7 March 2025|Barndo Lending, Barndominium Floor Plans
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While few people can build a new home with no financing, if Barndominiums have piqued your interest for their hardy design, rural aesthetic, and affordable building costs you’ll need to be fully informed on where to find a lender and what their requirements are.
Knowledge is power, so having this information in your arsenal will increase your productivity with your builder or real estate agent and expedite the process.
You’ll save a substantial amount of money on materials and labor by choosing a Barndominiums rather than a traditional stick-built structure, and that frees up funds for your favorite design choices, but knowing your lending options will inform exactly how much wiggle room you have when making those design and building decisions.
How Barndominiums are Classified?
While designers and builders classify a Barndominium as a metal structure with a barn-like exterior/construction and interior home amenities, lenders rarely make this distinction from a regular home build. The truth is that a loan is a numbers game with a lender, and they are uninterested in whether you want to build a barn home a post-modern structure on the side of a waterfall, or anything in between.
As long as the home you’re building meets the code for a permanent residence, what a lender looks at – instead of the Barndominium distinction – is a systematic list of qualifications to determine whether your desired home will qualify for a construction (or mortgage, for pre-built barn homes) loan. This list is based on numbers and statistics, not your home’s style.
What Do Lenders Look At?
- Your creditworthiness: Obviously this is the first thing a lender will look at, and it’s the first step to a pre-approval before you even meet with your builder. The lender will evaluate your credit history, income, and debt-to-income ratio to determine your building budget, and your preapproval is the budget your builder will go off of in design meetings.
- Location: What a lender is willing to put forth toward a specific home depends on recent sales in your area, based on an appraisal. For instance, if you have property in an area with homes comparable to the one you want to build that have sold for $500,000.00, that’s what the bank will be willing to pay for the home you’d like to build. When it comes to Barndominiums, this is where things become tricky. Barndominiums are still rare, and appraisers occasionally don’t know how to value the building.
- Your plan, desired fixtures, amenities, and finishes: Lenders want a full list of your home’s selections (or a general ballpark, anyway) to help them value it. For example, it will cost more to add hardwood floors than it would carpet, granite countertops than laminate, or marble bathroom floors than laminate. These are important considerations for any lender, as they can drastically change the value of a home, and therefore the amount the lender is willing to put forth
