USDA Loan for Barndominium: 11 FAQs Answered (2023)

One of the challenges of building a barndominium is finding a lender who is willing to approve a loan for construction. The lending requirements are often strict, such as requiring a large down payment and a high credit score.

Luckily, the United States Department of Agriculture (USDA) may have a solution. Obtaining a USDA loan for barndominium construction may allow you to build your dream home with no money down.

Editor’s Note: Looking to find a barndominium loan?

USDA Loan for Barndominium: 11 FAQs Answered (1)

What Is a USDA Home Loan?

A USDA home loan is a type of loan guaranteed by the USDA and issued by approved lenders throughout the country. The USDA loan program is designed to increase the availability of housing for middle-income and low-income households.

A USDA construction loan is an all-in-one construction loan, which is also sometimes referred to as a construction-to-permanent loan. The loan covers the cost of construction and automatically converts to a mortgage after the completion of your barndominium.

USDA construction loans often come with competitive interest rates. The current interest rate for low-income borrowers is 2.5%. Middle-income borrowers receive a slightly higher interest rate based on current market rates.

The loans have fixed interest rates, which means that the rate remains the same throughout the life of the loan. However, borrowers may apply for refinancing through the USDA program after the completion of the barndominium.

Benefits of a USDA Loan for Barndominium

Applying for a USDA loan for barndominium construction offers many benefits, especially for those with limited income:

  • No down payment
  • Lenient eligibility requirements
  • You only close once

USDA loans are not just for new home construction. Home seekers can apply for a USDA loan to purchase single-family homes, including existing barndominiums.

No Down Payment for USDA Loans

USDA loans offer 100% financing, which means that you do not need to make a down payment. If you qualify for the loan, you do not need to start making payments until after the barndominium is built.

Construction loans obtained through traditional financing often require a 20% down payment. The average cost of new barndominium construction ranges from $73,000 to $228,000, requiring a down payment between $14,600 and $45,600.

FHA loans are an alternative option for those with poor credit or limited income. Yet, FHA loans still require a down payment of about 3.5%. With an FHA loan, you may need a down payment of $2,555 to $7,980.

A USDA loan for barndominium allows you to build with no money down, which may give you more time to prepare your finances.

USDA Loan for Barndominium: 11 FAQs Answered (2)

Lenient Eligibility Requirements

The eligibility requirements are relatively lenient compared to traditionally financed loans. Along with 100% financing, USDA loans come with lower income requirements.

You are less likely to be denied for having a limited monthly income. Keep in mind that you still need a stable source of income, as the application process requires proof of at least two years of employment.

USDA Loan For Barndominium Come with Fewer Closing Costs

With a traditional construction loan, you need to complete the closing process twice. You first need to close on the land, which involves an appraisal and closing costs. You then need to pay closing costs and appraisal fees after the construction of the barndominium.

With a USDA construction loan, you only need to close once. You can buy land, build a barndominium, and finance the home with a single loan.

The loan covers everything, including buying a lot, inspection fees, administrative fees, builder’s insurance, and even landscaping.

Drawbacks of Getting a USDA Construction Loan

Not everyone qualifies for a USDA loan. Some of the potential drawbacks to a USDA loan are related to the eligibility requirements:

  • USDA loans may take longer
  • A limited selection of lenders
  • You can only build in approved areas

The requirements vary depending on your income and state. Before choosing to explore USDA loans, you should search for the USDA loan eligibility requirements in your state.

USDA Loan for Barndominium: 11 FAQs Answered (3)

How to Build Your Own Barndominium & 200+ Floor Plans

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USDA Home Loans Take Longer to Process

While obtaining a USDA loan is convenient, it can take longer compared to traditional financing. As the loan is guaranteed by a government agency, each stage must follow strict requirements.

The USDA must first review the application and verify your eligibility before the lender can approve the loan. This may take an additional two to three weeks compared to applying for a standard home loan from a bank.

Builder approval, permits, and the final appraisal must also follow the USDA requirements for the loan program. On average, borrowers wait up to a year before the completion of their new homes. However, the lengthy administrative processes are a small trade-off when you consider the benefits of a USDA loan.

Few Lenders Offer USDA Construction Loans

Not all lenders offer USDA loans. The lack of lenders that offer USDA home loans may prevent you from choosing a bank that you have an existing relationship with.

Depending on where you live, you may struggle to find a lender in your region that offers USDA loans, forcing you to expand your search to national lenders or banks in neighboring areas.

Where Can You Build a Barndominium with a USDA Loan?

