Alternative Financing

Personal / Portfolio Lenders: Steel Building Financing Guide

Community banks, credit unions, and portfolio lenders who set their own rules. Maximum flexibility on building type, but shorter terms and higher rates. Best for owner-builders and commercial projects.

Excellent for Steel BuildingsBest for: Borrowers building non-traditional structures or those who don't fit standard program requirements

Min Down Payment

15–25%

Typical Rates

7.0–10.0%

Max Term

20 years

Min Credit Score

Varies

Program Overview

Portfolio lenders — typically community banks, credit unions, and regional banks — keep loans on their own books rather than selling to secondary markets. This means they can set their own underwriting criteria without Fannie Mae/Freddie Mac restrictions. They are often the only option for owner-builders, unique structures, and commercial metal buildings.

How It Works

Because portfolio lenders don't need to meet secondary market guidelines, they can approve loans that other lenders reject. Relationship banking matters — having existing accounts, deposits, or business with the bank increases approval odds. Terms are typically shorter (5–20 years) with possible balloon payments, and rates are higher, but the flexibility is unmatched.

Administered By

Individual community banks, credit unions, and regional lenders

Program Types

Portfolio Construction LoansCommercial Real Estate LoansHELOC/Home Equity LoansSBA 504 LoansFSA Guaranteed LoansOwner-Builder Loans

Eligibility Requirements

Credit Score

Varies by lender

No standardized minimum. Community banks evaluate the full financial picture — some approve borrowers other lenders reject. Strong banking relationship can compensate for lower scores.

Down Payment

15–25%

Typical range, but some lenders may require more for non-traditional structures or less for strong relationships. Commercial projects may require 25–30%.

Income

No standard limits

Each lender evaluates income differently. Self-employment income, farm income, and non-traditional income sources are generally accepted more readily than at larger banks.

Occupancy

All types accepted

Portfolio lenders finance all property uses: primary homes, second homes, rentals, commercial, agricultural, and mixed-use. No occupancy restrictions.

Eligible Property Types

primary residencesecondary homeinvestmentagriculturalcommercialmixed use

Eligible Building Types

barndominiumshopbarngaragecommercialresidential

Additional Requirements

Relationship Banking

Strongly recommended

Having existing checking, savings, or business accounts with the bank significantly improves approval odds and may improve terms.

Collateral

Property serves as collateral

The property and land serve as collateral. Additional collateral (other real estate, equipment) may be considered for larger or riskier projects.

Business Plan (commercial)

Required for commercial projects

Commercial and mixed-use projects typically require a business plan demonstrating income potential and feasibility.

Step-by-Step Process

Identify Local Portfolio Lenders

1–2 weeks

Research community banks, credit unions, and regional banks in your area. Ask specifically if they keep loans on their books (portfolio) or sell to secondary markets.

Start with banks where you already have accounts

Small-town banks in rural areas are most likely to be portfolio lenders

Build the Relationship

1–2 weeks

Meet with a loan officer in person. Present your project professionally with detailed plans and financials. Establish or strengthen your banking relationship.

Move deposits to the bank before applying if possible

Present a professional construction package with plans, specs, and budget

Submit Application

1–2 weeks

Complete the bank's loan application with all financial documentation and construction details. Each bank has its own application process.

Each bank is different — ask what they need before submitting

Include a personal financial statement and net worth summary

Appraisal & Review

2–4 weeks

The bank orders an appraisal and reviews your complete file. Loan committee review may be required for larger projects.

Portfolio lenders may use local appraisers familiar with steel buildings

Loan committee meets on set schedules — ask when the next meeting is

Approval & Terms Negotiation

1–2 weeks

If approved, review the terms carefully. Portfolio terms are negotiable — discuss rate, term length, balloon provisions, and prepayment penalties.

Everything is negotiable with portfolio lenders

Ask about rate adjustments, balloon dates, and refinance options

Closing & Construction

1 week + 4–12 months construction

Close the loan and begin construction. Draw schedule disbursements fund construction progress.

