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How to Finance a Barndominium Kit: Loans, Mortgages, and Finding a Lender
You have picked out your land and you have chosen the perfect barndominium kit. The dream is starting to look like reality. However, the biggest hurdle for most builders is not the construction itself but the funding. Securing barndominium financing can feel confusing because it does not work exactly like a standard home mortgage.
Banks tend to be conservative. They like houses that are already built. Since you are building a custom structure using a wood post-frame kit, you need to present your project in a way lenders understand. This guide walks you through the loan types, payment options, and steps to get your money approved so you can start building.
Key Takeaways
- Unique Process: Financing a barndominium is different from buying an existing home because you are funding a construction project, not a finished house.
- Construction Loans: The most common method is a construction-to-permanent loan, which covers land, the kit, and assembly costs in one package.
- Buy Now, Pay Later: You can use options like Klarna or Shop Pay to purchase the kit materials immediately while securing long-term funding for the rest.
- Local Lenders: Small local banks and credit unions are often more willing to finance unique "owner-builder" projects than large national banks.
- Preparation: You must have detailed floor plans, a realistic budget that includes the foundation and utilities, and a timeline to get approved.
Table of Contents
- What Makes a Barndominium Kit "The Best"?
- Top Pick for Flexibility: Handcrafted Homestead Series
- Why It Stands Out
- Homestead Pricing and Sizing
- Top Pick for Size: Crafted Colossal Series
- Why It Stands Out
- Crafted Colossal Pricing and Sizing
- What Does the Price Actually Include?
- How to Choose Between the Models?
- Final Tips for Buyers
- Frequently Asked Questions
Why Is Financing a Barndominium Different?
When you buy a regular house, the bank gives you a mortgage based on the current value of the home. When you build a barndominium, the home does not exist yet. You are asking the bank to lend you money based on what the house will be worth once you finish it.
This is tricky for two reasons. First, you need a "construction loan" initially, not a standard mortgage. Second, barndominiums are unique. Appraisers sometimes struggle to find comparable sales ("comps") in the area to justify the value. Because of this, you need to be prepared with solid plans and numbers before you walk into the bank.
Can You Use a Construction-to-Permanent Loan?
This is the most popular route for building a primary residence. A construction-to-permanent loan bundles everything into one process. You close on the loan once. It pays for the land, the kit, the foundation, and the labor.
During the build, you typically pay "interest-only" payments on the money that has been paid out so far. Once the house is finished and receives a Certificate of Occupancy, the loan converts into a standard 15-year or 30-year mortgage.
The Catch for DIYers: Most construction loans require a licensed General Contractor to oversee the build. If you plan to DIY the entire assembly of a Best Barns kit, some banks may hesitate. You must look specifically for "owner-builder" construction loans if you want to swing the hammer yourself.
How Can You Buy the Kit Before the Loan?
Sometimes you want to secure your kit immediately to lock in the price or start the delivery process, even if your full construction loan isn't ready. This is where Point-of-Sale (POS) financing helps.
We offer Klarna and Shop Pay. These are excellent tools for the "materials" portion of your project.
- Split Payments: You can break the cost of the kit into manageable installments.
- Speed: Approval is usually instant, allowing you to order your Homestead or Colossal kit without waiting months for bank underwriting.
- Cash Flow: This keeps your cash savings free for other upfront costs, like permits or pouring the concrete slab.
Can You Use Home Equity?
If you already own a home and plan to build the barndominium on the same property (like a guest house) or on a new lot, a HELOC (Home Equity Line of Credit) is a powerful tool.
You borrow against the equity of your current house. The interest rates are usually lower than personal loans. You can use this cash to buy the kit, pour the foundation, and finish the interior. Since it is a line of credit, you only pay interest on what you spend.
This is often the easiest way to fund smaller builds like the Handcrafted Homestead 12'x20' without jumping through hoops for a construction loan.
How Do You Find a Barndominium-Friendly Lender?
Big national banks often have rigid checklists that barndominiums do not fit into. Your best ally is a local institution.
Look for:
- Regional Banks and Credit Unions: These lenders know the local market. They likely have seen pole barns and agricultural buildings converted into homes in your area.
- Farm Credit Institutions: Lenders who specialize in rural property understand post-frame construction better than anyone else.
- Mortgage Brokers: A broker can shop your file around to multiple lenders to find one willing to finance a kit home.
What Do You Need to Get Approved?
Banks want to know you can finish what you start. You cannot walk in with just a rough idea. You need a "loan packet."
Your packet should include:
- Blueprints: The detailed specification sheets for your Best Barns kit.
- Land Deed: Proof that you own the land or a contract to buy it.
- Detailed Budget: A line-by-line cost estimate. This must include the kit price, foundation, septic/sewer, well/water, electrical, insulation, and interior finishing.
- Contractor Bids: Even if you are DIYing parts, get bids for the plumbing, HVAC, and electrical work to show the bank realistic numbers.
Have any questions or would like to place an order? We'd love to help! Chat with our friendly customer service team by calling 1-844-945-3625, chatting in on our website or email us at customersupport@wildoaktrail.com. We look forward to hearing from you!
Frequently Asked Questions
Can I get a generic mortgage for a barndominium?
No, you cannot get a standard mortgage until the home is built. You need a construction loan first, which converts to a standard mortgage later.
Does FHA cover barndominium kits?
Yes, FHA construction loans exist and allow for lower down payments. However, they have strict requirements and usually require a licensed contractor.
Can I use Klarna to buy the entire kit?
Yes, depending on your credit limit and the kit price. Klarna and Shop Pay are great for splitting the material cost into payments.
Is it harder to finance a DIY build?
Yes. Lenders view DIY as higher risk. You may need an "owner-builder" loan or hire a contractor for the shell and finish the interior yourself.
How much down payment do I need?
Construction loans typically require a higher down payment, often between 20% and 30%, though land equity can sometimes count toward this.
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