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Will FHA Finance a Barndominium?

Will FHA Finance a Barndominium?

Barndominiums, with their unique blend of rustic charm and modern convenience, have become increasingly popular among homebuyers. However, securing financing for these hybrid structures can be challenging, especially when considering government-backed loan programs like those offered by the Federal Housing Administration (FHA). This article will explore whether FHA will finance a barndominium, outline the FHA requirements for a barndominium loan, and provide important things to know before applying.

FHA Financing for Barndominiums

The FHA offers various loan programs designed to help low-to-moderate-income borrowers secure home financing with lower down payments and more flexible credit requirements than conventional loans. However, because barndominiums are a relatively new and unconventional housing option, obtaining FHA financing for them can be more complex.

FHA Requirements for a Barndominium Loan

To qualify for an FHA loan, a property must meet several specific requirements. Here’s how these requirements apply to barndominiums:

1. **Property Eligibility**

**Primary Residence**: The barndominium must be intended as the borrower’s primary residence. FHA loans cannot be used for vacation homes or investment properties.

**Construction Standards**: The barndominium must meet FHA’s minimum property standards, which ensure the home is safe, secure, and habitable. This includes structural integrity, adequate heating and cooling, and proper plumbing and electrical systems.

**Appraisal**: The property must be appraised by an FHA-approved appraiser to determine its value and ensure it meets all FHA requirements. The appraisal will consider the overall condition of the property, its location, and comparable sales in the area.

2. **Loan Limits**

**Conforming Loan Limits**: The loan amount must fall within the FHA’s county-specific loan limits, which vary based on the cost of living in different areas. Borrowers should check the FHA loan limits for their county to ensure their barndominium’s cost does not exceed these limits.

3. **Borrower Requirements**

**Credit Score**: FHA loans generally require a minimum credit score of 580 for maximum financing (3.5% down payment). Borrowers with lower credit scores may still qualify but will need to make a larger down payment (10%).

**Debt-to-Income Ratio**: The borrower’s debt-to-income ratio (DTI) must be within acceptable limits. Typically, the FHA prefers a DTI ratio of no more than 43%, though exceptions can be made for borrowers with strong compensating factors.

**Down Payment**: The minimum down payment for an FHA loan is 3.5% of the purchase price for borrowers with a credit score of 580 or higher.


Important Things to Know Before Applying

1. **Finding an FHA-Approved Lender**

Not all lenders offer FHA loans for barndominiums. It is crucial to find a lender experienced with FHA financing for non-traditional homes. Research and contact multiple lenders to compare their experience and loan terms.

2. **Meeting Building Codes and Standards**

Ensure that your barndominium meets all local building codes and FHA standards. Working with experienced builders and contractors who are familiar with FHA requirements can help streamline this process. This includes ensuring the barndominium is constructed to meet residential building codes, not just agricultural or commercial codes.

3. **Appraisal and Inspection**

Prepare for a thorough appraisal and inspection process. FHA-approved appraisers will scrutinize the property to ensure it meets all necessary standards. Address any potential issues in advance to avoid delays or complications during the appraisal.

4. **Documentation and Paperwork**

Gather all necessary documentation before applying for the loan. This includes proof of income, tax returns, bank statements, and details of the barndominium’s construction and compliance with building codes.

5. **Additional Costs**

Be aware of additional costs associated with obtaining an FHA loan. This includes upfront mortgage insurance premiums (UFMIP) and annual mortgage insurance premiums (MIP), which are required for FHA loans.


Securing FHA financing for a barndominium is possible but comes with unique challenges due to the unconventional nature of these structures. The barndominium must meet FHA’s strict property eligibility criteria, including being a primary residence, meeting construction standards, and passing a thorough appraisal. Borrowers must also meet credit score, debt-to-income ratio, and down payment requirements.

white barndominium on the lake
Buildmax BM1440

To improve your chances of obtaining FHA financing for a barndominium, work with experienced lenders and builders familiar with FHA guidelines, ensure the property meets all building codes and FHA standards, and prepare for a detailed appraisal and inspection process. By taking these steps, you can navigate the complexities of FHA financing and secure the necessary funding to build or purchase your barndominium.

Aaron Scott
Aaron Scott
Aaron Scott is a freelance writer and researcher that has written hundreds of articles for online companies in the area of construction, design, finance and automotive. He's a Southern boy that enjoys creek fishing, hunting and camping. He's rarely seen without his trusted beagle hound "Scooter"
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