Barndominium Financing | Your Best 101 Guide for 2024!

Barndominiums have been gaining popularity these past few years as an alternative to traditional houses. They are multifunctional and, as such, are considered excellent investments by homeowners. You can have a house, a workshop, a garage, and a man cave under one roof. If you want a barndominium, you can either buy an existing one or build a new one for yourself. Both options require putting up the money, and that’s where barndominium financing can help you. How do you finance a barndominium? Is it the same process as financing a conventional house? 

This guide will help you understand the process of financing a barndominium. We will walk you through the steps you need to take and the documents you need. We will point you to financial institutions that might help you build your barndo. We will also give you tips to make the process easier and increase your chances of getting your barndominium loan application successful. However, if you’re still not sure if this type of home is right for you, make sure to read our extensive barndominiums guide – it will definitely help you make your mind up! And now back to financing…

Is it Hard to Get Financed for a Barndominium?

One thing that attracts homeowners to barndominiums is their unique appearances. Build them on a street filled with traditional houses, and your barndo will surely stand out. Unfortunately, this uniqueness also makes barndominium financing a bit harder. 

The process of securing a loan from a bank or lending company was built around traditional houses and buildings. It is not unusual to encounter loan officers who haven’t even heard about barndominiums before. 

There is also the issue of appraisals. Appraisers determine the loan amount depending on the appraised value of a property. This involves comparing your property to similar properties in the area. If you live in an area with no other barndominiums, the appraiser can’t assign a value to your property, which can result in your loan getting denied. 

Why Finance Your Barndominium? 

Although barndominiums are generally cheaper than traditional houses, you still need money to build them. The cost of building a barndo can also change depending on its size, design, materials, and location. A metal building home loan can help provide you with the required funds to complete your barndo. With the help of a barndominium loan, you can get relief from the financial stress of your construction project. This can help you devote your complete attention to monitoring the progress of your project instead of worrying if you have enough funds or if you’ll be left with a half-finished building. 

You can still benefit from metal-building home financing even if you have enough cash. Instead of using your entire savings to build, you can invest your money and use the loan to build your barndominium. You can also keep your savings intact for emergencies.

Is There a Difference Between Buying and Building When Financing for a Barndo? 

Yes, there are differences between buying and building a barndominium from a financing standpoint. If you’re buying a barndo, the process of securing a loan is similar to that of someone applying for a loan to buy a house. Most banks will require a down payment, proof of income, credit score, and details of the building you want to buy. Before heading to your bank, have a professional assess the barndominium you wish to purchase. Your bank might not distinguish between a barndominium and a traditional house, as long as the barndo you want to buy meets building codes for a permanent residence. 

Getting financing for constructing a barndominium is a bit more complicated. On top of the requirements mentioned earlier, you will need to submit more documents related to the planned construction. These documents may include the blueprint of the structure, details of subcontractors and their bids, a list of building materials and supplies, etc. Stick around for more information on these documents. 

A public forum like our Facebook group is a great source of information. You can ask other members about their barndominium mortgage experiences and the documents they had to submit. 

What are the Different Types of Loans Available for Financing a Barndominium? 

What’s great about barndominium financing is that you can explore different types of loans. We’ll tell you more about them to help you choose the right type of loan depending on your needs. 

Conventional Loan

Simply put, this loan is not part of a particular government program. Conventional loans are cheaper and have better mortgage rates than other loan types. However, you need a good or excellent credit score to qualify.  

Conventional loans are the most common loan types. It is possible to qualify for a conventional loan with a low credit score but expect higher rates, or you might be required to put down a larger down payment.  

A conventional loan can provide up to $647,200 for a single-family home or as high as $970,800 if you are building in a location designated as a high-cost area. If you need a more substantial loan, apply for a jumbo loan instead. 

USDA Construction Loan

This metal building home loan is guaranteed by the United States Department of Agriculture or USDA. This type of loan intends to make housing affordable for those living in rural areas. However, the USDA does not issue you the loan, you get the loan from another lender, and the USDA backs the loan.

