Barndominiums are a fantastic investment. While they have been around since the 1980s, in recent years, they have picked up in popularity again. They are a fantastic alternative if you are looking for a home that is unlike anything else on the market.
When it comes to purchasing a barndominium, it does come at a significant cost. Given that barndominiums are not your average house, you may be unsure of how you can finance one.
Fortunately, there are several ways to finance a barndominium, and a handful of lenders will offer you loans for this type of property.
In this article, we have laid out all the different ways in which you can finance a barndominium. By understanding the process and getting to know the challenges, you can give yourself the best shot at success.
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What is a Barndominium?
A barndominium is a home built using the shell of a post frame building or pole barn. These types of structures are usually used for things like warehouses and stables. However, they can also be turned into beautiful, modern homes with a little bit of modification.
Barndominiums are built on top of concrete slab foundations. The posts are driven into the ground or the slab, and then the steel frame is built on top of that. This makes them incredibly stable and very durable, so they will last for years to come.
Can You Finance a Barndominium?
When purchasing any type of home, the most common way to finance it is through home loans. This allows you to purchase a home without worrying about paying for the property upfront. Paying back the loan monthly is the easiest way to acquire a property.
As we have mentioned, it is possible to get a home loan for a barndominium. If you are unsure of who to approach about this, two of the most common ways to acquire a loan are through a local bank or a Farm Credit lender. Both options will give you the best chance of receiving a loan.
Even though these are the two most successful options, you can choose to try a national lender if this is an option you prefer. While this is not the most popular choice, many people do find success when going down this route.
If you are an existing customer with your bank, this could be a great place to start. If you meet with them, they will be able to chat with you about the different options you have. This will also give you a better idea of how much you will be able to borrow and how much of a down payment you need.
When it comes to down payments, the amount needed will vary from person to person. On average, to finance a barndominium, this is typically around 20%. However, credit checks and your credit score history need to be taken into account as well when you are trying to finance a barndominium.
Buying VS Building
Buying a Barndominium That is Already Built
When it comes to financing, another important decision you will need to make is whether you are going to buy or build a barndominium. This is because the process of getting a loan for buying vs. building is slightly different. As a result, there will be differences in the type of financing you receive.
While you can purchase a barndominium outright, the vast majority of people will not have the funds for this. As a result, you will likely need to borrow a loan and have a down payment to secure the property. You will then pay this off every month.
The borrowing process for purchasing a barndominium is very straightforward and similar to how you would purchase any other type of property. While there are not as many financing options available compared to purchasing a typical home, receiving the loan and funding is still possible.
Building Your Own Barndominium
Several additional things will need to be considered if you are looking to finance a build. If you seek a loan, the most popular option is to choose a Farm Credit lender. Typically, they will help you finance a build for any agricultural-type structure like a barndominium.
What You Need Before Trying to Get Barndominium Financing
Before you meet with a Farm Credit lender, it is useful to have a good idea of your plans for the barndominium. The more detailed your plans are, the more likely you are to be able to finance a barndominium. After all, the Farm Credit lenders will want to ensure that the barndominium can be built on the plot and that you are capable of paying the loan back.
Having a good idea of how the barndominium is going to be built and the costs it is going to incur is essential. The lender will want to know exactly how much you are looking to borrow from them.
When it comes to barndominiums, they can vary significantly in price. Given this, you will want to ensure you have calculated everything correctly before the meeting, and have detailed plans you can refer to.
Once You Are Approved to Finance a Barndominium
When you acquire a barndominium construction loan, they are typically split into two different parts. The first part of the loan is the building loan, and this will cover the cost of the materials used to build the barndominium and things such as the labor costs.
The second part of the building loan will cover the financing. They will include things such as the residual costs and are in addition to the building loans. These are typically the other costs that will occur such as setting up payment plans.
If you have saved up a significant amount of money, however, you do not need to get a loan. You can always choose to self-fund the project. Though, this can be quite costly, and it is important to keep other costs in mind like taxes and insurance.
Conclusion
We hope that you have found this article useful and insightful. Regarding barndominiums, they can be financed, whether you choose to finance them yourself or through a loan.
As they are not as popular as regular properties, you are slightly limited in the loan options available. However, many lenders will be more than happy to finance the project if you meet the criteria.
The most important thing to remember is that you need to have a clear idea of the costs, planning permission, and preferably a clear plan before meeting with an advisor.
If you are ready to start building the barndo of your dreams, check out our barndominium floor plans to help you create the barndominium of your dreams or use a barndominium design software program to help you plan out your space for your new home. When in the planning stages, be sure you also check out the barndominium financing and insurance options that are available. For more helpful tips, visit our FAQ barndominium section to get answers to all your barndo questions.
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