Navigating Barndominium Funding Beyond 2023
As interest grows in alternative housing options like barndominiums, many run into roadblocks securing financing from traditional lending institutions. Let’s explore factors making funding difficult, when improvements could occur, and where to find barndo-friendly financing even in 2023’s restrictive market.
Why So Difficult to Fund Barndominiums?
While technically residences, barndominiums pull modular construction techniques from agricultural buildings – causing confusion for some mortgage providers and appraisers. Financing challenges also stem from materials perceived as less valuable, scrutiny of non-standard designs, and rural land not comparing well.
Proving livable standards, validated build plans and inspection compliance requires extra work compared to site-built homes. But the biggest hurdle is appraisal gaps not valuing steel buildings on par with traditional house construction costs due to lack of direct comparison sales.
When Could Lending rates Ease Up?
As interest continues growing, barndominium popularity helps justify costs better to unsure lenders while comp sales build within appraiser databases. But full industry comfort may require another 5+ years. Some foresee gradual improvements in 2024 if factors like rising rates, inflation and economic recession don’t drastically dampen the alternative housing boom.
Where to Find Barndo-Friendly Financing Now
Rather than big banks, specialized financial institutions familiar with the alternative building approach offer better barndominium funding options today. (This list is only a general guide and isn’t full proof) Here are some examples of barndominium-friendly banking institutions to consider for financing:
Farm Credit Banks
– Farm Credit West
– Fresno Madera Farm Credit
– Northwest Farm Credit Services
– Farm Credit Mid-America
– American AgCredit
Small Regional Banks
– Tri Counties Bank
– Southside Bank
– First Financial Bank
– Legacy Bank
– Happy State Bank
Credit Unions
– Local Government Credit Union
– Meriwest Credit Union
– Atlanta Postal Credit Union
– Municipal Credit Union (New York)
Online Mortgage Lenders
– loanDepot
– Guild Mortgage
– New American Funding
Additionally, don’t rule out smaller local and community banks in rural areas. Being familiar with your local loan officer in a small rural town could get your much farther on your journey than even applying to a handful of online lenders who deal in agricultural loans and rural properties nation wide, they may be more receptive to barndominium financing compared to large national banks. Private lenders are another option for alternative funding sources.
The most financing success will come from institutions familiar with the growing barndominium movement who recognize their livability, customizability, and value potential despite being unconventional builds compared to traditional housing.
While mortgage qualifications and rates may not compete with traditional construction loans yet, these financing partners provide essential funding to devoted barndo buyers today. Maximizing large down payments and excellent credit histories also helps secure the best financing deals when constructing a dream barndominium sanctuary.
The Bottom Line
Yes, securing financing poses challenges for today’s barndo builds. But for devoted fans of the barn-inspired lifestyle, funding partners do exist especially as small and private lenders gain confidence and valuation data continues improving. There is still light at the end of the tunnel for determined do-it-yourselfers aspiring towards their own budget-friendly customized modern farmhouse sanctuary built just the way they always dreamed!