Understand the draw schedule and inspection requirements

Maintain good communication with your loan officer throughout

Refinance Planning (if needed)

Begin 6–12 months before balloon date

If your portfolio loan has a balloon payment or short term, plan refinancing into a conventional or government loan before the balloon date.

Start refinance conversations early — don't wait until the last minute

Consider VA, USDA, or conventional refinance options for better long-term terms

Financial Details

Down Payment

15–25% typical. May be higher for commercial or non-traditional projects. Strong relationship and collateral can sometimes reduce this.

Interest Rates

7.0–10.0% typical. Rates are higher than government programs because portfolio lenders assume more risk. Variable and fixed rate options available.

Loan Terms

5–20 years typical. Many portfolio loans have balloon payments (e.g., 5-year balloon with 20-year amortization). Shorter terms than government programs.

Fees

Origination fees 1–2%. Processing fees vary. Generally fewer regulatory fees than government loans.

Insurance

No PMI — portfolio lenders set their own equity requirements instead. Hazard and liability insurance required. May require life insurance assignment on larger loans.

Closing Costs

2–4% typical. May be lower than large bank closings due to fewer regulatory requirements.

Loan Limits

No standardized limits — each bank sets its own lending authority. Smaller community banks may cap at $500K–2M. Larger regional banks can do more.

Other Costs

Balloon payment risk: if you can't refinance at balloon date, the full remaining balance is due. Plan ahead for refinancing before the balloon.

Steel Building Considerations

Portfolio lenders are often THE MOST FLEXIBLE option for steel buildings. Because they keep loans on their own books, they have no secondary market restrictions — they can approve any building type they're comfortable with.

Common Challenges

Higher interest rates than government or conventional programs
Shorter loan terms with possible balloon payments
Smaller lending capacity at some community banks
Terms and availability vary significantly by institution

Tips for Approval

Portfolio lenders can approve ANY building type — barndominiums, shops, commercial, you name it
Owner-builder arrangements are often acceptable with portfolio lenders
Relationship banking is key — establish accounts before applying
Negotiate everything — rates, terms, balloon dates, and fees are all flexible
Plan your refinance strategy before taking a portfolio loan with a balloon payment

Lender Advice

Walk into your local community bank or credit union with a professional package: detailed construction plans, a realistic budget, your financial statements, and a clear explanation of your project. Portfolio lenders evaluate you as a person, not just a credit score.

Pros & Cons

Advantages

Maximum building type flexibility
No secondary market restrictions — portfolio lenders can approve any building type: barndominiums, shops, commercial, mixed-use.
Owner-builder friendly
Many portfolio lenders allow owner-builder arrangements that government and conventional programs prohibit.
Relationship-based lending
Decisions made locally by people who know you and your community — not by automated underwriting systems.
Flexible underwriting
Can approve borrowers who don't fit standard program requirements — self-employed, non-traditional income, unique properties.
All property types accepted
Primary, secondary, investment, commercial, agricultural, mixed-use — no property type restrictions.
Negotiable terms
Rates, terms, fees, and structure are all negotiable with portfolio lenders.
Faster decisions
Local loan committees can approve loans faster than government bureaucracies.
FSA guaranteed loan option
USDA Farm Service Agency guarantees can help reduce the lender's risk, improving terms for agricultural borrowers.

Disadvantages

Higher interest rates
7–10% is typical — significantly higher than government programs (5.25–6.5%).
Shorter loan terms
5–20 year terms are common vs 30 years for government and conventional. Higher monthly payments.
Balloon payment risk
Many portfolio loans have balloon payments — the full balance due at 5–10 years. Refinancing is required.
Larger down payment
15–25% or more required, locking up significant capital.
Variable terms between lenders
No standardization — every bank has different rates, terms, and requirements.
Smaller lending capacity
Small community banks may cap lending at $500K–1M, insufficient for larger projects.
Limited refinance safety net
If property values decline or your financial situation changes, refinancing the balloon can be difficult.
Less regulatory protection
Portfolio loans may have fewer consumer protections than government-backed programs.

