Pole barn homes, also known as shouses, barndominiums, or barn-homes, are buildings that use poles or posts as primary structure as opposed to traditional framing. If you are one of the many people who are planning to build a pole barn, you will find out that it can be a challenge to finance these projects. This is because pole barn homes are unconventional housing alternatives, so most lenders are not yet familiar with how these homes are built or how long they last.
Lenders and financing institutions do not want to risk financing something they know little about. This does not mean getting financing for these houses is impossible. This article will provide all the information and methods necessary to get a loan for your pole barn home.
Table of Contents
What is Pole Barn Home Financing?
Pole barn home financing is a type of mortgage loan used to finance the construction of a home built using a pole barn-style method. These structures are usually used for agriculture and industrial purposes, such as barns and warehouses. However, in modern times, this type of construction is commonly used for residential purposes; check out our pole barns guide for in-depth information on these types of buildings. The financing process for these buildings is similar to a traditional home loan.
How Does It Work?
Financing works by providing a borrower with the funds necessary to build or purchase a home. Typically the borrower will need to provide a down payment and meet certain credit and income requirements. Some lenders may have specific requirements for pole barn homes, so it is best to look into multiple financing solutions to compare your options before applying for financing.
The borrower will typically make monthly payments to the lender, which include the repayment of the principal amount plus interest. After the loan is fully repaid, the borrower then owns the property. However, if the borrower fails to make a payment, the lender can take possession of the property. It is important to understand the terms of the loan, the types of mortgages, rates, terms and conditions, and the pros and cons of each option.
How Can You Finance Your Pole Barn Home?
As with many projects, you can choose to finance your pole barn home in several ways. Below are some of the options you can consider, along with the pros and cons. The best one for you depends on your needs and financial situation. Pole barn homes are unique alternatives to traditional housing. For more information about these types of homes, we put together the pole barn homes guide.
Paying in Cash
If you have the cash at hand, you can pay for the construction of your pole barn home upfront.
Pros
- The most cost-effective way.
- You don’t have to deal with monthly payments and interest.
- You will be the owner of the property. Lenders will not be involved in your project.
Cons
- You need to have enough funds readily available.
- Not very practical for many people.
Personal Loan
Personal loans are typically lent based on your credit score, as they are mostly unsecured loans. This means the lender cannot take possession of your home if you fail to make payments. If you have a good credit score, you might find a personal loan the best option.
Receive Quotes from Multiple Barndominium Builders & Kit Providers Near You Today (It's Free!)
Fill in this 1-minute form below and receive estimates for your project without having to find them yourself! Let them do the work.
Pros
- Convenience. They are easy to acquire and don’t require you to send your building plans.
- Good interest rates for those with good credit scores.
- Flexibility. You can pay early with no penalties.
Cons
- By using collateral, you risk losing property.
- Interest rates can be high for those with poor credit scores.
- It can be challenging finding loans over a certain amount of money.
Home Equity Lines of Credit (HELOC)
This type of loan allows you to borrow money using the equity in your home as collateral. With a HELOC, you can access funds as needed rather than borrowing a lump sum at once. HELOCs are similar to credit cards, with a revolving line of credit that can be borrowed against and repaid multiple times.
Pros
- The option to access funds as needed rather than a lump sum can mean more flexibility with your loans.
- Interest pain on a HELOC may be tax deductible.
- You can pay the loan with no penalties.
Cons
- Having access to a line of credit can be tempting. It is easy to overspend and end up with unplanned debt.
- If you are unable to repay the loan, you may risk losing your home.
- Interest rates can change over time based on market conditions. This can lead to higher payments if interest rates rise.
Credit Cards
Although this method is not recommended for everyone, it is worth mentioning that credit cards can be an option to finance your pole barn home. You can spread out the expenses for those with multiple credit cards.
Pros
- You can take advantage of 0% interest offers.
- Convenient as you don’t have to deal with loan applications.
Cons
- Credit card bills can build up interest if unpaid for a long time.
- You risk ending up in a lot of debt that can be difficult to pay off.
How to Get a Loan for Your Pole Barn Building
Now that you have a good understanding of financing a pole barn house, knowing how to prepare for loan applications is just as important.