One of the perks of USDA Construction Loans is that they don’t require a down payment. The USDA also simplified the loan application process with its Single-Family Housing Guaranteed Loan Program, a construction-to-permanent loan. Instead of applying for two separate loans, one for the construction and one for the barndo itself, you can have both in a single close loan. This is a convenient and time-saving option because you only need to submit documents and undergo the application process once. If you want to learn more about it, make sure to read our extensive guide on USDA loans for barndominiums.

FHA Construction Loan

This loan lets you roll the costs associated with building a barndominium into an FHA mortgage loan. As its name suggests, this loan is backed by the Federal Housing Administration. This is an ideal loan if you haven’t purchased the land where you want to build because it covers all expenses, including buying the land, building materials, labor costs, and building permit fees.

The FHA Construction Loan has a low down payment requirement of a minimum of 3.5%, making it ideal for homeowners who cannot afford higher down payments. 

VA Construction Loan

A VA Construction Loan is a construction loan exclusively for service members and veterans who want to build their homes. You can also be eligible if you are a qualifying National Guard personnel, an eligible reservist, or a qualifying surviving spouse. One downside to this type of loan is that not all lenders offer VA Construction Loans. 

A VA Construction Loan is a short-term loan. Instead of one upfront payment, a VA Construction Loan only pays for the portion of your completed barndominium. 

One thing that makes a VA Construction Loan attractive is that it often doesn’t have down payment requirements. Some applicants are exempt from paying the VA funding fee, such as applicants receiving VA disability or qualified surviving spouses. 

How Do Lenders Classify Barndominiums Before Financing Them?

Although a barndominium looks unique compared to a traditional house, this is purely a difference in aesthetics. In the eyes of a lender, a barndominium and a regular house are the same as long as the existing barndominium or proposed construction passes building regulations.  


Assessing a structure from a lender’s perspective is a systematic process. The lender has a list of qualifications or criteria to determine if you qualify for a construction loan or metal building home mortgage.  

Credit Worthiness 

Creditworthiness is exactly what it says it is, a determination of how worthy you are to receive new credit. Your creditworthiness helps lenders determine how likely you’ll repay your loan obligations. If you have a good credit score of at least 670, the higher your chances of getting approved for a loan increase. It is also more likely that you will be given lower interest rates.

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If you have a low credit score, you might still qualify for a loan with a caveat. Borrowers with low credit scores might be offered a smaller loan limit. Another possibility is your bank giving you higher interest rates. Worse comes to worst, the bank might reject your application.    

Although your credit score plays a huge role in determining your creditworthiness, it is not the only factor. Lenders also look at your debt-to-income ratio or your capacity to pay according to your income. This means that you need to prove that your monthly income is enough for your living expenses and debt payment. 

Credit reports also play a role in determining creditworthiness. All three credit bureaus, TransUnion, Experian, and Equifax, generate credit reports. This report details the data on your current and past debt obligations. Lenders use these reports to review the details of your past debts and check if you can settle obligations on time. 

Your Full Home Selection’s List 

You must furnish the lender with a complete list of your barndominium selections. This can include but is not limited to the type of floor materials you want to use, bathroom fixtures, lighting fixtures, etc. Be as comprehensive as possible, as the lender will use the information to estimate how much money you need.

For example, ceramic tiles are more expensive than vinyl flooring materials. For your kitchen countertop, a marble countertop is pricier than one made of laminate or butcher block. 

The idea is to give the lender a ballpark figure of how much it will cost to finish your structure. Don’t worry because the list you provide is just for reference. You’re not bound to just the materials you listed during your application. 


“Location, location, location” is a phrase common amongst real estate agents to emphasize how location impacts the value of a property. A 2-bedroom bungalow in Santa Clara County, 

California will be pricier than a 5-bedroom, two-story house in rural Ohio. This is due to their locations and because the value of the land where your barndo will be constructed will affect the property’s overall value. 

