Barndominiums, a portmanteau of “barn” and “condominium,” have grown in popularity for their unique aesthetic, functional design, and potential cost savings. However, financing a barndominium can present unique challenges compared to traditional homes, due to their unique nature and varying costs. This comprehensive guide walks you through the financial aspects of building a barndominium, from understanding the factors influencing the cost to securing the right financing.

Factors Influencing Barndominium Costs

Barndominium costs can vary widely based on a range of factors including location, size, finishes, and the amount of Do-It-Yourself (DIY) work. For instance, a 2150 sq ft barndominium with a 1500 sq ft shop/garage may cost around $160,000 if you’re doing much of the work yourself. Conversely, a 30×60 barndo with 20×30 finished space plus porches and insulation could fall around the $145,000 range in a state like Alabama.

The final build cost can also greatly be impacted by factors like the builder’s experience, materials used, and the amenities included. For example, building off-grid can add significant upfront expenses like well drilling, septic systems, and solar power, which can range from $10,000 to over $30,000.

The cost of metal building kits for the barndo structure can range from around $30,000 to over $200,000 depending on size and features. This is just for the shell, not including interior buildout, which can account for 50% or more of the total barndominium cost. Items like HVAC, plumbing, electric, drywall, and cabinets can quickly add up.

Case Studies on Barndominium Costs

There are numerous examples of individuals who have built barndominiums at various cost points. For instance, Dave mentioned that some banks won’t loan money for small barndominiums under 1500 sq ft. On the other hand, Courtney, a contractor, claimed she could build a turnkey barndominium for around $145,000. However, this amount was disputed by some who felt the price wasn’t realistic.

Similarly, Monica detailed the costs for his 36’x40′ barndo build in Canada, which included $19k for siding/roof, $9k for columns/posts, $9k for trusses, $1k for wire. He expected the total to be under $110k USD.

In contrast, contractors in Texas, can build small barndos from $25k to $45k. These examples show that costs can vary widely depending on a range of factors, including the amount of DIY work, location, and the size and finishes of the barndominium.

Financing Challenges and Solutions for Barndominiums

Financing a barndominium can be challenging as lenders may view it as an “a-typical” mortgage requiring larger down payments, shorter loan terms, and higher interest rates. Some banks may even refuse to loan money for small barndominiums under a certain size.

However, there are financing solutions available. Barndominiums can be financed similarly to traditional homes, through mortgages, construction loans, or cash. Construction loans are commonly used, which allow you to finance the building of the barndominium over 6-12 months. Once complete, you can convert it to a traditional mortgage.

Mortgages for barndominiums have similar requirements to traditional mortgages, such as credit score and debt-to-income ratio, although rates may be slightly higher. Barndominiums on foundations are also easier to finance than pre-fabricated structures.

Working with Builders and Lenders

When planning to build a barndominium, it’s important to get quotes from multiple builders as prices can vary widely. Familiarity with the local building code is also important, as some areas prohibit certain barndominium designs or require specific construction techniques.

Lenders familiar with barndominiums can provide insights into financing options and requirements in your area. They may offer in-house financing options for the shell package or entire build, allowing you to spread payments over time.

Appraisals and Resale Value

Appraisals and resale values are important considerations in financing a barndominium. Turnkey barndominiums with more traditional architectural features may be easier to finance than basic metal structures, and simpler designs often retain value better. Resale value relies heavily on whether the barndominium was built to meet full residential building codes or agricultural standards, so it’s important to verify codes with your contractor.

Considerations for Owner-Builders

If you’re planning to do a significant amount of the work yourself, you can save significantly on labor costs. However, this approach might necessitate full cash payment upfront as opposed to financing over time. If you’re considering building in phases, for instance, an initial construction loan could just cover the shell, and then you can secure secondary financing to build out the interior finishes.

Additionally, familiarity with local zoning regulations is crucial as they may impact your financing options if agricultural buildings are restricted. Some lenders may shy away from non-conforming structures.

Additional Financing Tips and Considerations

There are several additional considerations to keep in mind when financing a barndominium. Down payments of 10-25% are common requirements from barndo builders, but some may allow owner-supplied materials to offset costs. The land value and site prep/foundation work can count toward your downpayment amount.

USDA and VA loans can be used to finance barndominiums in qualifying rural areas. These programs offer competitive interest rates and zero down payment options. Energy efficiency upgrades like spray foam insulation, solar panels, and radiant floor heating can make barndominiums eligible for special “green” mortgage programs or grants.

If you’re financing a pre-fabricated barndo, the manufacturer may partner with specific lenders familiar with their builds to facilitate the loan process. Manufactured barndos can qualify for chattel loans or personal property loans instead of mortgages, providing more flexible criteria.

Shopping rates from multiple lenders familiar with barndo financing – banks, credit unions, farm credit institutions, and mortgage brokers – is also advised for the optimal loan. Builder-arranged financing often carries higher interest rates, so it’s important to compare against other lenders to find the best rate for your financial situation.

Consider consulting with a financial advisor to structure your overall financing strategy and timeline – purchase land outright, construction loan, permanent financing, etc. Keep a detailed paper trail of all costs and payments to satisfy lender requirements and ensure each draw matches completed work phases.

In conclusion, while barndominium financing can be complex, with careful planning, research, and expert assistance, it is possible to secure the financing needed to build the barndominium of your dreams.

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