USDA home loans are only available for new and existing homes in specific rural and low-income areas. The USDA Income and Property Eligibility Map allows you to search addresses to determine eligibility.

The eligible areas are typically rural towns and cities with populations of 35,000 or less. Some larger, low-income areas may be covered by the program.

As barndominiums are typically found in rural areas, choosing a USDA-approved area for your barndominium should not be too difficult.

The USDA loan is flexible when it comes to acquiring land for a new home. However, you need to be prepared to start building immediately after getting approved.

You cannot use the loan to purchase land and build later. The loan may be used to cover the purchase of land or pay off a new loan used to buy land.

For example, you may find the perfect plot and not want to wait for USDA approval. You can obtain a standard loan for the land. The USDA loan for barndominium is then used to pay off the land and cover construction.

USDA Loan for Barndominium: 11 FAQs Answered (5)

What Credit Score Do You Need for a USDA Loan?

The credit score requirements vary depending on the lender. Most lenders require a credit score of at least 640 to qualify. However, borrowers can still receive approval with a credit score as low as 600.

A lower credit score requires manual approval by the underwriter. To receive manual approval, you may need to demonstrate one or more compensating factors. For example, you may need a low debt-to-income ratio, long job history, or enough savings to cover several mortgage payments.

Additional Considerations Before Getting a USDA Home Loan

A USDA loan is beneficial for specific situations but may not work for everyone. Along with a decent credit score, you need to show two years of consistent employment.

Applicants also need to pay attention to the income limit in their state. USDA construction loans are only available for households with income below a certain threshold. However, the threshold varies from state to state.

In Texas, the average income limit for a USDA loan is $112,850. A household with five or more occupants may receive an income limit of $148,950. In California, the income limit is between $135,250 and $178,550.

Borrowers also need to have stable finances, such as no gaps in income, no bankruptcies in the past two years, and no late or missing rent payments.

If you get approved, you must choose from a list of approved builders. You cannot act as the owner-builder. The contractors must be licensed, insured, and have a minimum of two years’ experience building new homes.

Alternatives to USDA Loan for Barndominium Construction

Borrowers who do not meet the eligibility requirements for USDA home loans may need to consider alternative financing options. Along with conventional construction loans, you may qualify for FHA or VA loans.

USDA Loan for Barndominium: 11 FAQs Answered (6)

The Department of Veterans Affairs offers a VA one-time close construction loan for qualified active-duty military members and veterans. As with the USDA loan, a VA loan offers up to 100% financing, which means no down payment.

The Department of Veterans Affairs does not set a minimum credit score. However, most lenders require a credit score of 620 or higher for the standard underwriting process.

The Federal Housing Administration (FHA) offers FHA loans, which include many of the same features provided by USDA loans. An FHA loan is another type of government-backed loan for moderate-income and low-income borrowers.

You only need a credit score of 600 to get approved for an FHA loan. However, most FHA loans require a down payment of at least 3.5%.

USDA Loan for Barndominium: 11 FAQs Answered (7)

How to Build Your Own Barndominium & 200+ Floor Plans

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USDA loans are available for middle-income and low-income households. Compared to other financing options, USDA loans for barndominium construction tend to offer better terms.

You can build a barndominium with no money down and receive a decent interest rate. However, you need to meet the eligibility requirements, which include an income cap and a preferred credit score.

If you are worried about getting approved for a construction loan through traditional financing options, start searching for USDA-approved lenders.

Learn more on construction-only loans and a construction-to-permanent loan when you get the Barndominium Life Program and lots more info on lending programs.

If you would like more guides like this one, check out the rest There, you will find more helpful tips and tricks from the pros. You will also findfeatured barndominiums, barndominium floor plans, and information on financingand insurance. Knowing as much as you can help you get the best results for your dream home.

USDA Loan for Barndominium: 11 FAQs Answered (9)

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Why is it hard to get a loan to build a barndominium? ›

The biggest challenge to getting a barndominium loan is that lenders require an appraisal to determine a property's value before they can approve a loan. If there are no other recent barndominiums sales in the area where you want to buy, it may be difficult to get approved for a loan.

How to use the VA loan to build a barndominium? ›

All barndominiums must be in line with the VA loan property requirements, which includes the following:
  1. Electric, heating and cooling systems must be working and in good condition.
  2. Roofing must be adequate and built to last.
  3. The size must be sufficient for basic living needs.
  4. Water supply must be continuous and clean.
Feb 4, 2022

Who finances barndominiums in Florida? ›

The United States Department of Agriculture (USDA) offers loans to low-income families, making the USDA loan an excellent option for financing a barndominium.

