homes), duplexes, and four- and six-plexes.
The goal is familiar: faster builds and lower costs. This time, designs lean on energy and space efficiencies driven by high-tech manufacturing.
If zoning and financing hurdles can be eased, prefab could again help close Canada's housing supply gap.
Here's a rendering of a familiar home style. It resembles the raised bungalow or contemporary ranch plan designs shown in CMHC's Small House Designs catalogue (1965 edition) that you're sure to recognize from a walk or drive through almost any older Canadian neighbourhood. Maybe you even live in one.
Those prefab homes serve as visual testimony to the government catalogues, born from a serious collaborative effort of architects, engineers, home manufacturers, and builders to balance form, function, and affordability.
Today's modern catalogue may look mail-order simple (click to add to cart?), but the result is substantial — a real home to live in, and a Canadian dream realized.
Despite the expansive promise to make Canadian homes more affordable, the policy push of Build Canada Homes (BCH), a new federal agency funding non-market and affordable-market housing, isn't aimed at the typical home buyer shopping with a mortgage pre-approval.
The program's rollout, as per the PMO's September 2025 launch, focuses on deeply affordable, supportive, and community housing, often built on public or surplus land.
Prefabricated and modular housing can reduce construction times by up to 50%, costs by up to 20%, and emissions by up to 22% compared to traditional construction methods. – Carney's Liberals, 2025
Even though its initial priority focuses on non-market housing, Ottawa has also positioned BCH to work with private builders and manufacturers — a step toward bringing cost-efficient, pre-built housing into the broader market.
Part of the agency's mandate — financing manufacturers, partnering with private developers, and standardizing designs through the Housing Design Catalogue and Housing Accelerator Fund — lays the groundwork for more affordable market prefab homes to come to a neighbourhood near you, which could impact home types from the small-lot missing-middle to single-detached designs.
Cities are being encouraged to modernize zoning to leverage controlled factory methods that can shorten build timelines and lower costs compared to site-built homes.
For land developers, prefab's scale-up could be a game-changer. Faster builds mean they're holding land for less time, spending less doing it, and recovering costs sooner.
And with homes ready for occupancy faster, homebuyers can move from mortgage approval to closing with fewer hiccups and delays.
Missing middle housing refers to multi-unit home types, such as duplexes, triplexes, fourplexes, townhomes, and courtyard-style buildings, that slot between single-detached houses and mid- to high-rise apartments. They're considered 'gentle-density' options that can add variety and affordability to established neighbourhoods without changing their character.
But try to build these options in older neighbourhoods that are primarily a collection of big lots with single-detached houses? That's when you'll quickly understand why this density type is 'missing' — NIMBYism (not in my backyard) has created powerful community pushback against density, pitching elected city officials against the urgent need to address housing shortages.
Even if the first BCH builds aren't for private sale, more homes in the system help every buyer.
According to CREA housing market data (Oct 2025), benchmark home prices still sit roughly 40% above pre-pandemic levels, leaving many Canadians locked out. When supply rises — regardless of who funds it or lives in it — competition can cool, bidding wars can ease, and home prices can moderate.
That broader housing-pressure relief can mean:
As Canada's prefab industry develops, improvements in technology and workforce expertise could drive down building costs across the board, making modular builds a more practical option for future homebuyers, especially those with land-ready opportunities for installation.
Zoning changes. Cities adopting the CMHC catalogue designs will need to relax or update bylaws to allow for more modular and gentle-density builds, especially in high-cost markets where land use is the biggest barrier.
Financing clarity. Prefab home installations don't fit neatly into traditional mortgage timelines. For a standard mortgage, lenders won't approve a borrower until the home is already installed or within 120 days of completion, and it must meet additional conditions compared to a site-built home.
As a result, buyers often require more expensive construction financing or need to finance the prefab home themselves to bridge the gap during the build.
If prefab developments become more common, financing could 'normalize' to echo site-built ones — helping developers, lenders, insurers, and appraisers apply consistent standards and streamline the process for prefab and modular homebuyers.
Affordability impact. If Build Canada Homes adds new supply as planned, it could help ease future competition and slow price pressures, a welcome evolution after years of sharp price swings and limited listings.
More homes on the market can't fix affordability overnight, but it can help restore balance and make homebuying and mortgage planning a little less of a moving target.
Check out your numbers with our Home Affordability Calculator.
Prefab housing is back in the national spotlight — with old-is-new-again designs intended to shepherd our national housing crunch into a mail-order state of simplicity, harkening back to the days of the Sears catalogue.
Here's what we make simple: Your mortgage solution and savings, helping to ensure your home is more affordable through lower mortgage rates, better mortgage products, and experienced, unbiased advice (that has garnered the most 5-star reviews in the industry).
For those considering a prefab home today, understanding how mortgage financing works is crucial. A True North Mortgage expert can help you navigate the details for financing that fits your timeline and homeownership goals.
Prefab homes can still qualify for a traditional mortgage, whether you're purchasing or renewing.
We offer a competitive, flexible prefab mortgage option if your home is on real property (land you own).
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