Can you finance a barn?
The good news is that financing is available for detached structures, including barns. Barns and their smaller cousins, she-sheds and man-caves, have become increasingly popular in recent years as ways to add space and storage to your property at a comparatively reasonable price. Though you may pay close to six figures for a large timber-built barn that is way less than the equivalent bricks and mortar would cost. And they are far quicker to construct too. Once the site is prepared, you are talking days or weeks rather than months and years.
What types of barns can be financed?
Finance can be sourced for all sorts of barns and related detached structures. So whether you’re thinking small or large scale, there are lenders out there that will offer you financial help. Your ideal barn may be a small timber-built carport or a full-size metal agricultural barn for storing hay and straw (or that collection of Ferraris you own). Whatever you need, there are finance solutions available.
How much does a barn cost?
Obviously, the final cost relates to size, though the bigger your barn, the less per square foot it is likely to cost. The second important factor is the type of material it is made from and the method of construction.
Prefab metal barns are the most cost-effective option and typically come in at around $8 per-square-foot for a DIY kit. This rises to $15-$19 per-square-foot for a more bespoke, professionally built barn. So for a 40x60 DIY barn, you are looking at around $19,200 and $42,000 for the turnkey solution.
By contrast, a wooden barn costs more like $45-$150 per square foot, making the 40x60 structure somewhere between $108,000 and $360,000. Don’t forget that having a two-story barn does not cost twice as much. It is relatively inexpensive to go for this option as much of the original cost is made up of ground preparation, foundations, and roofing. Even on a wooden barn, it should only increase the cost by about $10 per square foot.
Bear in mind that you also have to add in the costs of getting the site ready and any foundations that are needed.
Can you finance a barn repair?
If you already own an old barn that needs renovation, there is a chance that you will be able to tap into one of the programs that are available that help to preserve agricultural buildings. The Departments of Agriculture in many states provide funding, as does the U.S. Department of Agriculture. These grants, loans, and tax credits are usually only available if the barn is still used for agricultural purposes.
What are my options to finance a barn?
There are many different forms of finance available for barn construction. Among the most common are:
Home Equity Lines of Credit
Home Equity Lines of Credit, or HELOCs, are essentially a loan based on the equity in your property and acts much like a credit card. Essentially your house is used as collateral for the loan, and as you repay the outstanding balance, so the cash is available to borrow once again. A HELOC often carries a lower interest rate than many other forms of finance, and that interest may be tax-deductible. You also only pay interest on the amount you actually borrow, not the agreed maximum.
Be aware that some providers offer fixed interest rates while in other cases, the interest rate may vary, usually linked to the U.S. Prime Rate, and may go up or down.
Personal Loans
You may prefer the simplicity of a personal loan to be the best option for financing your barn. The lender gives you a certain agreed sum that you then repay regularly, usually monthly, over a fixed period of time plus interest.
This may be a secured loan or an unsecured loan depending on your agreement. Secured loans usually have the advantage of lower rates and longer terms, but your house and property may be in danger if you fail to make repayments. While generally being more expensive, unsecured loans do not require collateral and can be easier and quicker to set up.
In both cases, you will need a good credit score and a reasonable income to secure the loan. If your credit is less than perfect, you may not be able to get a personal loan, and you will need to explore other avenues for your barn finance.
Home Renovation Loans
You may be eligible for the Federal Housing Administration’s 203k Rehabilitation Mortgage Insurance Program. An FHA 203k loan effectively combines renovation and purchase into one mortgage and offers very low-interest rates because it is government-backed. They are also reasonably easy to qualify for. A 20RK loan will allow you a maximum of $30,000 for renovations.
Credit Cards
While not the cheapest option, credit cards could offer you the easiest answer to your barn funding needs. They are certainly a very flexible form of borrowing and allow you to spread the costs of construction over time. Some offer discounts at home improvement stores, which should help you reduce the costs of the barn. It might even be worth considering applying for a credit card from one of the big hardware stores such as Lowes or Home Depot.
What is the average interest rate on a barn loan?
Interest rates vary widely for barn finance and depend on the provider, the amount, type of loan, and your personal situation. You may get rates as low as 4%-5% or as much as 15%. Credit cards are currently running at around 16%.
Pros and cons of barn financing?
Pros
- Barn financing gives you the money to build your barn without leaving you short of cash. It means you can enjoy the benefits of owning the barn you need right now without having to save.
- You don’t have to compromise. By borrowing the amount you actually need, you can get the barn you want rather than the one you have the cash for. Barn financing means you get the size and quality of the structure you want.
- There is a big choice of providers. Lenders vary from the traditional banks and credit unions to online finance companies. The products they offer are wide-ranging, and you are certain to find one that fits your needs.
- You can access the money quickly. Particularly with online unsecured loans, the decision process is typically very fast, and you get the cash in days, sometimes in just a few hours.
Cons
- All finance costs money. Even the most generous interest rates are still going to make the project more expensive than if you paid in cash.
- Getting a loan means you are in debt. Failure to keep up repayments will damage your credit score and make getting further finance harder and more expensive.
- Paying the loan off early may be penalized. Sometimes part of the agreement is that paying the loan off before the full term is up incurs a charge. You certainly need to take this into consideration when seeking a lender.
- There may be administration costs. Many providers charge an “origination fee” when setting up the loan. This is usually between 1%-6% of the amount borrowed. If your barn is going to cost $35,000 and the origination fee is 3.5%, you will be looking at paying the finance company $1,225.
How can I apply for barn financing?