Who finances barndominiums in Alabama? ›

Alabama Farm Credit can finance qualifying rural homes and homesites for your full-time residence or for weekend getaways including barndominiums. Alabama Farm Credit is your local rural financing provider to trust.

What are the disadvantages of a barndominium? ›

A barndominium is not a conventional home, so while they are gaining popularity, they do not appeal to the mass market. Since they are a niche market with a floor plan that is customized to each owner's specifications, it may be difficult to sell in the future if you decide to do so.

Are barndominiums good investments? ›

A barndo with high-end finishes and cabinetry will have a higher value than a home with standard finishes. Barndominiums do hold their value, and they do appreciate over time. If you're building a quality structure and plan to rent or live in the barndominium, you will likely find it to be a great investment.

What is the average cost of a barndominium in VA? ›

Barndominium kit prices in Virginia can range from $18.00 to $29.00 per square foot depending on complexity and design.

Does USAA help with closing costs? ›

USAA will not pay your closing costs for you. But there are other ways to get closing cost assistance. You can apply for down payment assistance or closing cost grants. You could ask a family member for gift funds.

How do you cut costs when building a barndominium? ›

5 Ways to Save Money on Your Barndominium Build.
  1. Be strategic about where you put your framed openings: ...
  2. Use concrete floors. ...
  3. DIY finish work (Stairs, Barn Doors, Light Fixture Installation) ...
  4. Ask for “builder grade”/“build program” or scour the remnant yard for countertops.

How much does the average barndominium cost in Florida? ›

Barndominium kit prices in Florida can range from $18.00 to $29.00 per square foot depending on complexity and design.

What is another name for a barndominium? ›

People have different names for slight variations of the shop house, some call them pole barns, steel buildings, or shouses. The styling of the barndominium sets it apart from the others where it actually resembles a barn in a lot of the stylish ques that it has adapted from its namesake.

How big is a 40x60 barndominium? ›

40×60 BARNDOMINIUM METAL BUILDING – 2,400 SQUARE FOOT OF CUSTOMIZABLE SPACE. Our 40×60 barndominium steel buildings provide 2,400 square feet of interior space that can be customized to your specifications.

What do I need to know before building a barndominium? ›

Here are the most important things to know about building a barndominium.
  • Obtain a permit for your project. Photo by Bridger Steel, Inc. ...
  • Test the paint. Photo by Justin Doyle Homes. ...
  • Prepare for surprise costs. Are you a home owner? ...
  • Plan for electrical work. ...
  • Choose your windows and doors wisely. ...
  • Add insulation—it's important.
Mar 14, 2022

Who owns the barndominium? ›

Owner Kristi Bass was found guilty of a Class C misdemeanor for renting out the property made famous by HGTV's Fixer Upper after she was denied the proper permit by the city council, the Waco Tribune-Herald reports.

Are barndominiums loud when raining? ›

Noisier Living

Because barndominiums are typically built with metal or steel, they transfer sound more easily—especially when it's windy or raining. Even with good insulation, outside noises will be louder because of the steel exterior.

Is it cheaper to build up or out on a barndominium? ›

Is It Cheaper to Build a House or Barndominium? It depends. The average cost of a barndominium in Texas is $70 to $95 a square foot to build vs. the cost of a house is around $115 - $145 per square foot.

How do you insulate a barndominium? ›

The cheapest solution for insulating the barndominium walls is batt and roll insulation like 24-inch Prodex Total 5M. They are also less expensive to install than blown-in or spray foam insulation but provide less coverage. Blown-in and spray foam insulation have the greatest coverage and insulating value.

How long does it take to build a barndominium from scratch? ›

Building a barndominium typically takes between nine and 18 months. They tend to be a bit faster to build compared to a traditional home, Mike W. said. Barndominiums can be built from converted barns, but many are now built from the ground up.

Can a barndominium withstand a tornado? ›

Insulated concrete forms or ICF for short is a method of building that incorporates insulated concrete blocks in the construction, what is interesting is that an ICF barndominium can withstand 200mph winds from an F2 tornado.

Are Barndominiums long lasting? ›

Durability: The metal in barndominiums allows for optimal durability. You can count on it to protect your space from damaging elements like water, wind, and heat and last up to 60+ years. Low Maintenance: Metal and steel barndominiums require very little upkeep and maintenance.

Who builds Barndominiums in NC? ›

Carolina Post Frame Barndominiums is the nation's leading provider of barndominium construction plans and blueprints. We provide you the ability to have everything you need to hire a local contractor and build one of our 'viral' barndominiums anywhere across the country.

