Farm Ownership Loan Program Benefits
Farm Ownership Loans will help you purchase or enlarge a farm or ranch, construct a new or improve an existing farm or ranch building, pay closing costs, and pay for soil and water conservation and protection. FSA provides guaranteed and direct loans. Under a guaranteed loan, a commercial lender makes and services the loan, and FSA guarantees it against loss up to a maximum of 95 percent of loan value.
For those not yet meeting the qualifications for a loan guarantee from a commercial lender, FSA also makes direct loans, which are serviced by an FSA Official. FSA has the responsibility of providing credit counseling and supervision to its direct borrowers by making a thorough assessment of the farming operation.
Farm Ownership Loan Program
The Farm Service Agency offers loans to help farmers and ranchers get the financing they need to start, expand or maintain a family farm. Use the Loan Assistance Tool to check your eligibility for FSA Loans, discover FSA loan types, learn about FSA Loan requirements, and walk through the easy-to-understand instructions when completing the forms.
Guaranteed Loan Maximum Interest Rates
Interest rates charged by guaranteed lenders at the time of closing or restructuring may not exceed the following: For loans with rates variable or fixed for less than 5 years: The prior business day’s SOFR plus 6.75%.
For loans with rates fixed for 5 years or more: The prior business day’s 5 Year Treasury note rate plus 5.5%.
Note: If SOFR is less than 1.75%, lenders may add an additional 1% to each of the respective maximums above. Lenders are not required to directly price their loans on the SOFR or 5 year Treasury. These rules simply establish the maximum interest rates that may not be exceeded by guaranteed lenders at closing.
Who is eligible for Farm Ownership Loans (Direct and Guaranteed)?
To be eligible for this loan, you must be a U.S. citizen. citizen, non-citizen national or legal resident of the United States or U.S. territories. You must be an agricultural producer or family farmer and must have experience in farm business operations in at least three of the 10 years prior to the application submission. You must also meet all of the following:
- Have a satisfactory history of meeting credit obligations, and
- Be unable to obtain credit elsewhere at reasonable rates and terms to meet actual needs, and
- Have legal ability to incur loan obligations, and
- Be the owner-operator of a family farm after loan closing.
Applicants are automatically not eligible if either of the following apply:
- Are delinquent on a federal debt, or
- Have caused FSA a loss by receiving debt forgiveness (certain exceptions apply).
What are the loan terms for Farm Ownership Loans (Direct and Guaranteed)?
Eligible applicants may obtain direct loans up to a maximum indebtedness of $300,000. Maximum indebtedness for guaranteed loans is $1,392,000 (amount adjusted annually for inflation). The maximum repayment term is 40 years for both direct and guaranteed farm ownership loans. In general, loan funds may be used to purchase a farm, enlarge an existing farm, construct new farm buildings and/or improve structures, pay closing costs, and promote soil and water conservation and protection.
Farm Operating Loan Program Benefits| Max Loan Length | 40 years |
| Interest Rate | Direct - Varies, Guaranteed - Market |
| Max Loan Amount | Direct - $300,000, Guaranteed - $949,000 |
| Payment Frequency | Varies |
| Prepayment Penalties | None |
| Max Loan Length | Direct - 0, Guaranteed - 1% |
Documents required for Farm Ownership Loan Program
The specific documents required for a Farm Ownership Loan Program can vary depending on the lending institution and the type of loan program you're applying for. However, here is a general list of documents that are commonly requested when applying for a farm ownership loan:
- Loan Application Form: Most lenders will require you to fill out a comprehensive loan application form.
- Personal Identification: Government-issued photo ID (such as a driver's license or passport) for all applicants.
- Proof of Citizenship or Legal Residency: Birth certificate, passport, or other documents proving your citizenship or legal residency status.
- Business Plan: A detailed business plan outlining your farming operation, including your goals, marketing strategy, production plan, and financial projections.
