Financing Your Barndominium | JJ's Custom Builders (2024)

Barndominiums are quickly gaining in popularity, and for a good reason: they are a great alternative to traditional houses. They offer maximum space at affordable prices and are highly customizable. Barndominums also make a fantastic investment. Converting a barn into several income-producing apartments is an excellent investment.

Most people finance their traditional homes with a mortgage from a national lender; those looking to buy a Barndominium might have to get more creative. While it’s not impossible to obtain a traditional construction loan through a national lender, it may be a bit more complicated. Initially, a lender might be wary of Barndominiums because they are considered unconventional builds. While this is likely to change as Barndominiums become more common, there are many ways to obtain financing.

In some cases, the challenge stems from confusion in terms. If you are working with a large national lender, consider referring to your build as a custom home instead of calling it a Barndominium. You may still be able to get a conventional construction loan.

You have other options if your lender is still hesitant to provide financing.

Financing Your Barndominium | JJ's Custom Builders (1)

First, find a lender who is open to financing non-traditional construction. Usually, those will be lenders that keep their mortgages in-house. The two most successful ways to get a loan for your Barndominium are through your local bank or a Farm Credit lender.

Small Banks

While there are fewer and fewer small, local banks around these days, they still exist and are excellent places to start looking for financing. If there is a bank like this in your area, you’ll want to open an account with them (if you don’t already have one) to gain trust and so they can get to know you before you ever go in asking for a loan.

Farm Credit Lenders

The other place to look is with a Farm Credit lender. Farm Credit, a nationwide network of customer-owned financial institutions, provides loans and financial services to U.S. farmers, ranchers, agribusinesses, and rural homebuyers. They are a great place to look for financing on a Barndominium.

Be Prepared:

No matter what type of lender you use, you need to be prepared for your first meeting. The more you have prepared, the better your chances of obtaining your loan. One of the best things you can do is to calculate, to the best of your ability, the entire cost of building your Barndominium. You should have solid plans to show the lending officer.

You’ll want to show blueprints with schematics and interior details. It will also help if you have a contractor bid ready to go, along with a list of supplies and a realistic timeline. Anything you can bring to the meeting that will raise the confidence level of the lender about your ability to see the project to completion will help you. You want the bank to know that they are financing a well-thought-out project and that you know how to complete this build.

As with any loan, the loan officer will consider your income history, credit score, and the amount of capital you can invest as a down payment.

Your lender will be able to talk you through the different loans and options available to build your Barndominium. Some of the more common loan types (FHA, VA) may not be available if you’re trying to build a Barndominium. The lack of comparable sales (for the appraisal process) in the market usually prohibits the use of these types of loans. Luckily, conventional construction loans are available, as are a couple of other options.

A USDA construction loan is an outstanding choice if you qualify and are trying to build in one of the eligible rural areas designated by the USDA. You can buy land, build a Barndominium, and finance the home with a single loan. The loan will cover everything: buying a lot, inspection fees, administrative fees, builder’s insurance, and even landscaping. Not only do you get the benefit of one loan and one closing, but it’s a government-backed loan with $0 down.

Financing your Barndominium is possible.

No matter where you start — farm credit, local bank, or large national lender — make sure you shop around for the lowest interest rate, best terms, and different types of loans before making a selection.

Considering a Barndominium?

We would love to talk with you more! Contact our team today to learn about pricing, options, styles, and how to get started on your dream Barndominium.

The first step is a phone consultation.
If needed, we will meet with you in person as well!

Get a Quote


PrevPreviousHeating and Cooling a Barndominium

Next5 Things to Consider Before Building a Barndominium in PennsylvaniaNext

On Key

Related Posts

The Value of Choosing a Full-Service Contractor for Your Pole Barn; A Look at JJ’s Custom Builders

When embarking on a pole barn construction project, one of the most crucial decisions you’ll make is selecting the right contractor. While many options exist,

Improving Agricultural Productivity: Tailoring Your Pole Building for Maximum Efficiency

In the realm of agriculture, efficiency is paramount. Every square foot of space should be utilized effectively to streamline operations and maximize productivity. Enter pole

The Benefits of Installing Insulation Alongside Your Roof and Siding

In the realm of home improvement, one often overlooked aspect is the insulation and vapor barrier installed alongside the roof and siding. While it may

Versatile Solutions for Your Business Needs

Pole barns, originally known for their use in agriculture, have evolved into versatile structures that find applications beyond the farm. At JJ’s Custom Builders, we

Pole Barn Maintenance: How to Keep Your Barn in Tip-Top Shape

JJ’s Custom Builders recognizes the significance of preserving your investment, particularly when it comes to pole barns. These versatile structures serve various purposes, from storage

Financing Your Barndominium | JJ's Custom Builders (2024)


Is it hard to get a loan to build a barndominium? ›

Difficulty obtaining USDA loan: Though far from impossible, obtaining a USDA loan for a barndominium may be challenging. Many USDA lenders are unfamiliar with these structures and may be reluctant to finance their purchase.