Does USAA do USDA loans? ›

USAA doesn't offer FHA or USDA loans. Home equity loans and lines of credit are also unavailable at USAA.

What is the minimum credit score for USAA mortgage? ›

USAA works with servicemembers and veterans nationwide, with a focus on VA loans (both conforming and nonconforming), although it does offer a conventional product, as well. You'll need at least a 640 credit score to qualify, and must take out at least $50,000.

How many points do you need for VA loan? ›

Generally, you'll need at least six good years' worth of points, with a good year equal to at least 50 retirement points. Talk with a VA loan expert if you have questions about your service history and potential VA loan eligibility.

Can a Barndominium be passive house? ›

Yes! Since barndominiums are so large and wide open inside, you might be concerned about whether they are suitable candidates for passive design. But they are. In fact, there may be an additional benefit for barndominium owners.

Do I need an architect for a barn conversion? ›

Before you begin any work on a modern barn conversion, you will need to obtain planning permission from your local council. This can be a complex and time-consuming process, so it's important to work with an experienced architect or builder who can guide you through the process.

Can I convert a barn to a house? ›

You are not allowed to build a barn and convert it straight away – new barns must exist solely for agricultural use for at least 10 years before they can be converted. The agricultural use may have stopped before March 2013, but it can't have had any other material change of use since this time.

How big of a barndominium can I build for 200k? ›

A 2,000 sq ft living area could cost $200,000 to $260,000 to build. We have found most people end up with higher end finishes in their barndominium thus the higher price per square foot.

Can you put carpet in a barndominium? ›

Carpet has insulation value, so it will prevent some heat from transferring through into your barndominium. You can use a few area rugs, but avoid large rugs or wall-to-wall carpeting. Vinyl flooring is not a good choice either.

What is the first step to building a barndominium? ›

Get an idea of the budget for your barndominium:

Having an idea of your overall budget is really the first step in determining if building a barndominium is feasible, and will help guide decisions on how much you can spend on land, how large of a home you can build, and other important factors.

Are Barndominiums safe in hurricanes? ›

A Barndominium, if built correctly should be able to withstand a category 3 to category 4 hurricane. Comparable to other home types a Barndominium should be able to withstand most hurricanes with no to minimal damage.

How much does it cost to build a house in Florida? ›

The cost of house building in Florida ranges between $240,000 – $350,000, with the state average at $295,000. This figure does not include land costs, excavations, permits, and other expenses. Home building prices in Florida can reach millions depending on the build type and customizations.

What is a barndominium versus Shouse? ›

Structure & Building Material

And as the name suggests, barndominium exteriors are usually built to resemble a traditional barn, whereas a shouse looks more like a work shed with tall garage doors.

What type of metal is a barndominium? ›

Barndominium Panel Options

These panels are typically made from 26 gauge steel and coated with a Siliconized Modified Polyester (SMP) or Kynar 500 (PVDF) coating.

Why do people build barndominiums? ›

Barndominiums are a Popular Alternative to Traditional Homes

They tend to be more energy efficient than a traditional home and usually are lower maintenance. Barndominiums also offer a unique aesthetic because of their design, which makes them appealing to those who want something more than the traditional homes.

How thick should a barndominium floor be? ›

Your floor should be a minimum of 4″ thick. The concrete's strength should be a minimum of 2500 psi, with fiber mesh reinforcement added at the batch plant OR #3 rebar on 24” centers.

What is the most common barndominium size? ›

Since a barndominium essentially is made up of a metal shell, residents have a lot of freedom and flexibility as far as the internal guts of their home plan. They frequently go for 4,000 square foot layouts that have 2.5 bathrooms and three bedrooms in total.

How thick should barndominium walls be? ›

To be on the safe side assume 5 inches for interior walls. Exterior walls for a barndominium can range from 5 inches to 20 inches depending on building style. You likely have a foot or more less interior space to use. If you have a 40×40 living area and 12-inch thick walls your interior space for living is 38×38.

What questions to ask when building a barndominium? ›

7 Questions To Ask Your Metal Barndominium Building Supplier
  • Pricing, deposit, and payment schedule: ...
  • Engineering timeline and deliverables. ...
  • Materials included in your steel building package. ...
  • Framed openings and building dimensions. ...
  • Warranty on finish. ...
  • Offloading responsibility.

