Securing Construction Loans for Custom Barndominium Projects
As the barndominium movement accelerates, with folks reinventing antique barns into spectacular modern dream homes, custom structural modifications and finishes often require substantial upfront funding before owners can lock in permanent mortgages. And specialized construction loans catering to the unique build-out needs of custom barndo projects remain scarcely available from mainstream banks.
What exactly are construction-to-permanent loans? And where should future custom barndo homeowners turn to finance their rural renovation adventures?
Demystifying Construction-to-Permanent Loans
Construction-to-permanent financing blend two typically separate loan products – construction loans and mortgages – into simplified one-stop-shop lending. Benefits include:
• Just one loan application for full financing
• Locked-in long-term interest rates
• Automatic conversion to permanent mortgage upon build completion
• Often requires just one closing versus two separate transactions
By securing funding for the full custom construction phase as well as subsequent permanent financing, the lending process proves more streamlined. Yet banks rarely offer these combo construction loans for unconventional buildings like barndos.
Where To Secure Barndominium Construction Financing
Given major banks’ aversion towards financing non-conventional construction loans, where can custom barndo builders turn for project funding?
Credit Unions & Local Lenders – Certain progressive local credit unions and community banks recognize barndominium financing as a growth niche, selectively offering custom construction terms based on relationship history and specialized underwriting.
Renovation Mortgage Lenders – Some lenders specializing in financing major home renovations possess more flexibility regarding barndo construction loans thanks to familiarity with rehabilitation builds. They may Custom Barndominium loans given sufficient collateral and credit.
Peer-to-Peer Investment Networks – Recently, peer-to-peer real estate investment networks like Groundfloor allow investors to directly finance custom construction projects. This facilitates finding private barndo construction capital.
While still a nascent niche, financing vehicles are slowly emerging to fund custom barndominium projects for owners willing to search beyond surface-level options. As popularity continues rising, expect better access to custom construction-to-permanent barndominium loans. The time is ripe for enterprising rural investors to help fuel newlyweds to retirees pursuing their dreams of custom barndo living!