Common Pitfalls

Ignoring the balloon payment timeline

Many portfolio loans have a balloon due in 5–10 years. Borrowers forget about it or assume they can easily refinance.

How to avoid: Note your balloon date immediately and begin refinance conversations 6–12 months ahead. Have a backup plan if refinancing proves difficult.

Not negotiating terms

Unlike standardized government programs, portfolio loan terms are negotiable. Borrowers who accept the first offer leave money on the table.

How to avoid: Negotiate rate, term length, balloon date, prepayment penalty, and fees. Get competing offers from other portfolio lenders as leverage.

Skipping relationship building

Walking in cold to a community bank with a loan request is far less effective than being an existing customer.

How to avoid: Open checking and savings accounts at the bank 2–3 months before applying. Move direct deposits. Build a face-to-face relationship with bank staff.

Not planning the long-term financing path

Portfolio loans are often a bridge to better long-term financing. Borrowers who don't plan ahead end up stuck in high-rate loans.

How to avoid: Plan the portfolio loan as Step 1. Identify your Step 2 (VA refinance, USDA refinance, conventional refinance) before you close the portfolio loan.

Required Documents

Government-issued photo IDRequired

Valid driver's license, passport, or state ID for all borrowers

Personal financial statementRequired

Detailed listing of all assets, liabilities, and net worth. Many banks provide their own form.

Income documentationRequired

Pay stubs, W-2s, tax returns (2–3 years). Self-employed: profit/loss statements, 1099s, business returns

Bank & investment statementsRequired

All accounts at all institutions — 2–3 months of statements

Construction plans & budgetRequired

Detailed construction plans and a line-item budget. Does not always need an engineer stamp for portfolio lenders.

Builder informationRequired

Builder contract, license, insurance. For owner-builders: detailed construction experience and management plan.

Land documentationRequired

Deed, survey, legal description. Title insurance may be required.

Business plan (commercial projects)Optional

Revenue projections, market analysis, and feasibility study for commercial or income-producing properties

Additional collateral documentationOptional

If offering additional properties or assets as collateral, provide deeds, valuations, and descriptions

ReferencesOptional

Personal and professional references. Business banking references if applicable.

Frequently Asked Questions

What is a portfolio lender?

A portfolio lender is a bank or credit union that keeps loans on their own books rather than selling them to Fannie Mae, Freddie Mac, or other secondary market investors. This allows them to set their own underwriting rules without external restrictions.

Why would I use a portfolio lender instead of a government program?

Portfolio lenders are ideal when you don't qualify for government programs (non-veteran, non-rural, investment property, commercial use), when you're building a non-traditional structure that other lenders won't finance, or when you want to be your own builder.

What is a balloon payment?

A balloon payment means the full remaining loan balance is due at a specific date (typically 5–10 years). The loan may amortize over 20–30 years for monthly payment purposes, but the remaining balance must be paid or refinanced when the balloon comes due.

Can I be my own builder with a portfolio lender?

Often yes — portfolio lenders are among the few that allow owner-builder arrangements. You'll need to demonstrate construction management experience, a realistic budget, and may need to hire licensed subcontractors for electrical, plumbing, and structural work.

How do I find portfolio lenders?

Visit community banks and credit unions in your area. Ask specifically: 'Do you keep construction loans on your books or sell them to the secondary market?' Banks that keep loans in-house are portfolio lenders.

Can portfolio lenders finance commercial steel buildings?

Yes — portfolio lenders are often the best option for commercial metal buildings, warehouses, agricultural facilities, and mixed-use structures. Government programs typically don't cover commercial use.

What are FSA guaranteed loans?

The USDA Farm Service Agency (FSA) guarantees loans made by commercial lenders for farm ownership and operations. FSA guarantees up to 95% of the loan, reducing risk for the lender and potentially improving terms for agricultural borrowers.

Are portfolio loan rates negotiable?

Yes — unlike standardized government programs, portfolio loan rates, terms, and fees are negotiable. Having competing offers from other banks, a strong banking relationship, and a well-presented project package all improve your negotiating position.