Can you put wood floors in a barndominium? ›

Well Jerry, a simple answer is yes, you need to support floor joists at the exterior wall. Beyond this things begin to get more complex and should only be done with a Registered Professional Engineer being involved.

What are the best materials for a barndominium? ›

A barndominium is typically constructed entirely with metal panels for both the roofing and siding materials. There are many benefits to using steel for your barndominium, and here are just a few: Extreme Durability — Steel has strength that's simply unmatched by other building materials.

Why is a barndominium called a barndominium? ›

Real estate developer Karl Nilsen coined the term “barndominium” in 1989, initially to describe properties that offer a house (or lot) along with boarding facilities for the residents' horses. Today's barndominiums may be new builds or existing barns that have been retrofitted to make them habitable.

What is Texas barndominium? ›

A hot real estate trend is growing all over Texas: barndominiums. A barndominium is a nostalgic alternative to conventional or new build homes, combining a barn's traditional exterior look while adding customizable living and workspaces.

Do Chip and Joanna still flip houses? ›

Chip and Joanna Gaines are used to renovating houses, but they're setting their sights on something bigger — much bigger — in their next TV show. Rather than flipping a house, the couple is now setting their sights on a hotel.

How hard is it to build a barndominium yourself? ›

Barndominium kits are fast to build; it takes about six months to build a barndominium using a kit. Metal barndominiums are structurally sound and don't need load-bearing walls. Metal barndominiums last longer, require less maintenance, and waste fewer materials. Barndominiums have a fire-resistant design.

Who builds barndominiums in NC? ›

Carolina Post Frame Barndominiums is the nation's leading provider of barndominium construction plans and blueprints. We provide you the ability to have everything you need to hire a local contractor and build one of our 'viral' barndominiums anywhere across the country.

Who builds barndominiums in Indiana? ›

We run Boss Hog Barndominiums, the Premiere Barndominium builder in Indiana, Michigan, Kentucky, Ohio, & Illinois. At Boss Hog Barndominiums, we specialize in custom Barndominium Builds, Pole Barn Homes, and Metal Building Homes.

Can you build a barndominium in Michigan? ›

Many families in Michigan love one-story barndominium homes, they are more quiet since there is no foot traffic from the second story. You may notice a lot of ranch style homes in your area, but a ranch style house plan is more expensive to build than a two story house.

What I wish I knew before building a barndominium? ›

Here are the most important things to know about building a barndominium.
  • Obtain a permit for your project. Photo by Bridger Steel, Inc. ...
  • Test the paint. Photo by Justin Doyle Homes. ...
  • Prepare for surprise costs. Are you a home owner? ...
  • Plan for electrical work. ...
  • Choose your windows and doors wisely. ...
  • Add insulation—it's important.
Mar 14, 2022

How much do most barndominiums cost to build? ›

The national average barndominium cost is $265,000, though the final price is heavily influenced by size, site, and materials. Barndominium enthusiasts can expect to pay anywhere from $112,800 to $540,000 for their dream home.

What is the average cost of a barndominium in NC? ›

Barndominium kit prices in North Carolina can range from $18.00 to $29.00 per square foot depending on complexity and design.

What's the cheapest you can build a barndominium? ›

Low Building Cost

We explore the cost breakdown more later, but the general ballpark that professional contractors give is $30-$150 per square foot to build a barndominium house versus $100-$200 per square foot to build a traditional house.

What is the best type of building for a barndominium? ›

However, it's going to be prone to more risk over the long term, as wood is vulnerable to termites and can be damaged due to fire. Steel represents the ideal choice for barndominium builders, as it strikes the perfect balance of being cost-effective, quick to erect, and exceptionally durable.

Who owns Texas barndominiums? ›

Building “barndominiums” is not a new idea, says Erik Cortina, owner of Texas Barndominiums, LLC.

What state is best to buy a barndominium? ›

Barndominiums have become most popular in Texas, Oklahoma, Missouri, Arkansas, Alabama, and Mississippi, but Texas is the number one place you'll find them. However, that doesn't mean if you don't live in any of these states, you can't build one!

How tall can you make a barndominium? ›

Barndominiums are prized for their size and structure, and its ability to be modified to suit the owner's convenience. Houses are usually built with ceiling heights that measure up to 8 to 9 ft (2.4 to 2.7 m), whereas barndos have incredible vaulted ceiling heights of 14 ft (4.3 m) or more.

Can you build a barndominium in Florida? ›

Yes, you can build a barndominium in Florida as long as it meets local codes and requirements. You'll find that rural areas of the state are more barndo-friendly because regulations aren't as restrictive as suburban or urban areas.


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