Quick answer
If you’re considering building a barndominium, modular home, or another non-traditional home, a one-time close loan can often be a viable option and is sometimes the best choice.
If your property meets permanent home standards, your lender accepts non-traditional builds, and you satisfy program requirements such as zoning, permits, and credit, this loan saves you time by bundling land, construction, and permanent financing into one loan.
What is a one-time close loan
A one-time close loan (also called a construction-to-permanent loan) is a single mortgage that covers:
- Buying the land (if needed)
- Building or assembling the home
- Converting into a permanent mortgage once construction is complete
That means just one closing, one underwriting process, and one set of fees rather than separate loans for land, construction, and permanent financing. It’s designed to simplify the financing journey.
Why barndominiums and modular homes are trending
You might see more people choosing barndominiums or modular homes in rural or semi-rural areas. Things driving the trend:
- Faster build times (especially for modular homes)
- Lower costs for materials and labor compared to full site-built homes
- Flexibility of design (metal structures, open floor plans, mixed-use space), and
- Growing interest in custom, affordable housing outside typical suburbs
These types of alternative housing structures are part of a growing shift toward off-site construction financing and affordable homeownership models.
Can one-time close loans be used for barndominiums or modular homes?
Short answer: Yes. But whether your project qualifies depends on lender policies, the loan type (FHA, VA, USDA, conventional), and whether the design and build meet certain requirements.
Common one-time close loan programs and how they apply to non-traditional builds:
| Loan Type | Permits barndominiums or modular homes? | Key requirements / caveats |
| FHA one-time close | Some lenders allow modular homes. Barndominiums are often fine if treated like a permanent home. | Home must be on a permanent foundation; must meet local building codes; must be your primary residence; down payment (often ~3.5%). |
| VA one-time close | Yes, some programs allow modular homes and barndominiums. | Veteran eligibility required; builder must meet VA approvals; certain property standards and permits must be met. |
| USDA construction / one-time close | Possibly, especially in rural or eligible areas. | Must be in USDA-eligible area; meet income limits; property must satisfy USDA property and occupancy requirements. |
| Conventional one-time close | Often more flexible, especially for modular homes or non-traditional builds like barndominiums. | Higher credit scores usually; larger down payments; strict appraisal and contractor documentation; materials and finishes may affect cost and eligibility. |
Pros and cons of using a one-time close loan for these home types
Advantages
- Only one closing and one underwriting process which means less paperwork and fewer re-qualifications
- Locks in many costs up front, including interest rate, which protects you if interest rates rise during construction
- Lower ongoing cost risk (no need to juggle separate interest rates or lenders)
- Easier coordination between land acquisition + construction + final mortgage
Challenges
- Lenders may hesitate if the barndominium or modular design doesn’t meet standard definitions of a permanent home
- Appraisals can be tricky: they’ll need to consider the finished value of a non-traditional build
- Strict permitting and local code requirements. If your zoning isn’t set up for “barn-style” living, that adds work
- Higher upfront documentation: detailed build plans, cost estimates, contractor contracts
What to know about financing non-traditional home builds
When working with barndominiums, modular homes, or other non-site-built housing, expect stricter appraisal standards and more paperwork.
Lenders want to ensure these off-site construction projects meet permanent housing codes, local zoning rules, and resale value expectations.
Steps to use a one-time close loan for your barndominium or modular home
To increase your chances of a smooth financing process, follow these steps:
- Check local building, zoning, and property use rules
Make sure barndominiums or modular homes are permitted where you want to build - Find lenders familiar with these loan types and non-traditional homes
Ask about experience with barndominiums or modular builds and whether they offer one-time close loans under FHA, VA, USDA, or conventional products - Prepare your plans and budget
You’ll need detailed architectural drawings or modular plans, contractor agreements, site work costs, and realistic timelines - Get required permits in place
Many lenders will require building permits or at least proof of permit availability before finalizing the loan - Understand appraisals and inspections
Since the lender wants to ensure the finished home has value as a residential property, the build needs to pass inspections and meet certain property standards during and after construction - Lock in interest rates and terms
Once approved, make sure you understand whether rate is fixed, what the draw schedule is, and how the loan transitions to permanent mortgage
FAQ: Building a barndominium or modular home
Q: What minimum down payment is required for one-time close loans under FHA, VA, or USDA when building a barndominium or modular home?
A: It depends on the program. FHA typically requires a down payment of about 3.5%; VA may allow no down payment for eligible veterans; USDA often offers zero down payment in eligible rural areas. Conventional loans typically require a larger down payment (often 10–20% or more), especially for custom builds.
Q: Can I use land I already own with a one-time close loan?
A: Yes. Having land you already own can help. Some one-time close loans allow you to roll in the land cost or use existing land equity toward your down payment. Be prepared to present proof of ownership and the current value.
Q: Will I need a higher credit score for a barndominium or modular home build than for a standard home?
A: Often yes. Non-traditional homes tend to carry more risk in a lender’s eyes, so better credit, a solid history, and a lower debt-to-income ratio can improve your terms.
Q: Do barndominiums meet standard appraisal requirements?
A: If they’re built to permanent home standards (i.e., with proper foundation, utility connections, and local code compliance), yes. Appraisers consider the finished, livable value. However, unique features might complicate the appraisal, so working with someone experienced is helpful.
Q: Are interest rates or costs higher for one-time close construction loans?
A: They can be. Sometimes, administrative costs, builder draw monitoring, construction contingency fees, and risk premiums are higher. However, when compared to taking out separate loans (land, construction, and permanent), those extra costs are often offset by savings elsewhere.
Build smarter with GoMortgage
If building a barndominium or modular home is your dream, you don’t have to navigate the financing maze alone. GoMortgage can help you:
- Explore FHA, VA, USDA, or conventional one-time close loan options
- Connect with lenders who understand non-traditional homes
- Gather the documents, plans, and permits you need
- Get a clear cost and rate estimate upfront
GO Mortgage can help you navigate financing for barndominiums, modular homes, or other non-traditional home construction projects with confidence. Explore your one-time close loan options today.