Financing Barndominium Builds in Texas

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.

For those dreaming of building their own home but worry about the cost, barndominiums may offer a happy medium.

To help you decide if building and financing a barndominium is right for you, here’s a look at everything you need to know about barndos in Texas.

WHAT IS A BARNDOMINIUM?

Over the last five years, interest in barndominiums jumped considerably. And the number one place searching for barndominiums? Texas.

If you’ve noticed these structures popping up, you’re not alone. The frames look like a typical barn, but inside, they’re fully decked out, just like your traditional home.

Typically, Texas barndominiums are constructed on a concrete footpad, framed with steel, and covered in metal sheeting instead of wood or siding, which helps reduce build costs.

Because barndos are so customizable, buyers and builders aren’t limited to one floorplan or style. They range in size, design, and purpose. Some serve as the family home, while others may include workspaces, equipment storage, and stables.

HOW DOES A BARNDO DIFFER FROM A CONVENTIONAL HOME?

A few key differences exist between a traditional home and a barndominium.

Keep these in mind as you weigh your options:

• Building materials. A conventional home is often built out of wood and brick. However, most barndominiums use metal siding and roofing as the primary exterior building materials.
• Cost. Barndominims typically cost less to build due to using more affordable building materials.
• Design. Barndos provide a blank canvas for owners to create the interior space they want. Adding work, storage, and equipment space to a barndominium’s design is easy.
• Acreage. Based on the square footage and design, barndos may need more land than a conventional home and meet zoning regulations.

A barndominium may fit those who dream of living in wide-open acreage, renting land for recreation , or building a weekend ranch away from the hustle and bustle of city life.

TYPES OF BARNDOMINIUMS

When building or buying a barndo in Texas, you have several options:

• Buy an existing barndo. Barndominiums are popular all over East Texas. As you’re house shopping, include a barndo on your list.
• Use a kit. Kits are pre-fabricated based on existing floor plans. Choose the kit you like, and the manufacturer delivers the pieces for construction.
• Custom designed. Work with a designer and general contractor to modify an existing floor plan for an additional cost or start with a new custom design.

As you start the process, determine which approach you want to take. Options may vary depending on local availability, customization, and cost.

THE PROS AND CONS OF BARNDOMINIUMS

As with any home, there are advantages and some challenges associated with building and living in a barndo. Run through your must-haves and non-negotiables and determine the best option.

Barndo pros:

• Quick builds. Compared to a new build traditional home, a barndo can be ready for you to move into in a month or two. A wood-framed home can take seven months to a year to build.
• Durability. Some of the popularity of barndominiums in Texas and other rural areas is due to durability. A steel building can withstand most weather and is more resistant to storm, impact, and insect damage.
• Versatility. A unique benefit of a barndo is versatility. A barndominium can be more than a home, including spaces for your home office or business, equipment, and storage.
• Customization. Barndominiums are blank canvases featuring large open spaces. You can transform a barndo into something uniquely yours that meets your needs.

Barndo cons:

• Zoning. Depending on where you live, you may struggle to get the permits to build a barndo since it’s not quite a conventional home. Before purchasing land to build the barndo on, check with local building regulations.
• Corrosion. While a barndominium may not have the upkeep of a wood-framed home, metal may corrode and rust over time.
• Selling. If you decide to sell your custom barndominium, you may struggle to find buyers who agree with your design choices. They could be more challenging to sell compared to a traditional home in the future.
• Noise. Metal homes may transfer more noise inside than conventional wood or brick homes. For example, you’ll hear rain hitting the roof or the sides of your home.

BUILDING COSTS: BARNDOMINIUM VS. NEW HOME

If you’re considering buying land and building a home instead of an existing property, one of your first questions may be how much does a barndominium cost in Texas compared to a new home?

According to the National Association of Homebuilders (NAHB), the average cost of constructing a single-family home in 2022 was nearly $395,000. While the median price of a new house for sale in 2023 is $427,400.

In terms of price per square foot to price out an existing barndo or complete your own build, consider a few loose guidelines :

• $50-100/sq. ft. for the barndominium shell
• $100-155/sq. ft. for more budget-conscious and DIY projects
• $155-250/sq. ft. for standard builds
• $250+/sq. ft. for high-end or turn-key service

Due to differences in land costs, customized designs, and materials needed, building a barndominium in Texas can range from $180,000 on the lower end to upwards of $550,000 for a large luxury barndo.

On average, it costs around $300,000 for a new build barndominium in Texas with nicer finishings and additional features such as a wrap-around porch.

A similar range applies when buying pre-existing barndominiums. Depending on location, size, and finishings, barndos can run from $150,000 to nearly $1 million.

WHAT FACTORS AFFECT BARNDOMINIUM BUILDING COSTS?

When building, land, materials, and labor are the primary costs to consider. But you’ll need to budget for other expenses too.

Buying land in Texas

Factor in how much acreage you want and determine the costs of barndominium land packages in your area, including access to roads and utilities. Land costs vary across Texas.

The median price per acre for small land purchases in Texas is approximately $7,500. Land in more rural areas, such as the South Plains, costs less than in Dallas, Austin, or the Gulf Coast.

Prices vary based on location and the type of land. For example, in Texas, cropland is valued at a higher cost per acre compared to pastureland, according to the USDA .

Site preparation and development

Before any building can start, the land must be prepped, and there are costs associated with that, including pulling permits and complying with zoning regulations.

Costs here depend on the barndominium land package: if it’s cleared, leveled, and in a buildable condition, ready to be hooked up to local utilities and septic systems, then development costs may be far less. On the other hand, adding utilities to the lot could be a significant investment.