Applying for barn financing can be a simple process or long and drawn out. Some online loan companies make it comparatively simple and straightforward. On the other hand, getting a secured personal loan from a traditional bank may be a much more complicated procedure requiring lots of paperwork and time. It’s a good idea to have a quote for the cost of the build of your barn, and then compare financing options to ensure you get the best value loan possible.
If you decide that barn fencing is for you, your main difficulty will be deciding on a loan provider and the product that best suits you and your circumstances. As you can now understand, the choice is very wide, and you need to consider your options very carefully before you sign on the dotted line. Making a mistake at this stage could be costly. You do need to know what you are getting into and how much the whole deal will cost.
PrimeRates can help make the whole process much more user-friendly. Our application process takes two minutes to complete and doesn’t affect your credit score. Once you are prequalified, we will give you a list of offers so that you can easily select the one that is ideal for you. After that, you’ll be taken to the lender’s site to agree to the terms, and then all you need to do is wait for funds to arrive and start the build!
Is it a good idea to take out a loan to finance a barn?
Home Advisor reports that on average it costs about $50,000 to build a barn with a typical range between $10,000 to $158,400. Most people do not have that much extra cash on hand, thus making barn financing more common. If you do have enough cash on hand, you may still prefer affordable monthly payments instead of spending a chunk of cash. In most cases, personal loans are used for barn financing. PrimeRates has lending partners that can help all credit types secure barn financing up to $100,000. By visiting PrimeRates you can shop some of the top lenders rates and offers without affecting your credit score. PrimeRates has lending partners that can offer barn financing up to $100,000 with rates starting at just 4.99% and terms up to 12 years. Banks and credit unions may offer barn financing as well but they usually have more strict requirements than online lenders. In addition, it may take longer to apply and receive funds. Some online lenders can fund loans same-day as approval. If you are on a budget, you may want to explore the various types of barns available. The barn materials and design you choose can impact the cost.
What type of barns can be financed?
Whether you are going to use a barn or barns for business or personal use, you can use financing. If you use a personal loan, just about any type of barn can be financed. Different types and sizes of barns can vary in price. If you are on a budget, which most of us are, you should explore the various types of barns to make good decisions. Pole barns are a popular choice. In most cases, pole barn materials cost less than other methods and they do not require a traditional foundation. On average, pole barns cost about $25,000 or about $20 to $35 per square foot. When you are shopping for pole barns, the initial estimate may sound affordable. However, it’s important to ask for the total costs that includes all extras such as windows, stall doors, and so on. There are prefabricated options available for pole barns, wooden barns, and metal barns. Prefabricated metal barns are usually one of the cheapest options ranging in price between about $7 and $25 per square foot. Another selling point of a prefabricated barn is that most of them come with a multi-year warranty.
What are monthly payments on a barn loan?
Monthly payments can vary depending on the loan amount, loan term, interest rate, fees, and other factors. If you are prequalified for a barn loan, you should have an idea of what interest rate, amount, and term you qualify for. To estimate close to actual monthly payments, you should get prequalified and then use a payment calculator. Payment calculators can help you estimate payments and experiment with a variety of loan amounts and terms. For example, let’s say you prequalify for $25,000 with a 3 year term and 4.99% rate with one lender and a $25,000 loan with a 5 year term and a 5.99% interest rate with another lender. While it may be tempting to take the lower interest rate, the monthly payment may be more affordable with a longer term and slightly higher rate. You can use a payment calculator to help determine which loan offer is best for you. Let’s take a look at some estimated payment scenarios for barn loans. . .
- $25,000 loan at 4.99% with a 5 year term: estimated monthly payment $472
- $25,000 loan at 4.99% with a 8 year term: estimated monthly payment $316
- $25,000 loan at 7.99% with a 5 year term: estimated monthly payment $507
- $25,000 loan at 7.99% with a 8 year term: estimated monthly payment $353
What is the best way to finance a barn?
One of the best ways to finance a barn is an unsecured personal loan. We specify the term “unsecured” because unsecured loans do not require collateral. Some lenders may offer secured and unsecured loan options. If you use a secured loan, you will be required to provide collateral. Another option you should be aware of is fixed or variable. If possible, you should use a personal loan with a fixed interest rate. Loans with fixed interest rates are easier to manage with less surprises. Most PrimeRates lending partners offer unsecured fixed personal loans for barn financing. Before applying for a barn loan we recommend getting an estimate of what your barn will cost. Most personal loans are issued as a lump sum that can be repaid over time with interest. In most cases, interest starts accruing as soon as a personal loan is funded. Borrowing the appropriate amount of money can help you avoid unnecessary interest charges.
Is it more economical to build a barn house?
In most cases, it’s cheaper to build a barn house than a custom home on your land. Barn houses are probably more popular than you think. Most people use pole barns as houses. Pole barn houses are a more affordable option that does not require a foundation. This makes building costs less than other options. However, barn houses usually require a fair amount of maintenance in the long run. Most pole barns are made using wood and wood barns are naturally prone to decay. Before building a barn house you should compare the pros and cons. Tiny homes may be cheaper to build than barn homes.
Can a barn repair be financed?
Barn repairs can be financed using personal loans or credit cards. Barn repairs can cost thousands of dollars. For more expensive barn repairs, you should use a personal loan. Personal loans usually have lower interest rates compared to credit cards. Whether you have good credit or bad credit you can qualify for a personal loan. In addition, if you have credit challenges you can use a personal loan to help rebuild your credit.