- Credit History: A credit report for all applicants. Lenders will assess your creditworthiness to determine the risk of lending to you.
- Income Verification: Documents providing evidence of your income, including tax returns, W-2 forms, and recent pay stubs.
- Collateral Information: Information about the property you're using as collateral for the loan. This may include property appraisals and surveys.
- Financial Statements: Recent financial statements for your farming operation, including balance sheets and income statements.
- Legal Documents: Any legal documents related to the farm, such as land deeds, titles, and leases.
- Insurance Information: Details about your insurance coverage for the farm property and equipment.
- Environmental Compliance: Some loan programs may require documentation of compliance with environmental regulations.
- Resumes: Resumes of the individuals involved in the farming operation, highlighting relevant experience and skills.
- FSA (Farm Service Agency) Forms: Depending on the specific program, you may need to complete forms provided by the Farm Service Agency or other relevant government agencies.
It's important to note that different lenders and loan programs may have additional or specific requirements. It's advisable to check with the specific institution offering the loan for a detailed list of required documents and to seek guidance from a financial advisor or agricultural specialist to ensure you provide all necessary information for a successful loan application.
Required Eligibility for Farm Ownership Loan Program
Eligibility criteria for a Farm Ownership Loan Program can vary based on the specific program and the lending institution involved. However, there are some common eligibility requirements that are often associated with farm ownership loans. Here is a general overview:
- U.S. Citizenship or Legal Residency: Typically, applicants need to be U.S. citizens or legal residents to qualify for farm ownership loans.
- Farm Size and Use: The farm must meet certain size and use criteria. Eligibility may depend on factors such as the acreage of the farm and the types of crops or livestock produced.
- Creditworthiness: Applicants are usually required to demonstrate good credit history and financial stability. Lenders will assess your creditworthiness to determine the risk of providing a loan.
- Repayment Ability: You must demonstrate the ability to repay the loan. This involves providing evidence of sufficient income to cover loan payments and other financial obligations.
- Farm Management Experience: Some programs may require applicants to have a certain level of experience in farm management or related agricultural activities.
- Collateral: Since farm ownership loans are often secured by the farm property itself, you need to have suitable collateral. The value of the property will be assessed to determine loan eligibility.
- Legal Requirements: Compliance with legal requirements, such as environmental regulations and zoning laws, may be a factor in eligibility.
- Business Plan: Many programs require applicants to submit a detailed business plan outlining the goals, operations, and financial projections for the farm.
- Loan Purpose: The loan must be used for an eligible purpose, such as purchasing farmland, making improvements to existing farmland, or refinancing existing debt.
- Participation in Government Programs: Some programs may require participants to be actively engaged in certain government agricultural programs or meet specific conservation standards.
- Family Farming Operation: Some loan programs may give preference to family farming operations over corporate entities.
It's important to note that eligibility requirements can vary, and specific farm ownership loan programs may have additional criteria. The Farm Service Agency (FSA) in the United States is a common provider of farm loans, and they have specific programs with their own eligibility criteria. Prospective applicants should contact the relevant lending institution or government agency to get detailed information about eligibility requirements for a specific farm ownership loan program.
How do I apply for Farm Ownership Loans (Direct and Guaranteed)?
To apply for a direct operating loan, applicants must submit an application form (FSA-2001, "Request for Direct Loan Assistance") and all other required documentation to their local USDA Service Center or FSA County Office. Please follow guidance on "How to Complete an FSA Loan Application" found on the FSA Fact Sheet.
Forms can be located on FSA's Farm Loan Programs Direct Loan Application Forms and Instructions page. To apply for a guaranteed loan, visit your lender who will arrange for the guarantee.
How can I contact someone?
For more information about FSA loan programs, please visit FSA's Farm Loan Programs homepage. You may also obtain information through your local FSA office or USDA service center. To locate the office nearest you, visit the USDA Service Locator page. 1-202-720-2791.