Most barndos sit on a concrete slab foundation. So if the land is ready for building, factor in the cost of excavating, leveling, and pouring the footprint.

Floor plans

Size is one of the most significant decisions impacting the cost of building a barndominium. To design your own Texas barndominium floor plan, you must work with a professional drafter or architect.

A pre-set floor plan is a more affordable but slightly less customizable option. For example, you can purchase a basic floor plan for a barndo for $1,000 or less. Expect to pay more for more extensive or custom plans.

Once you have a floor plan, provide it to your architect or contractor to create a site plan and mechanical and plumbing drawings. You’ll need those plans stamped by a structural engineer before the building begins.

Building materials

Exterior building materials are where you can save a lot of money on a barndominium compared to traditional houses. A reasonable estimate is that around 40-50% of project costs go to materials.

Keep in mind interior costs may run similar to conventional home builds. According to the NAHB, the average home build costs include around $70,000 in major plumbing, electrical, and HVAC systems and nearly $95,000 in interior finishes. Depending on the size and layout of your barndominium and how much work you’re willing to do yourself, interior costs may be lower.

Since barndos are constructed primarily from metal, you can save time and money by not relying on lumber for framing and siding. If you use a barndo kit, the exterior building supplies are included and delivered to your site.

If you work with a builder, starting from scratch, they will source and supply the materials needed and include that in the total cost. You’ll work with them to determine the costs and design.

Construction and labor

There are two standard options for construction:

• Barndominium kit. These come with all the plans and materials you need to build the barndo. The manufacturer delivers the materials for assembly, and you can put it together yourself or hire a crew. These are typically the most affordable options.
• Builders and general contractors. Another option is to hire a builder or GC with experience building barndominiums in Texas. They’ll employ subcontractors and monitor the project until completion. Expect to pay more to work with a GC or builder.

Beyond materials, labor is often the other significant construction cost, ranging from 25-35% of project costs.

You may need to hire plumbers, electricians, and carpenters to help construct the exterior and get the interior turn key, especially if you don’t have the time or ability to do it yourself.

Insurance

Insurance for barndominiums is more complicated. Since many barndos are mixed-use, such as home and work or storage space, traditional homeowners insurance may not cover it.

You may have to find insurers offering barndominium coverage and comparing plans. Read the policies to understand what’s covered, as it may range dramatically by carrier.

Typically, barndo owners can get coverage ranging from the actual cash value of the property to replacement costs and extended value policies.

Saving costs

There are some ways to cut costs. You may reduce the price per square foot of construction by doing some work.

One approach is to hire a contractor to construct the shell of the barndominium. For example, they lay concrete, build the frame, and complete plumbing and electrical.

Then you can work on the interior finishings yourself. Since the interior of a barndominium is customizable, you could choose a floor plan that allows you to lay tile, cabinets, flooring, trim work, and paint easily.

Planning can help cut costs, potentially saving thousands during the building process.

DIFFERENT TEXAS BARNDOMINIUM LOAN OPTIONS

Whether you plan to buy an existing property or build your own, you may need help financing a barndominium.

If you’re worried that Texas barndominium loans may be hard to get, the reality is you have various paths to explore depending on your needs and financial situation.

Conventional loans

A conventional loan may be an option if you’re looking to purchase an existing barndominium as your primary residence, investment property, or vacation home.

For a conventional loan, terms are often for 30 years, with no restrictions on acreage. However, you may need to meet minimum credit scores and other financial requirements.

Rural home loans

Texas has plenty of rural acreages, and if you dream of buying and building on a larger plot in the country, a rural home loan may fit your needs.

These home loans have similar terms as conventional loans, and you must meet specific requirements for credit scores and maximum loan amounts.

Construction loans

If you plan to build your barndo, explore a construction loan. These have slightly different terms than conventional home loans and provide construction financing for barndos and other types of homes.

After you select your land and contractor or kit manufacturer, securing financing is the next step.

A construction or homesite loan offers a one-time loan, meaning you begin paying your mortgage at closing rather than waiting for the final construction. This can help save on additional fees and closing costs.

After closing the deal, your bank may help you manage the draw process to ensure the project moves on time and according to plan.

Home refinancing

Do you love the look of barndos but don’t want to leave your home? Then, consider expanding your current home and adding a barndo-style addition.

In this case, explore refinancing your home. For example, a cash-out refinance can help you pull from the equity you’ve built in your home and use those funds to finance your barndo addition.

PREPARING FOR FINANCING A BARNDOMINIUM IN TEXAS

Just like with other types of financing, you’ll want to prepare for the loan application process . Since barndominiums are still somewhat unconventional, having your paperwork, plans, and ducks in a row can help you secure financing more quickly.

When you’re ready to apply for a loan, have your credit score, documentation of your floor plans, and bids from contractors ready. In most cases, the more information you have, the better, include:

• Interior and exterior floor plans
• A list of supplies
• Contractor or subcontractor bids and information
• A realistic timetable
• Estimated costs

This information will help your lender see you’re taking the project seriously and have plans to move forward.

THE BOTTOM LINE ON TEXAS BARNDOS

Whether buying an existing barndominium or planning to build your own, you have options.

Learn how Texas Farm Credit’s Mortgage division can help you get started.

From buying rural land to applying for a conventional loan, we have the tools and resources for everything you need for barndominium loans .

This article was originally posted in the Texas Farm Credit Resource Center: https://texasfarmcredit.com/resources/texas-barndominiums/