Inquire
Before deciding which financing option or lender to work with; it is important to talk to multiple lenders. You need to ensure they have experience financing pole barn home mortgages and construction loans. Talking to lenders will also allow you to compare the best terms and interest rates.
Calculate the Total Cost of Your Project
At this point, you need to decide which builder you want to work with and the financing you want to use. Other than the estimated cost that your builder can provide, you also have to take into account the costs that were not included, such as site preparation, foundation, septic, and sewer system. You also must take into account the cost of acquiring permits. Lastly, you need to include the budget for the interior finishes. Pole barn homes will generally only provide the shell. The interiors will be up to you. Check out our Pinterest account for ideas on designing your interior.
Prepare the Plans
Providing your lender with your floor plans, blueprints, and elevation drawings will help them visualize the final result of your construction project. The more information they have, the less they have to resort to guesswork. With all the information they need, they are more likely to take your application more seriously.
Decide on Your Capital Investment
Determining how much capital you would put into your construction project is another thing you need to prepare. It is far too common for clients to be asked how much capital they plan to invest in the project, and they would say something like “As little as possible”. Although there is a minimum, it is better to determine your capital beforehand and check your best options.
Should You Finance Your Pole Barn Home?
It depends on whom you ask. To folks who have the cash at hand to pay for the pole barn home fully, this is the obvious best option. You don’t have to worry about preparing your building plans or the tedious process of looking for a lender and applying for a loan. Furthermore, you don’t have to pay monthly because the home is already yours.
However, most aspiring pole barn owners wanting to start their builds do not have adequate spare cash to pay for the home in full. If you are one of these people, looking into financing to turn your dreams into reality is best. The information provided above is a great starting point as you look at your options for financing. With all these ways to finance a home, the challenge is finding the perfect financing solution that suits you. Whichever way you are planning to proceed, we can say that financing your dream pole barn home would be totally worth it. If you want to talk to others who have gone through this experience, you can join our Facebook group and ask questions.
Frequently Asked Questions
How much do pole barn homes typically cost?
The cost of a pole barn can depend on many factors, such as the home’s design, features, and size. HomeAdvisor estimates the average pole barn home can range between $15,000 and $30,000. Larger and more complex builds can cost twice, if not more. These figures include materials and labor costs.
If you want a cheaper option, you can also go with DIY kits, where you can save on labor fees. Kits can be as low as $7,000 – $18,000. Kit suppliers can deliver the materials on-site. You can then do the rest of the work. Check out our list of the top pole barn home kit suppliers you can choose from. If DIY is the way you plan to go, you will find our article on how to DIY pole barns very useful.
Which banks offer to finance pole barns?
| New Century Bank – NCB has a history of unique and alternative housing such as barndominiums, prefab, modular, and pole barn homes. They finance buildings both for residential and commercial purposes. | |
| Liberty Federal Credit Union – Credit unions are unlike other financial institutions. They are non-profit systems that the members own with the purpose of serving the needs of the average consumer. Liberty FCU has a program to help with the purchase and construction of residential pole barn homes. | |
| HFS Financial – HFS Financial is known for home improvement projects. They offer to finance pole barn homes. After the approval of your application. You will receive the funds in a matter of days. They are particular with time, so they have a 60-second loan inquiry and can even get consumers funded within 24 hours. |
How hard is it to finance a pole barn home?
Financing a pole barn home can be as easy as financing a traditional home, as long as the pole barn meets local building codes and is classified as a permanent residence. Although it is worth noting that some lenders consider a pole barn home a special property and may require a larger down payment or charge a higher interest rate. This is why it is important to follow the steps above to be prepared. To answer the question, financing a pole barn home can be easy with enough time and effort put into research.
Conclusion
Financing a pole barn home may come with some challenges and considerations. Some lenders do not qualify them as houses and would have special requirements such as a larger down payment. However, by shopping around and comparing rates from different lenders, you can find the best financing option that will work for you. Your dream pole barn home can be a reality, and you will soon be living in your unique customized home. Check out our Instagram for inspiration on design ideas for your pole barn home.
