Barndominiums are popular these days in part due to their affordability. Most people constructing barndominiums are not going to be able to pay for the entirety of their projects upfront using cash, however. Chances are good you are going to need to take out a loan to finance your barndominium.
This post is your guide to barndominium loans. We will go over what type of loan you need, the process for obtaining one, and where you can get one. First, let’s discuss the costs of building a barndo briefly.
What Does It Cost to Build a Complete Barndominium?
Here are the average costs to build a finished barndominium in 2025:
- Anywhere from $65 to $150 per square foot
- Anywhere from $65,000 to $540,000 total
- Average square footage: 2,400
When you consider that barndominiums tend to be pretty affordable for how spacious they are, they are a good deal. Still, most people do not just have $65,000+ lying around ready to spend all at once.
What Type of Loan Do You Need to Finance a Barndominium Home?
How do you finance building a new home when that home is a barndominium?
You can finance a barndominium using a mortgage, just as you would another more traditional type of loan. Here are a couple types of mortgages that can be used for barndos:
- Conventional mortgage: A conventional mortgage is one that is eligible to be guaranteed by Fannie Mae or Freddie Mac. It is not guaranteed by a government department. For it to be a conventional conforming loan, it must be within the conforming loan limits for the county where you are building the home. If it exceeds those limits, then it is a jumbo loan, also called a non-conforming loan.
- USDA mortgage: A USDA loan can be a suitable choice for a barndominium as well. USDA loans are backed by the US Department of Agriculture, and are income-based. If you meet the income limits and you are building within a USDA-designated “rural” zone, you may qualify. One of the benefits of USDA loans is that they have zero down payment. They also have relaxed credit qualifications, and feature competitive mortgage rates. In additional, a USDA mortgage is a single-close product, which can greatly streamline the lending process when you are building a barndominium.
- FHA mortgage: This is a type of mortgage that is backed by the Federal Housing Administration. You do not need perfect credit to qualify, and down payments can be as low as 3.5%. This makes them popular among first time homebuyers.
- VA mortgage: Another type of loan you can use for a barndominium is a VA mortgage backed by the Department of Veterans Affairs. This type of mortgage has no down payment, and does not require PMI. You can qualify without a perfect credit score.
You will start the mortgage process with a consultation where you discuss your project, needs and goals with the lender. They will take a look at where you want to build, how much you want to borrow, your credit score, your income, your debt-to-income ratio, your employment status and history, and your assets.
Based on this information, they can recommend what type of mortgage is ideal. They also can tell you how much you qualify to borrow.
What is the Loan Process for Financing a Barndominium?
We have already discussed this topic a little bit above while talking about mortgage consultations. Here is a further breakdown of what to expect when applying for barndominium loans.
1. Choose a lender.
To get started, you have to find a lender willing to finance barndominiums. Not all lenders do, because barndos are a specialized type of housing. Select a lender with extensive experience financing barndos to make the process as quick, easy and straightforward as possible.
2. Schedule your consultation.
The next step is to schedule a consultation. You can then discuss the details of your project with the lender, and see if it makes sense to proceed. During this step, you can decide on a type of mortgage.
3. Apply with detailed documentation.
When you are ready to apply, you will need to bring documentation with you to support the process.
Your lender will check your credit score. But you will need to verify your income. Usually this requires a W-2, but if you do not have one, you can use bank statements. These can also be used to verify your assets. You will need to document any outstanding debts you have as well. Make sure you have your identification docs ready to go too.
Everything listed above is standard when you are applying for a mortgage to buy a traditional home. But if you are constructing a home, that is a more complex scenario. To get the lender to approve you for financing, you have to prove that your project is realistic.
So, you are going to need to provide additional documentation when building a barndominium.
This includes:
- Documentation for the land you purchased, including the date you bought it, the amount you paid, how many acres it consists of, the land’s estimated market value, and the outstanding balance on the loan if it is not fully paid off. You may also need to document the availability of utilities as required per your local zoning regulations to construct a home on the land.
- Blueprints for your barndominium that list all of the dimensions clearly.
- Estimates on the cost and timeline for your project from the building companies and contractors you are going to be working with.
- Your building permits. Some people try to apply for barndo financing before they get their building permits. We suggest waiting until afterwards. With building permits, you will have a much stronger application.
4. Await approval.
After you have submitted your application and all of the required documentation, you just need to wait for the underwriter to review what you’ve submitted and decide if you qualify for a loan. If you do, they will also determine the interest rate you qualify for.
If you are pleased with the barn financing offer, you can sign on the mortgage, and then move forward with barndominium construction.
Considerations When Choosing a Lender for a Barndo Project
Here is what you should look for when picking your lender:
- Experience: The more barndo loans a lender has done, the easier and faster the mortgage process will be. In fact, many of the big banks have no experience with barndominium loans, and may not offer them at all. So, you cannot assume every lender you’re interested in is suitable. You need to contact them and ask if they do not list barndo loans on their sites.
- Flexibility: You are building a custom home. Since your project involves so much personalization, and construction can be a complex process, you need a lender with flexibility to match.
- Efficiency: Ask the lender for a time estimate before you get started. Make sure it fits with your plans for your construction timeline.
- Broad range of mortgage products: The more mortgage products the lender offers, the more likely it is you will be able to find one that is suitable for your scenario.
- Excellent rates: Some lenders have more competitive mortgage rates than others. A lower mortgage rate can save you thousands of dollars over the term of your barndo loan.
Where Can You Get a Barndominium Loan?
It is important to shop around for the best rate and terms when you are planning to finance a barndominium project. To save you time, we have done the legwork for you and researched lenders for barndominium loans. Click below to schedule a consultation with our recommended barndominium lender.