Financing Your Barndominium Build: Loans and Options
Building a barndominium is an exciting way to create a home that blends style, comfort, and practicality. These homes are gaining popularity for their open layouts, affordability, and rustic charm. But one of the biggest questions future homeowners face is how to finance their build. Unlike traditional homes, barndominiums often fall into a unique category when it comes to loans and lending options. Understanding how financing works can make the process smoother and help you turn your dream home into reality.
Understanding Barndominium Construction
Before diving into financing, it helps to understand what makes a barndominium unique. While some people think of them as metal buildings, many are actually built with wood framing and finished with durable metal siding. At Barndos Direct, homes are framed with 2x6 exterior walls and 2x4 interior walls, ensuring strength, insulation, and design flexibility. The exterior siding is typically metal, but homeowners can upgrade to 26-gauge board and batten siding or 26-gauge standing seam roofing for enhanced durability and aesthetic appeal. This construction approach provides a solid structure with the charm and functionality that barndominium living is known for.
Why Financing a Barndominium Is Different
Barndominiums often combine elements of both residential and agricultural construction. Because of that, not every lender classifies them as standard homes. Some treat them like custom homes or even pole barns, which can make the lending process a bit more complex. However, more lenders are beginning to recognize the growing demand for barndominiums and offer dedicated loan options for these builds.
Here are a few factors that can influence your financing options:
Appraisal challenges: Some lenders may find it difficult to compare barndominiums with traditional homes due to limited local comps.
Construction type: Wood framing with metal siding can sometimes be considered non-traditional, so providing detailed plans helps lenders assess the build.
Land ownership: Owning your land outright can improve your loan terms and simplify the approval process.
Builder reputation: Working with an experienced builder that specializes in barndominiums, like Barndos Direct, reassures lenders that your project meets quality standards.
In-House Financing with Rural First
Something to note — Barndos Direct also offers in-house financing through Brandon Savage at Rural First. This partnership gives clients a convenient option to explore competitive loan programs designed specifically for rural and barndominium-style construction. Working directly with a financing expert who understands these projects can streamline the approval process and make the transition from planning to building much smoother.
Types of Loans Available for Barndominiums
When financing your barndominium, several types of loans are available depending on your budget, location, and timeline. Let’s take a closer look at the most common options.
1. Construction Loans
A construction loan is one of the most common ways to finance a new barndominium build. These short-term loans cover the cost of construction and are typically converted into a long-term mortgage once the home is complete. Funds are released in stages, known as “draws,” as different parts of the project are completed.
Benefits:
Allows for flexible financing throughout the build
Interest-only payments during construction
Converts into a permanent mortgage after completion
Things to Know:
Requires detailed plans, cost estimates, and a licensed builder
May involve multiple inspections and appraisals
Interest rates are typically slightly higher during construction
2. Conventional Mortgages
If your barndominium meets standard housing criteria, you might qualify for a conventional mortgage. Lenders that understand barndominium builds may treat them like stick-built homes, especially when they’re constructed with wood framing and include permanent foundations.
Benefits:
Lower long-term interest rates compared to construction loans
Easier to refinance in the future
Potential for down payments as low as 3% for qualified buyers
Things to Know:
The property must meet lender standards for residential classification
Appraisals must show comparable sales in the area
3. FHA Loans
FHA loans are government-backed loans designed for first-time or moderate-income buyers. They can be a great choice if your credit score is on the lower side or if you need a smaller down payment.
Benefits:
Down payments as low as 3.5%
More flexible credit requirements
Competitive interest rates
Things to Know:
The barndominium must meet FHA property standards
Some lenders may not offer FHA loans for non-traditional builds
4. USDA Loans
If you’re planning to build your barndominium in a rural area, a USDA loan may be ideal. These loans are backed by the U.S. Department of Agriculture and aim to support homeownership in less-populated regions.
Benefits:
No down payment required for qualified applicants
Low mortgage insurance costs
Competitive fixed rates
Things to Know:
The property must be located in a USDA-eligible area
Income limits apply based on household size and region
5. VA Loans
Veterans and active-duty service members may qualify for VA loans, which can be used to finance a barndominium build if it meets specific requirements. These loans are among the most affordable options for qualified applicants.
Benefits:
No down payment for eligible veterans
No private mortgage insurance (PMI)
Competitive rates with flexible terms
Things to Know:
Must meet VA property standards
Builder and construction plans must be approved by the VA
Tips to Improve Your Chances of Loan Approval
Getting financing for a barndominium is achievable, but preparation is key. Here are a few steps to make the process easier and increase your likelihood of approval:
Work with experienced lenders: Choose a lender familiar with barndominium builds to simplify the approval process.
Prepare detailed construction plans: Include specifications, materials, floor plans, and cost estimates to demonstrate the project’s quality and value.
Boost your credit score: A higher credit score can help you secure better interest rates and terms.
Have a realistic budget: Include a contingency fund for unexpected expenses.
Own your land if possible: Owning land outright can strengthen your financial position and reduce lender risk.
What About Financing Upgrades?
Barndominiums offer flexibility not only in layout but also in finishes and materials. Optional upgrades, such as 26-gauge board and batten siding or 26-gauge standing seam roofing, can increase long-term value and reduce maintenance costs. If you want to include these upgrades, discuss them with your lender early in the process. They can often be rolled into your construction loan if included in the builder’s contract.
Current Market Trends
Barndominiums have seen a surge in popularity over the past few years, especially in regions where land is more affordable and open spaces are abundant. According to the National Association of Home Builders, the cost to build a barndominium can range between $120 to $160 per square foot on average, depending on materials, finishes, and location. This makes them a cost-effective alternative to traditional custom homes while offering the same comfort and style.
Many homeowners are choosing barndominiums not only for the financial advantages but also for the lifestyle benefits. The open floor plans, energy efficiency, and modern designs provide the perfect mix of practicality and personality.
Final Thoughts
Financing your barndominium build might seem complex at first, but with the right information and team, it’s a manageable and rewarding process. From construction loans to government-backed programs, there’s an option for nearly every budget and situation. The key is preparation, transparency, and working with experts who understand your vision.
Whether you’re just beginning to plan or ready to start building, taking the time to explore your financing options will help you move forward with confidence. A well-planned budget and the right loan can bring your dream barndominium to life sooner than you think.
Start Planning Your Dream Barndominium Today
If you’re ready to explore your financing options and begin designing your custom barndominium, visit Barndos Direct. Their experienced team can help you plan your build from start to finish — and with in-house financing available through Brandon Savage at Rural First, securing the right loan has never been easier.