Financing Barndominiums: Can you Finance these Unique Homes

Barndominiums have become a popular housing option in recent years, combining the rustic charm of a barn with the comfort and functionality of a modern home. These unique properties offer a blend of traditional and contemporary design elements, making them an attractive choice for individuals seeking a home that stands out from the crowd. However, financing a barndominium can be a complex process, as it falls outside traditional mortgage lending criteria. In this article, we will explore the options available for financing barndominiums and provide insights into the challenges and considerations involved.

Understanding Barndominiums

A barndominium is a type of residential property that combines living quarters with space typically used for non-residential purposes, such as a barn or a storage area. These homes often feature large open spaces, high ceilings, and a versatile layout. Barndominiums can be customized to suit individual preferences, with various floor plans and design options available.

Traditional Financing Options

When it comes to financing a barndominium, the first challenge is finding traditional lenders who are willing to consider these unique properties. Most banks and mortgage lenders have specific criteria for approving loans, which may not align with the unconventional nature of barndominiums. However, some financial institutions are open to financing these properties under certain conditions.

One option is to approach local banks or credit unions that are familiar with the real estate market in your area. These smaller institutions may be more flexible in their lending criteria and willing to assess the value of a barndominium on a case-by-case basis.

Another option is to seek a construction loan for your barndominium. Construction loans are designed to provide funding for the building or renovation of a property. With this type of loan, the lender typically releases funds in stages as the construction progresses. Once the construction is complete, the loan can be converted into a mortgage.

Specialized Barndominium Lenders

In recent years, specialized lenders have emerged to cater specifically to the financing needs of barndominium buyers. These lenders understand the unique requirements of financing barndominiums and offer tailored loan products to meet those needs.

Barndominium lenders typically evaluate the property based on its appraised value and the borrower's creditworthiness. They may also consider factors such as the size of the property, location, and intended use (e.g., primary residence, vacation home, rental property).

It is important to note that specialized barndominium lenders may charge higher interest rates compared to traditional mortgage lenders. This is due to the higher risk associated with financing unique properties like barndominiums. However, for individuals who are passionate about owning a barndominium, these specialized lenders provide a viable financing option.

Alternative Financing Options

In addition to traditional and specialized lenders, there are alternative financing options that can be explored for barndominium financing. These options may not be as widely available or conventional, but they can provide a solution for buyers who are unable to secure financing through traditional means.

One such option is owner financing, where the seller acts as the lender and finances the purchase directly. This can be a mutually beneficial arrangement, as it eliminates the need for a traditional mortgage lender and allows the buyer and seller to negotiate favorable terms. However, it is crucial to consult with legal and financial professionals to ensure that the agreement is legally binding and protects the interests of both parties.

Crowdfunding is another alternative financing method that has gained popularity in recent years. Platforms like RealtyShares and Fundrise allow individuals to invest in real estate projects, including barndominium developments. Buyers can leverage these platforms to raise funds for their barndominium project, sharing the risk and potential rewards with a pool of investors.

Challenges and Considerations

While financing a barndominium is possible through various channels, there are several challenges and considerations that potential buyers need to be aware of.

Firstly, insurance providers may view barndominiums differently from traditional homes, leading to higher insurance rates due to their unconventional construction and design. It is essential to research and find an insurance provider that specializes in insuring barndominiums to ensure adequate coverage at a reasonable cost.

Secondly, the appraisal of a barndominium can be complex, as comparables may be limited, and traditional appraisal methods may not accurately reflect the unique features and value of these properties. Working with an appraiser experienced in evaluating barndominiums can help ensure an accurate assessment of the property's worth.

Additionally, local zoning regulations and building codes may vary, affecting the feasibility of constructing a barndominium in certain areas. Before embarking on the financing process, it is crucial to research and understand the zoning laws and building codes in your desired location.


While financing a barndominium may present some challenges, there are options available for prospective buyers. Traditional lenders, specialized barndominium lenders, and alternative financing methods offer avenues for financing these unique homes. By understanding the requirements, considering the challenges, and exploring the various financing options, individuals can turn their dreams of owning a barndominium into a reality. Remember to consult with professionals, such as lenders, real estate agents, insurance providers, and legal advisors, to ensure a smooth financing process. With the right approach and resources, financing a barndominium can be a viable and rewarding endeavor.

18 October 2023
Written by John Roche