Does Fannie Mae Even Lend on Barndominiums?
When considering financing options for unique residential structures like barndominiums, potential homeowners often look to conventional sources like Fannie Mae. Understanding whether Fannie Mae will lend on barndominiums and the specifics regarding land acreage can be crucial for planning and decision-making. Here’s a detailed overview addressing these questions:
**Fannie Mae’s Guidelines on Unique Properties:**
Fannie Mae, a government-sponsored enterprise, primarily provides financing for conventional residential homes. However, Fannie Mae does have guidelines that address unique or non-traditional properties, which include properties like barndominiums. The key is how well the property conforms to traditional residential standards and its comparability to other homes in the area.
**Conformity and Marketability:**
For Fannie Mae to finance a barndominium, the property must conform to the area’s housing standards and be marketable as a residential property. This means it should not deviate significantly in terms of quality, condition, or materials from other residential properties in the neighborhood. The home should also be built with materials and in a manner that adheres to local building codes.
**Appraisal Requirements:**
An essential factor in securing financing from Fannie Mae for a barndominium is the appraisal. The appraiser must find comparable sales (comps) of similar properties within the local market. Due to the unique nature of barndominiums, finding comparable properties can be challenging, which might complicate the appraisal process.
How Many Acres Does Fannie Mae Allow?
**General Guidelines on Land Acreage:**
Fannie Mae does not specify a maximum acreage for properties it finances; however, the amount of land considered in the valuation of the property does have guidelines. The land must be typical for the area, meaning that the size of the plot should not be so extensive as to render the property non-residential by local standards.
**Impact of Excessive Acreage:**
If a property includes more land than what is typical in the area, only a portion of the land value may be included in the appraisal for mortgage purposes. For instance, if a property has 20 acres, but typical residential plots in the area are around 5 acres, only the value of those 5 acres might contribute to the property’s appraised value. The remaining land would be considered excess land and might not add proportionally to the appraisal value used for securing the loan.
**Financing Larger Acreages:**
For properties with significant acreage, potential borrowers might need to consider other types of loans more suited to agricultural or larger rural properties, such as USDA loans, which are more flexible regarding the amount of land included.
All-In-All
When considering a barndominium for a Fannie Mae loan, it’s crucial to ensure that the property meets the expected residential standards in terms of construction, appearance, and functionality. The property should ideally not be an outlier in terms of its physical and aesthetic characteristics compared to other neighborhood homes.
As for the land, while there is no strict upper limit to the acreage Fannie Mae will finance, the property must still conform to what is typical for residential properties in the area to ensure it remains eligible under Fannie Mae guidelines. Potential borrowers should be prepared for a detailed appraisal process, especially for properties that are larger or more unique than standard residential plots.