What if I can't refinance when my balloon is due?

This is the biggest risk with portfolio loans. If property values have declined or your financial situation has changed, refinancing can be difficult. Plan ahead: maintain good credit, build equity, and start the refinance process 6–12 months before the balloon date.

Can I use a HELOC to finance steel building construction?

If you have significant equity in an existing property, a Home Equity Line of Credit (HELOC) can fund steel building construction. This works well for shops, garages, and accessory buildings on property you already own.

Official Sources & Resources

Verify the information above directly from these official sources. Rates, terms, and eligibility requirements change frequently — always confirm with the lender or program administrator.

USDA Farm Service Agency LoansFSA guaranteed and direct farm loan programs

SBA 504 LoansSmall Business Administration commercial financing

ICBA (Community Banking)Independent Community Bankers of America

CUNA (Credit Unions)Credit Union National Association

Bankrate Portfolio Lender GuideUnderstanding portfolio lending

NerdWallet Owner-Builder LoansGuide to owner-builder financing options

Investopedia Portfolio LendersPortfolio lender definition and overview

CFPB Home Equity LoansConsumer guide to HELOC and home equity loans

In This Guide

Disclaimer: This guide is for informational purposes only and does not constitute financial, legal, or professional advice. Interest rates, loan terms, eligibility requirements, and program details change frequently. Always verify current information with the lender or program administrator before making financial decisions. Homestead Steel Structures & Design is not a lender, financial advisor, or mortgage broker. Last updated February 2026.

Ready to Finance Your Steel Building?

We help connect you with lenders experienced in steel building and barndominium financing — so you can focus on your build, not the paperwork.

Get Your Free Quote Explore Building Series

Alternative Financing

Personal / Portfolio Lenders: Steel Building Financing Guide

Excellent for Steel BuildingsBest for: Borrowers building non-traditional structures or those who don't fit standard program requirements

Min Down Payment

15–25%

Typical Rates

7.0–10.0%

Max Term

20 years

Min Credit Score

Varies

Program Overview

How It Works

Administered By

Individual community banks, credit unions, and regional lenders

Program Types

Portfolio Construction LoansCommercial Real Estate LoansHELOC/Home Equity LoansSBA 504 LoansFSA Guaranteed LoansOwner-Builder Loans

Eligibility Requirements

Credit Score

Varies by lender

No standardized minimum. Community banks evaluate the full financial picture — some approve borrowers other lenders reject. Strong banking relationship can compensate for lower scores.

Down Payment

15–25%

Typical range, but some lenders may require more for non-traditional structures or less for strong relationships. Commercial projects may require 25–30%.

Income

No standard limits

Each lender evaluates income differently. Self-employment income, farm income, and non-traditional income sources are generally accepted more readily than at larger banks.

Occupancy

All types accepted

Portfolio lenders finance all property uses: primary homes, second homes, rentals, commercial, agricultural, and mixed-use. No occupancy restrictions.

Eligible Property Types

primary residencesecondary homeinvestmentagriculturalcommercialmixed use

Eligible Building Types

barndominiumshopbarngaragecommercialresidential

Additional Requirements

Relationship Banking

Strongly recommended

Having existing checking, savings, or business accounts with the bank significantly improves approval odds and may improve terms.

Collateral

Property serves as collateral

The property and land serve as collateral. Additional collateral (other real estate, equipment) may be considered for larger or riskier projects.

Business Plan (commercial)

Required for commercial projects

Commercial and mixed-use projects typically require a business plan demonstrating income potential and feasibility.

Step-by-Step Process

Identify Local Portfolio Lenders

1–2 weeks

Research community banks, credit unions, and regional banks in your area. Ask specifically if they keep loans on their books (portfolio) or sell to secondary markets.

Start with banks where you already have accounts

Small-town banks in rural areas are most likely to be portfolio lenders

Build the Relationship

1–2 weeks

Meet with a loan officer in person. Present your project professionally with detailed plans and financials. Establish or strengthen your banking relationship.