Another factor is the appraised value of the other properties surrounding yours. If similar structures in your area have high appraisal values, your property will also have a higher appraisal value. This is where a barndominium might be at a disadvantage because they are rare, and the lender might not have a similar property to compare with.  


A collateral is something you pledge as security for loan repayment. It can be a house, a lot, or your savings account. The bank can legally seize your collateral if you default on your loan. 

Aside from increasing your loanable amount, there are other benefits to putting up collateral. With collateral help, even borrowers with bad credit, low income, or poor employment history might qualify for a loan. 

What Do You Need Before Trying to Get Financed for Your Barndo?

You need to do some things before applying for a metal building home loan; accomplishing the list below can help improve your chances of getting your application approved. It can also help cut down application time and save you the hassle of going to your bank or lending company multiple times just to pass requirements. 

Pay Off Your Debts

If you have outstanding debts, especially sizeable ones, pay them off. Outstanding debts can reduce your chances of getting your application approved. The logic behind this is simple if your income is just enough for living expenses and paying outstanding debts, how will you manage to pay another loan?

Building Plan

This is critical in applying for a barndominium construction loan because the lender will use your building plan to assess the value of your project and determine how much your loanable amount will be. Some homeowners use hand-drawn plans, but it will be better to present a professionally-drawn plan. If you want to draw up a plan yourself, try using a computer program like AutoCAD to make the plan look more professional and presentable. 


This is something mentioned earlier but bears repeating because of its importance. List down the timeline for construction, labor costs, the materials you will use, and corresponding price estimates. If you have a contractor, get a quote for how much the project will cost. The lender will use the estimates to determine your loan amount. Check with your bank because they sometimes have the Cost Breakdown Form you need to fill out. 

Contractor Information

Compile a builder package for your lender that includes a general resume and references. You should also get a copy of your contractor’s license and insurance bond. Make sure that the license is current and that they are authorized to build in your state.  

Prepare Your Credit Report

Get a copy of your credit report even though your lender will have a copy of your credit report. If you have a copy of your credit report, you can check for errors or discrepancies. This will give you a chance to try and correct them or gather supporting documents to disprove the said errors. 

If you’re looking for a financial institution to give you a barndominium mortgage or construction loan, your best bet is to start with your bank. Banks are more likely to approve a loan and offer great rates to borrowers with an account. Don’t be afraid to shop around to compare rates and terms and get the best possible offer. Aside from your local bank, we’ve listed other institutions offering barndominium financing deals. 

Atlantic Bay

Founded in 1996, Atlantic Bay Mortgage Group has headquarters in Virginia Beach, Virginia. Atlantic Bay offers conventional and other home loans to borrowers.

Wells Fargo

Wells Fargo has been operating since 1852 and is headquartered in San Francisco, California. It is a multinational financial services company that offers home mortgage loans for those who want to own a barndo. 

Rocket Mortgage

Rocket Mortgage is a mortgage lender founded in 1985. They offer home loans, VA, and FHA loans. They also offer Jumbo Loans for loans up to $2.5 million. 

New Century Bank

New Century Bank was chartered in 1905 in Munden, Kansas. They offer conventional, FHA, and VA mortgages. They also offer construction loans with a permanent home mortgage.

Local Banks

A local bank is an excellent option for getting a loan because they often have great relationships with their clients since they belong to the same community as their clients. Another advantage of getting a loan from a local bank is that they are often more expedient in processing applications. This is because, unlike national banks, they don’t need to send applications to their main branch for approval. 

Farm Credit Union

Farm Credit is another favorite among homeowners for barndominium loans. They are independent financial institutions owned by members. Their main thrust is supporting rural and agricultural communities, making them ideal for those who want to build barndos. 

