The U.S. Department of Veterans Affairs (VA) has done a lot of work over the past 50 years to not only provide a community for American military veterans, but also to support their daily post-service lives. One such program offers home loans to veterans, service members, and their surviving spouses.
One of the biggest questions attached to the VA home loan program is whether or not a person is limited to what time of home they can finance with a VA loan. More specifically – can you use VA loans for barndominiums?
The short answer to this question is yes. Barndominiums are highly budget-friendly new constructions, which can be even easier with the proper financing program. But especially because barndominiums are one of the most easily customizable homes available on the housing market today, it’s important to do your research and start your planning early.
Read on to learn how to take advantage of VA loans for barndominiums – and how you can start building your dream barndominium today.
What is a barndominium?
Post-frame buildings have been used as an agricultural staple for almost 100 years, but the concept of converting these structures into chic, metal buildings is still relatively new to the housing market.
Barndominiums can be built in half the time of traditional home construction – and they usually cost about half of the money per square foot. A lot of this is due to the simplicity of the barndominium design. A barndominium places sheet metal siding around a pole barn frame, and this is built on top of a concrete slab.
These materials have become popular in new home designs because they are long-lasting and can remain free from rot and mold. And the post-based framing of the home allows for the weight of your house to be distributed through the exterior walls and roof instead of interior beams. This leaves the main space of your home as a customizable, open-concept floor plan.
Especially if you are okay with a minimalist house, a basic barndominium will give you a lot of interior floor space at a very low cost. This can be customized into recreational vehicle storage, a large workspace, or even the home gym you’ve always wanted to create!
Barndominium Financing Basics
Because barndominiums are still a newer home idea, you must do a little extra work if you want to use a traditional mortgage lender or bank to finance your home construction. This is mostly because most home lenders don’t yet know how to determine the value of a barndominium home.
However, there are several ways you can work around this. Working with small local banks means you are more likely to get financing for a nontraditional home. Or, if you plan to use the land where you’re building your barndominium for agricultural endeavors, you can acquire a home loan through programs like Farm Credit.
One of the other ways to guarantee financing for your barndominium home is to have clear plans for your project. This includes a detailed floor plan and budget breaking down all the building materials you plan to use to construct your barndominium home. It also helps to work with experienced contractors and barndominium builders in your area to help you navigate zoning laws and building codes. Finally, you can always reach out to a building appraiser to help you determine the long-term value of other barndominium homes in the area where you plan to build.
In short, if you’re willing to do the work and research, barndominium home financing is highly possible.
What are VA Loans?
The VA loan program was first developed after World War Two, as an alternative to cash bonuses for military service members. The initial goal was to help veterans afford housing for their families after returning home from active duty. At that time, one in five new homes being built throughout the United States was financed with the help of a VA loan. VA loans greatly boosted the American economy then, and they still continue to do this while also helping veterans and their families find beautiful housing.
In the 73 years since they were first developed, VA loans have helped military families build over 20 million homes at affordable rates. The lending amount has also increased from $2,000 to over $420,000. When the average home cost is around $330,000, this could mean you can finally purchase the perfect home for you and your family.
There are now more stipulations about how this money can be spent, when it can be spent, and who exactly can spend it. But one of the best parts about using a VA loan for barndominiums is that you are taking the benefits of a low-cost mortgage and buying more house for even less upfront money.
When you think about it that way, it should make a lot of sense for American veterans and their families to use their VA loan benefits to build a new barndominium!
Using VA Loans for Barndominiums
VA loans for barndominiums can be used to build a new custom barndominium home or to purchase a prebuilt barndominium in your area that’s on the market. But outside of the fact that you don’t qualify for a VA loan unless you’re a veteran, service member, or military spouse, there are a few other guidelines attached to this finance program that will impact your barndominium home.
Here is a list of some of the top VA loan details you’ll need to keep in mind for a barndominium home purchase:
- VA loans can only be used to pay for primary residences, not secondary or vacation homes.
- A home financed by a VA loan must include a functioning HVAC and electric system.
- You must have a working roof that is built as a permanent fixture to your home.
- The floor plan for your barndominium must include at least 400 square feet of living area (keep in mind, the average barndominium includes 1200 square feet of interior living space).
- You cannot use lead-based paint anywhere in your barndominium, and it should be free from mold and rot (good thing barndominiums use metal building supplies and a concrete slab foundation that guarantees this for years after the home is built).
- A VA-loan-financed home must also include a working sewage system and all-weather street access.
To summarize, VA loans for barndominiums will help you pay for a barndominium home near established neighborhoods and housing developments. This is not an option if you are hoping to purchase a barndominium in a highly rural area away from other people.
New Barndominums and VA Loans
It’s important to note that VA loans are funded by the private lending group of the Department of Veterans Affairs. This means they have the final say on whether you will receive financing for your new home project. And most often, this means they are most likely to approve financing for established home purchases, instead of new home construction.
But there is a possible workaround for this detail as well. As a veteran, you can always apply for a VA loan to refinance your home project. So this would mean you could build your dream barndominium with the help of financial support from a local lender through a construction loan. Then you could convert your construction loan into a permanent VA loan mortgage.
If you choose to go this route, your barndominium home will need to be built to meet all the standards of a traditional VA home loan. Believe it or not, this will save you even more money if you keep these details in mind for your new barndominium home. This means you should look for empty lots that are already connected to electricity and sewage lines. Paying attention to details like these will help keep your home project on schedule and more affordable from the beginning.
When all of this is done, you will be ready to refinance your barndominium home through the VA cash-out refinance program. All you need then is proof of your employment and other financial records to prove you have the income to make your new mortgage payments on time.
Now that you’ve read through our guide to VA loans for barndominiums, the only thing left to do is to get started on your new post-frame home design! Feel free to check out our barndominium FAQs, including a guide to barndominium resale value and 5 amazing barndominium interiors.
We also have a lot of great state-based barndominium builder guides, no matter where you plan to build your barndominium in the United States. And you can even see barndominium floor plans on our website to help get the ideas started for your new home project as soon as possible.
If you want to learn more before you commit to building your post-frame home, check out our eBook Building Your Dream Barndominium. It’s affordable, informative, and will give you every resource you need to move forward with your post-frame home build confidently.