Ever heard of barndominiums? Giving borrowers a unique mix of rustic charm with modern amenities, this combination of barn and condominium is popping up more in the industry.
We cover what barndominiums are and what borrowers and lenders alike should consider when this home option pops up in your pipeline. From the expertise of Anthony Coculo, Quality Assurance Manager, Appraisals at Enact, let’s dive in.
What is a barndominium?
The term "barndominium" is a combination of "barn" and "condominium," which combines elements of a barn with those of a conventional home. What’s interesting is that unlike condominiums which have common spaces shared with neighbors and HOA fees, barndominiums typically are built on their own land, just like traditional detached residential homes.
Back in the late 1980s and early 1990s, the barndominium concept emerged as a solution for farmers looking to repurpose traditional barn structures into cost-effective living spaces. A barndominium typically features an open and expansive metal structure, having the look of a barn, with modern amenities and residential functionalities. This innovative approach to housing design has gained popularity for its blend of rustic charm and contemporary living.
Main features of a barndominium
Some of the barndominium’s desirable features include its open concept, large energy-efficient windows allowing passive solar to help heat the expansive space, and typically rustic decor which includes incorporating barn doors somewhere within the design. The design of a barndominium allows for customization to match individual preferences and styles, reflecting personal tastes and interests. These structures commonly will include a shop and/or large garage space all contained within the “living area” of the home. With spacious layouts and an emphasis on functionality, barndominiums have become a trendy choice in recent years in the housing market, appealing to those seeking a unique but highly functional living space.
Pros and cons of barndominiums
Living in a barndominium presents a range of pros and cons that potential homeowners should consider before making a decision. Some of the advantages of barndominium living include cost-effectiveness, customization, reduced exterior maintenance, spaciousness, durability, and eco-friendliness.
On the other hand, challenges such as difficulty in obtaining conventional mortgage loans and potential limitations in building and zoning regulations may present obstacles for those interested in this housing option. Please refer to the list of advantages and limitations below. This is obviously not a comprehensive list; however, these are some of the most popular reasons to build or not to build a barndominium.
Advantages
- Barndominiums are often more affordable to build compared to traditional homes due to their simpler construction.
- They offer a unique opportunity for customization where owners can design the interior layout.
- Barndominiums typically have high ceilings and large open spaces, providing a sense of openness and flexibility in design.
- With the right design and materials, barndominiums can be energy-efficient, leading to lower utility costs over time.
Limitations
- Some areas have restrictions on building barndominiums, limiting where they can be constructed.
- Barndominiums may not appeal to all buyers, potentially affecting resale value in certain real estate markets.
- Securing financing for a barndominium can be more complex than for a traditional home, as some lenders may be unfamiliar with this type of property.
Considerations for borrowers planning to build a barndominium
Before building a barndominium, make sure your prospective borrowers check local zoning regulations to ensure compliance. Make sure they have detailed information about their barndominium project as one would with any other traditional home. For example, they should provide architectural plans and specs, including landscaping details to you to help you understand the value and potential of these properties, making financing smoother. And, to minimize maintenance challenges, they should prioritize quality materials and construction practices during the building process.
Barndominiums offer cost-effectiveness, customization, spacious interiors, and energy efficiency as key benefits. However, challenges like zoning regulations, resale value concerns, maintenance issues, and financing hurdles may still exist in some markets. By researching zoning laws, enhancing curb appeal, informing lenders, and focusing on quality construction, individuals can mitigate some of the limitations associated with barndominiums. Considering both the benefits and limitations can help hopeful homeowners make informed decisions when opting for a barndominium as their living space.
Ultimately, a barndominium is a great and innovative housing option that combines the rustic charm of a barn with the modern amenities of a home. Originating in rural areas, barndominiums have gained popularity in recent years due to their affordability and versatility. While they offer a spacious and open floor plan, they also come with some drawbacks such as limited privacy and potential zoning restrictions. However, with proper planning and design, a barndominium can be a comfortable and stylish living space for those seeking a unique or alternative housing solution.
How do the GSEs and Enact handle barndominiums?
The GSEs will accept barndominiums, but with specific requirements needed surrounding the property’s residential nature and marketability. Additionally, Enact will accept properties like a barndominium subject to GSE guidelines. This property type falls under what we consider atypical or unique properties. To get a better understanding of the necessary requirements from the GSEs, please refer to Fannie Mae and Freddie Mac selling guides.
More ways we can help at Enact
We offer underwriting services, along with training resources, to help you understand the nuances of navigating an ever-evolving mortgage marketplace. Be prepared and stay proactive to help your borrowers navigate the mortgage process more effectively. Plus, we have more great articles coming from our Appraisals and Quality Assurance team. Keep an eye out for them on our Insights & Trends page.
Source: Anthony Coculo is a Quality Assurance Manager, Appraisals at Enact Mortgage Insurance.
The statements in this article are solely the opinions of Anthony Coculo and do not necessarily reflect the views of Enact or its management.
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