You can find Farm Credit all over the country, but the number of locations will depend on how many Farm Credit members there are in a state. States like Texas, Ohio, North Carolina, Michigan, and California have more than 20,000 members each. Other states, like Georgia, Florida, Oklahoma, and Arizona, have fewer members. 

However, having more members doesn’t always translate into a larger loan volume. For example, Texas has almost 50,000 members and a loan volume of $29.9B. On the other hand, California has around 21,000 Farm Credit members, but their loan volume is $40.7B. This can be because of several factors, like the high prices of land and building materials in California. It can also mean that Texas residents are partial to other lending companies or that their loan amounts are smaller.

Does Financing a Barndominium Differ Across Different States?

No, barndominium financing is the same across different states. However, the requirements to get loan approval differ depending on the bank or lending company issuing the loan. Some are stricter and demand more documents, while others require fewer documents. Some banks request more requirements depending on the borrower’s credit score or capacity to pay. 

There are also differences in the way banks handle barndominium loans. For example, New Century Bank has a mortgage specifically for post and steel frame buildings, while other banks treat barndos like conventional houses. Banks with barndominium loans may be better because they are more familiar with your planned structure. However, this is not a guarantee that your loan will get approved. At the end of the day, approval still rests on your qualifications to receive a loan. 

Lenders also differ on the amount of down payment they require. Rocket Mortgage states that first-time home buyers may be able to get a conventional loan with as low as a 3% down payment, depending on the borrower’s qualifications and the type of loan they are applying for. On the other hand, New Century Bank did not mention a minimum down payment, only saying that it would depend on the lender reviewing the loan application. 

It is important to note that banks and lending companies are businesses and have their internal processes and requirements. By applying for a loan, you submit yourself to these processes, and you must abide by them to get your loan. The best thing to do is consult several banks about your loan application. You can compare their requirements, terms, and rates to help you choose the lender offering the best deals available.  

Frequently Asked Questions (FAQs)

Financing a barndominium can be tricky if it’s your first time building one. Some things might be unclear to you, and this section aims to answer some of your questions about how to finance a barndominium.

How hard is it to get financing for a Barndominium?

It will depend on several factors. If you have an excellent credit score and can prove that you can pay, then financing a barndominium will be easy. The challenge is if you are building or buying in an area with no other barndos because the lender will find it difficult to appraise the structure and determine the loan amount. 

Will banks finance a barndominium?

Yes, banks will finance a barndominium. Although some banks treat barndominiums the same as conventional houses, others have specific loans for metal buildings such as barndos. However, do your research first because there are also banks that don’t consider them as permanent residences. 

What credit score do you need to build a Barndominium?

If you are applying for a conventional loan, you must have a credit score of at least 620. This is the minimum score, and a higher credit score increases your chances of getting approved for the loan amount you are eligible for. 

FHA loans are more forgiving and require only a FICO score of at least 580 to qualify for the low down payment advantage at 3.5%. You can still apply for an FHA loan with a FICO score lower than 580, but you will have a required down payment of 10%. 

What is the maximum acreage for a Fannie Mae loan?

There is a myth that Fannie Mae imposes a 10-acre limit on loans, but this is incorrect. There is no specific limitation to the acreage or size of a lot as long as it is predominantly residential in use and appraised using Fannie Mae Form 1004.

Can you use a VA loan to build a Barndominium?

Yes, you can fund a barndominium using a VA loan as long as the structure meets the property and occupancy requirements set by Veterans Affairs. There are also other guidelines, like the stipulation that the property will be primarily used as a residence. Contact the VA office to get a complete list of requirements if you intend to take a VA loan. 

To Wrap Up

Some homeowners find barndominium financing intimidating but in almost all aspects; it is the same as a regular housing loan. Many financial institutions are willing to extend their assistance to those who plan on building a barndo. Spend time researching your barndominium financing options to choose the best option available.

Don’t forget to check our Facebook page and join our Facebook group with over 125,000 helpful barndominium enthusiasts ready to share their own financing stories and educate you more about barndominiums and the different financing options you can explore.

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