Pole barns are easier, quicker and less expensive to construct than conventional stick-built structures. But they’re still an investment.
If you’re a planner, you may have been saving up to pay for your project in cash, but if you’re like most people, you’ll probably want to finance your project.
The question is: how do you finance a pole barn? Is that even possible? Yes, but it’s important to understand your options and what to expect.
How Much Do Pole Barns Cost?
The cost of a pole barn will depend on the size of the building, the site work that needs to be done and other factors. But according to Homeadvisor.com, the average cost of a pole barn is $25,000.
Larger and more elaborate designs can cost significantly more ($100,000+), while small, simple kits can be as low as just a few thousand dollars.
Cost per square foot ranges from $20 to $35. Labor costs can be up to $10 per square foot.
Pole barn vendors should provide you with a quote or estimate on the cost of your building. This will give you an idea of how much you need to finance and help you determine how you want to finance it.
What’s the Best Way to Finance Your Pole Barn?
We get this question a lot. And for good reason. This is the biggest hurdle for all of us when planning our build.
You may be wondering whether your bank would finance this type of purchase. Will you be able to secure financing?
The truth is that financing pole barns is easier than ever. If you’re looking for a post frame home, financing may be a little more complicated, but still not impossible.
When you’re financing a pole barn, whether as a shop or a home, you have two main options:
- Builder direct
- Traditional Bank or Lender
Some builders offer financing in-house, and this can be a convenient option if you haven’t or can’t get approval from the bank.
Of course, you always have the option of paying for your pole barn with cash.
Let’s take a closer look at what your pole barn financing options are:
Pole Barn Financing Options
#1 – Construction-to-Permanent Loan
For post frame homes, a construction-to-permanent loan may be the ideal option. With this type of loan, the lender provides payouts at different intervals along the construction process until the structure is complete.
Once completed, the loan transitions to a traditional mortgage. You’ll make monthly payments just as you would with any other home. Different lenders offer different options for these types of loans, so you’ll want to compare terms and rates to find the best option for your project.
It’s important to note that a construction-to-permanent loan will have high down payment requirements. You’ll likely need to put down at least 20%-30%.
Also, keep in mind that this type of loan can also provide you with the cash you need to finish out the interior.
To be approved for this type of loan, you’ll likely need to have excellent credit.
It’s not easy to get this type of loan for a pole barn home. Not many lenders will finance post frame structures this way, and if they do, they will have stringent requirements.
#2 – HELOC (Home Equity Line of Credit)
If you already own a home and want to add a pole barn to your property, you may be able to finance your purchase with a HELOC.
A HELOC is essentially a line of credit that’s secured by your home, and you can use this line of credit to make large purchases. The benefit of a HELOC is that the interest rate is lower than other types of loans. The interest may also be tax deductible, which will save you more money come tax season.
When you take out a HELOC, you’re borrowing against your home’s equity and using your home as collateral. When you repay the loan, your credit is replenished. It’s kind of like a credit card in this way.
One great advantage of this is that you can borrow as little or as much as you want. With a conventional type of loan, you’ll need to use the entire balance and pay on that balance every month.
#3 – Personal Loan
Credit unions and banks also offer personal loans that you may be able to use to finance your pole barn. If you’re looking for a small and simple post frame structure, this type of loan may be a good option.
Loan limits usually cap out at around $100,000, so unless you’re building a post frame home, you should be able to use a personal loan for your pole barn – as long as you have excellent credit and enough income.
#4 – Purchase with cash
Not a reasonable option for most of us. However, if you have the funds available you can negotiate serious savings with a cash purchase.
Pole Barn Loans: Steps to Prepare
Now that you understand your financing options, it’s important to take the right steps to prepare. Here’s how:
Estimate the Total Cost of the Project
At this stage, you probably have an idea of which builder you want to use and what type of financing you want to use. Your builder should be able to provide an estimate on the cost of the pole barn, but you’ll also need to consider other costs:
- Site preparation, including excavation, utilities and the foundation. If you’re building a pole barn home, you may also need to consider the cost of installing a septic and well if you don’t have access to city water and sewer.
- Permits. No matter the purpose of your pole barn, you will almost certainly need to have permits. Check with your local county to see what the requirements are.
- Finishing the interior. Post frame builders will typically only provide the shell of the building. It’s up to you to finish the interior.
These costs can add up. Site work can be especially costly, depending on your project and location.
Have Your Plans Ready to Go
When going to a lender, it’s helpful to have your floor plan and elevation drawings ready to go. These plans and drawings will better help the lender visualize your project and help your chances of having your application approved.
Make Sure Your Ducks are in a Row
Pole barns are an investment. Make sure that you’re prepared financially for your project. Remember that loans for pole barns may have:
- Higher down payment requirements – 30% or more in some cases.
- Shorter loan terms.
- Lots of paperwork.
It’s not impossible to finance a pole barn project, but be prepared for the costs and the extra effort that you may need to put into finding a lender and going through the financing process.
Banks That Finance Pole Barns
More banks are offering financing for pole barns. Three lenders that offer loans specifically for post frame construction include:
Acorn Finance makes it easy to compare loan options from different lenders that will finance pole barns. They offer quotes in just 60 seconds, and it won’t affect your credit score.
The advantage of using Acorn is that they have a huge network of lenders, and you’ll receive pre-qualified offers. You can also sort your loan offers by:
- Payment amounts
- Interest rates
- Loan terms and lengths
The great thing about using Acorn is that everything is done online. It’s a quick and convenient way to see your lender options.
With Acorn, you can receive offers for:
- Loans up to $100,000
- Rates as low as 3.99%
- Terms up to 12 years
Acorn covers 90% of the U.S., so most people won’t have a problem getting loan offers for their pole barn project.
HFS Financial specializes in home improvement loans, and they offer to finance specifically for pole barns. If approved, you can have your funds ready for use in just days – not weeks or months.
Their 60-second inquiry will not impact your credit score. In fact, you don’t even have to provide a social security number. The company will connect you with lenders to fund your project.
HFS works with unsecured loans up to $250,000 and interest rates as low as 2.99%.
New Century Bank
Post frame financing is a specialty of New Century Bank. They can help you get financing for your pole barn, whether you’re using it for agricultural or residential purposes.
They’re one of the few lenders that will offer mortgages for pole barn homes, so you’ll have the same financing options of any other conventionally built home. You’ll need to provide your floor plan and elevation plan when applying.
It’s rare to find a reliable and credible lender offering post frame construction loans. New Century Bank is an exception.
The company has two main locations in Kansas: Belleville and Manhattan.
New Century Bank offers easy access to their pre-qualification form. They recommend providing supporting documents to expedite the review process, including:
- Paystubs for the last month
- Bank statements for the last two months
- Tax returns for the last two years
- Copy of social security card and photo ID
- Recent retirement plan statements
The application process is a little more complicated with New Century Bank, but it’s worth the effort if you’re looking to obtain a conventional mortgage for your post-frame residential construction loans.
Financing a pole barn is easier than you think. Now that you know what to expect and how the process works, you can start connecting with lenders armed with the knowledge you need to – hopefully – get approved.
If you have your financing in order, let us help you get your pole barn kits at a discount.