Move deposits to the bank before applying if possible

Present a professional construction package with plans, specs, and budget

Submit Application

1–2 weeks

Complete the bank's loan application with all financial documentation and construction details. Each bank has its own application process.

Each bank is different — ask what they need before submitting

Include a personal financial statement and net worth summary

Appraisal & Review

2–4 weeks

The bank orders an appraisal and reviews your complete file. Loan committee review may be required for larger projects.

Portfolio lenders may use local appraisers familiar with steel buildings

Loan committee meets on set schedules — ask when the next meeting is

Approval & Terms Negotiation

1–2 weeks

If approved, review the terms carefully. Portfolio terms are negotiable — discuss rate, term length, balloon provisions, and prepayment penalties.

Everything is negotiable with portfolio lenders

Ask about rate adjustments, balloon dates, and refinance options

Closing & Construction

1 week + 4–12 months construction

Close the loan and begin construction. Draw schedule disbursements fund construction progress.

Understand the draw schedule and inspection requirements

Maintain good communication with your loan officer throughout

Refinance Planning (if needed)

Begin 6–12 months before balloon date

If your portfolio loan has a balloon payment or short term, plan refinancing into a conventional or government loan before the balloon date.

Start refinance conversations early — don't wait until the last minute

Consider VA, USDA, or conventional refinance options for better long-term terms

Financial Details

Down Payment

15–25% typical. May be higher for commercial or non-traditional projects. Strong relationship and collateral can sometimes reduce this.

Interest Rates

7.0–10.0% typical. Rates are higher than government programs because portfolio lenders assume more risk. Variable and fixed rate options available.

Loan Terms

5–20 years typical. Many portfolio loans have balloon payments (e.g., 5-year balloon with 20-year amortization). Shorter terms than government programs.

Fees

Origination fees 1–2%. Processing fees vary. Generally fewer regulatory fees than government loans.

Insurance

No PMI — portfolio lenders set their own equity requirements instead. Hazard and liability insurance required. May require life insurance assignment on larger loans.

Closing Costs

2–4% typical. May be lower than large bank closings due to fewer regulatory requirements.

Loan Limits

No standardized limits — each bank sets its own lending authority. Smaller community banks may cap at $500K–2M. Larger regional banks can do more.

Other Costs

Balloon payment risk: if you can't refinance at balloon date, the full remaining balance is due. Plan ahead for refinancing before the balloon.

Steel Building Considerations

Common Challenges

Higher interest rates than government or conventional programs
Shorter loan terms with possible balloon payments
Smaller lending capacity at some community banks
Terms and availability vary significantly by institution

Tips for Approval

Portfolio lenders can approve ANY building type — barndominiums, shops, commercial, you name it
Owner-builder arrangements are often acceptable with portfolio lenders
Relationship banking is key — establish accounts before applying
Negotiate everything — rates, terms, balloon dates, and fees are all flexible
Plan your refinance strategy before taking a portfolio loan with a balloon payment

Lender Advice

Pros & Cons

Advantages

Maximum building type flexibility
No secondary market restrictions — portfolio lenders can approve any building type: barndominiums, shops, commercial, mixed-use.
Owner-builder friendly
Many portfolio lenders allow owner-builder arrangements that government and conventional programs prohibit.
Relationship-based lending
Decisions made locally by people who know you and your community — not by automated underwriting systems.
Flexible underwriting
Can approve borrowers who don't fit standard program requirements — self-employed, non-traditional income, unique properties.
All property types accepted
Primary, secondary, investment, commercial, agricultural, mixed-use — no property type restrictions.
Negotiable terms
Rates, terms, fees, and structure are all negotiable with portfolio lenders.
Faster decisions
Local loan committees can approve loans faster than government bureaucracies.
FSA guaranteed loan option
USDA Farm Service Agency guarantees can help reduce the lender's risk, improving terms for agricultural borrowers.

