Barndominiums are a fantastic investment. While they are something that has been around since the 1980s, in recent years they have picked up in popularity again. They are a fantastic alternative if you are looking to purchase a home that is different from your average.
When it comes to purchasing a Barndominium like with any other type of house, 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.
However, you will be reassured to know that there are a number of ways in which you can finance a barndominium, and there are a handful of lenders that will offer you loans for this type of property.
In this article, we will be chatting through all the different ways in which you can finance a barndominium.
Can you get a home loan for a Barndominium?
When it comes to purchasing any type of home, the most common way to finance it is through home loans. This allows you to purchase a home without having to worry about paying for the property upfront. By paying back the loan monthly, this is by far the easiest way to acquire a property.
As we have mentioned at the beginning of this article, it is possible to get a home loan for a barndominium. If you are unsure of whom to approach in regard to this, two of the most common ways to acquire a loan are through a local bank or a Farm Credit lender. Both of these 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 option, 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 have a meeting with them, they will be able to chat with you through 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, for a barndominium, this is typically around 20%. However, credit checks and your credit score history does need to be taken into account too.
Buying VS Building
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 buying and building is slightly different. As a result, there will be differences in the type of financing you receive.
When you are looking to buy a barndominium, while you can purchase one 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 in order to secure the property. You will then pay this off on a monthly basis.
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 in comparison to purchasing a typical home, it is still possible to receive the loan and funding needed.
However, when you are looking to finance a build there are a number of additional things that will need to be taken into consideration. If you are choosing to seek a loan the most popular option is to choose a Farm Credit lender. Typically, they will help you when it comes to building finances.
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 accepted for a loan. 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 this 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.
When you acquire a building barndominium loan, these typically are 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. This is 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 borrow a loan, you can choose to self fund the project. Though, this can be quite costly.
We hope that you have found this article useful and insightful. When it comes to 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 limited slightly in the loan options available to you. However, there are many lenders who will be more than happy to finance 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.