Why don't banks finance barndominiums? ›

It can be more challenging to finance a barndominium.

That's because they're a relatively new type of home and are considered a unique property by lending guidelines. Thankfully, as these metal homes grow in popularity, getting a conventional loan for barndominium purchases and refinances is getting much easier.

What credit score do you need to build a barndominium? ›

you can likely finance the purchase of a barndominium kit with engineered Floor Plans if you have at least a 580 credit score, but a 620+ FICO score is recommended to ensure you qualify for the most affordable financing rates.

What I wish I knew before building a barndominium? ›

Here are the most important things to know about building a barndominium.
  • Obtain a permit for your project. Photo by Bridger Steel, Inc. ...
  • Test the paint. Photo by Justin Doyle Homes. ...
  • Prepare for surprise costs. ...
  • Plan for electrical work. ...
  • Choose your windows and doors wisely. ...
  • Add insulation—it's important.
Mar 14, 2022

How do people finance barndominiums? ›

You can apply for a traditional mortgage loan to finance your barndominium, but it's essential to meet the lender's requirements, such as credit score, income, and down payment. Your property appraisal will play a significant role in determining your loan amount.

Why do lenders not like barndominiums? ›

Most financial institutions will not provide mortgage loans for barndominiums, largely due to a lack of comparable sales during the appraisal process.

Why are barndominiums hard to insure? ›

While a barndominium is very similar to a traditionally built home, insuring them can be much more difficult. There can be several reasons why insurance companies are hesitant to insure these structures. The primary reason is that these homes are non-standard construction, which means they lack historical data.

How well do barndominiums appraise? ›

Thanks to their grandeur, a barndo could appraise a little higher than your traditional 3-bedroom suburban home. Of course, each property will vary as there is a lot of freedom in the building and design of a barndominium.

Are barndominiums bad investments? ›

As such, it is more difficult to assess the resale value of a Barndominium. Unlike modular homes and trailers, Barndominiums maintain their value and are likely to increase over time. If you are purely looking for a quick resale investment, a Barndominium may not be your best option.

Does FHA lend on barndominiums? ›

Some of the more common loan types (FHA, VA) may not be available if you're trying to build a Barndominium. The lack of comparable sales (for the appraisal process) in the market usually prohibits the use of these types of loans. Luckily, conventional construction loans are available, as are a couple of other options.

Does FHA cover barndominiums? ›

Federal Housing Administration (FHA) Loans

However, it's essential to note that not all barndominiums will qualify for FHA loans; the property must meet specific FHA guidelines, which may vary depending on the local jurisdiction.

What is the most expensive part of building a barndominium? ›

The biggest cost of building a barndominium comes from purchasing and building the metal shell, including the roof, doors, and windows. Other major exterior features that can affect the building cost include: Metal siding.

What are the negatives of barndominiums? ›

If you're considering building or buying a barndominium, consider this list of downsides before you sign your name on a dotted line:
  • Location Limitations. ...
  • Financing. ...
  • Corrosion. ...
  • Noise. ...
  • UV Exposure. ...
  • Wiring Challenges. ...
  • Reselling.
Oct 19, 2022

How long does it take to build a barndominium from scratch? ›

Most barndominiums take approximately 3-6 months to construct. However, just like with a conventional home, a barndominium's construction time depends on various factors including the level of customization.

Do FHA loans cover barndominiums? ›

Permanent Residence: The FHA OTC loan is intended for financing a barndominium that serves as a permanent residence. It's not suitable for structures used solely for agricultural or commercial purposes. Land Acquisition: Similar to manufactured homes, the loan can cover both the land acquisition and construction costs.

How long does it take to build a barndominium yourself? ›

All the finishing touches – drywall, paint, built-in furniture, moulding, roofing, siding, and fascia – can take 1 or 2 months, depending on the level of extravagance and detail. Minimalists will save time in this stage! All in all, most barndominiums take about 6 months to build.

Top Articles
Latest Posts
Article information

Author: Eusebia Nader

Last Updated:

Views: 5993

Rating: 5 / 5 (80 voted)

Reviews: 95% of readers found this page helpful

Author information

Name: Eusebia Nader

Birthday: 1994-11-11

Address: Apt. 721 977 Ebert Meadows, Jereville, GA 73618-6603

Phone: +2316203969400

Job: International Farming Consultant

Hobby: Reading, Photography, Shooting, Singing, Magic, Kayaking, Mushroom hunting

Introduction: My name is Eusebia Nader, I am a encouraging, brainy, lively, nice, famous, healthy, clever person who loves writing and wants to share my knowledge and understanding with you.