Disadvantages

Higher interest rates
7–10% is typical — significantly higher than government programs (5.25–6.5%).
Shorter loan terms
5–20 year terms are common vs 30 years for government and conventional. Higher monthly payments.
Balloon payment risk
Many portfolio loans have balloon payments — the full balance due at 5–10 years. Refinancing is required.
Larger down payment
15–25% or more required, locking up significant capital.
Variable terms between lenders
No standardization — every bank has different rates, terms, and requirements.
Smaller lending capacity
Small community banks may cap lending at $500K–1M, insufficient for larger projects.
Limited refinance safety net
If property values decline or your financial situation changes, refinancing the balloon can be difficult.
Less regulatory protection
Portfolio loans may have fewer consumer protections than government-backed programs.

Common Pitfalls

Ignoring the balloon payment timeline

Many portfolio loans have a balloon due in 5–10 years. Borrowers forget about it or assume they can easily refinance.

How to avoid: Note your balloon date immediately and begin refinance conversations 6–12 months ahead. Have a backup plan if refinancing proves difficult.

Not negotiating terms

Unlike standardized government programs, portfolio loan terms are negotiable. Borrowers who accept the first offer leave money on the table.

How to avoid: Negotiate rate, term length, balloon date, prepayment penalty, and fees. Get competing offers from other portfolio lenders as leverage.

Skipping relationship building

Walking in cold to a community bank with a loan request is far less effective than being an existing customer.

How to avoid: Open checking and savings accounts at the bank 2–3 months before applying. Move direct deposits. Build a face-to-face relationship with bank staff.

Not planning the long-term financing path

Portfolio loans are often a bridge to better long-term financing. Borrowers who don't plan ahead end up stuck in high-rate loans.

How to avoid: Plan the portfolio loan as Step 1. Identify your Step 2 (VA refinance, USDA refinance, conventional refinance) before you close the portfolio loan.

Required Documents

Government-issued photo IDRequired

Valid driver's license, passport, or state ID for all borrowers

Personal financial statementRequired

Detailed listing of all assets, liabilities, and net worth. Many banks provide their own form.

Income documentationRequired

Pay stubs, W-2s, tax returns (2–3 years). Self-employed: profit/loss statements, 1099s, business returns

Bank & investment statementsRequired

All accounts at all institutions — 2–3 months of statements

Construction plans & budgetRequired

Detailed construction plans and a line-item budget. Does not always need an engineer stamp for portfolio lenders.

Builder informationRequired

Builder contract, license, insurance. For owner-builders: detailed construction experience and management plan.

Land documentationRequired

Deed, survey, legal description. Title insurance may be required.

Business plan (commercial projects)Optional

Revenue projections, market analysis, and feasibility study for commercial or income-producing properties

Additional collateral documentationOptional

If offering additional properties or assets as collateral, provide deeds, valuations, and descriptions

ReferencesOptional

Personal and professional references. Business banking references if applicable.

Frequently Asked Questions

What is a portfolio lender?

Why would I use a portfolio lender instead of a government program?

What is a balloon payment?

Can I be my own builder with a portfolio lender?

How do I find portfolio lenders?

Can portfolio lenders finance commercial steel buildings?

What are FSA guaranteed loans?

Are portfolio loan rates negotiable?

What if I can't refinance when my balloon is due?

Can I use a HELOC to finance steel building construction?

Official Sources & Resources

Verify the information above directly from these official sources. Rates, terms, and eligibility requirements change frequently — always confirm with the lender or program administrator.

USDA Farm Service Agency LoansFSA guaranteed and direct farm loan programs

SBA 504 LoansSmall Business Administration commercial financing

ICBA (Community Banking)Independent Community Bankers of America

CUNA (Credit Unions)Credit Union National Association

Bankrate Portfolio Lender GuideUnderstanding portfolio lending

NerdWallet Owner-Builder LoansGuide to owner-builder financing options

Investopedia Portfolio LendersPortfolio lender definition and overview

CFPB Home Equity LoansConsumer guide to HELOC and home equity loans

In This Guide

Ready to Finance Your Steel Building?

We help connect you with lenders experienced in steel building and barndominium financing — so you can focus on your build, not the paperwork.

Get Your Free Quote Explore Building Series