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Farm Ownership Loans

With FSA's Direct Farm Ownership Loans, "we keep America's farming growing."

Farm Ownership Loans provide to one hundred percent financing and are a valuable resource to assist farmers and ranchers purchase or enlarge family farms, improve and expand existing operations, increase agricultural performance, and help with land tenure to save farmland for future generations. With a maximum loan quantity of $600,000 ($ 300,150 for Beginning Farmer Deposit), all FSA Direct Farm Ownership Loans are financed and serviced by the Agency through regional Farm Loan Officers and Farm Loan Managers. The funding originates from Congressional appropriations as part of the USDA budget plan.

Fact Sheet: Farm Loans Overview (PDF, 807 KB).

Direct Loan Making Handbook 3-FLP (PDF, 2.5 MB).

National Agrability Project.

Farm Answers Library.

Farmers.gov.


Frequently Asked Questions

FSA's Direct Farm Ownership loans are utilized to:

- purchase a farm or ranch.

- expand an existing farm or ranch.

- make a down payment on a farm.

- purchase of easements.

- construct, purchase or enhance farm houses, service structures or other facilities and enhancements important to the farm operation.

- promote soil and water conservation and defense.

- pay loan closing costs.


There are 3 types of Direct Farm Ownership Loans: "regular," joint financing, and down payment depending upon private needs. FSA also uses a Direct Farm Ownership Microloan for smaller monetary requirements.

Direct Farm Ownership Joint Financing Loan

Also called a participation loan, joint funding enables FSA to supply more farmers and ranchers with access to capital. FSA lends up to 50 percent of the expense or worth of the residential or commercial property being purchased. A business loan provider, a State program, or the seller of the farm or cattle ranch being purchased supplies the balance of loan funds, with or without an FSA guarantee.

Direct Farm Ownership Deposit Loan

Available only to qualified beginning farmers and ranchers and/or minority and women applicants, a Deposit loan is a special kind of Direct Farm Ownership loan program that partially funds the purchase of a household size farm or ranch. Beginning farmers do not have to recognize themselves as a minority or female, and minority and females loan candidates do not have to be beginning farmers.

The Down Payment Farm Ownership loan is the only loan program that does not supply 100 percent financing. Deposit loans require loan applicants to offer a minimum cash deposit of 5 percent of the purchase rate of the farm.

As developed by the Beginning Farmer definition, loan candidates interested in the Deposit loan might not own more than 30 percent of the average size farm at the time of the application. The applicant may surpass the 30 percent after the loan is closed. The most present Census of Agriculture data is used in this computation.

The maximum loan amount for a "regular" Direct Farm Ownership loan is $600,000. The optimum loan amount for a Joint Financing or Participation Farm Ownership loan is $600,000.

Direct Farm Ownership Deposit optimum loan amount works in a different way. The optimum loan amount under this loan program will not exceed 45 percent of whichever is the lesser amount of:

- the purchase cost;.

- the assessed value of the farm being bought; or.

- $667,000.


The balance of the purchase cost not covered by the deposit loan and applicant deposit might be financed by a commercial, cooperative, or private lender, including the seller. The funding offered by FSA and all other creditors can not surpass 95 percent of the purchase price. An FSA warranty might be used if financing is provided by qualified loan providers.

The maximum repayment duration for the Direct Farm Ownership loan and the Joint Financing loan is 40 years.

The payment term for FSA's part of a Down Payment loan is twenty years. The non-FSA financing portion is needed to be a minimum of a 30 year repayment period with no balloon payment allowed within the very first twenty years of the loan.

There are 3 various kinds of credentials for a direct farm ownership loan which need to be fulfilled:

- qualified farm enterprise.

- basic eligibility requirements.

- farm management experience.


First, the operation must be a qualified farm business. Farm Ownership loan funds can not be utilized to finance nonfarm business, such as unique birds, tropical fish, pet dogs or horses used for non-farm purposes (racing, satisfaction, program and boarding).

All loan applicants must have the ability to satisfy the following general eligibility requirements:

- must not have Federal or State conviction( s) for planting, cultivating, growing, producing, gathering, saving, trafficking, or belongings of controlled substances.

- have the legal capability to accept responsibility for the loan responsibility.

- have an appropriate credit rating.

- be a United States citizen, non-citizen nationwide or legal resident alien of the United States, consisting of Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, and certain former Pacific Trust Territory.

- have no previous financial obligation forgiveness by the Agency, including an assurance loan loss payment.

- be unable to obtain sufficient credit somewhere else, with or without an FSA loan assurance.

- not be overdue on any Federal financial obligation, besides IRS tax financial obligation, at the time of loan closing.

- not be disqualified due to disqualification arising from Federal Crop Insurance infraction.

- have the ability to show adequate farm supervisory experience through education, on-the-job training and/or general farm experience, to ensure affordable prospect of loan repayment capability.

- must be the owner-operator of a family farm after loan closing.


Managerial Experience Requirements

The Direct Farm Ownership loan is various from all the other FSA loan offerings since Congress wrote into the law an additional 3 year farm management experience requirement. These 3 years of experience must be within ten years of the date of loan application.

Loan candidates may replace 1 year of those 3 years if they have 1 of the following:

- post-secondary education in an agriculturally-related field; and/or.

substantial company management experience; and/or.

- leadership or management experience while servicing in any branch of the armed force.


To get credit for 2 out of the 3 years, loan applicants need to reveal 2 of the following:

- not less than 16 hours of post-secondary education in an agriculturally-related field; and/or.

significant company management experience with a minimum of 1 year of management in a non-agriculture related field where the applicant's day-to-day obligations included direct management experience, such as workers choices, payroll, and inventory purchasing. Simply put, not a person who is a manger in title only; and/or.

- having been honorably released from the armed forces of the U.S.; and/or.

- a minimum of 1-year experience as employed farm labor with considerable management responsibilities; and/or.

- effectively finished a farm management curriculum provided by a cooperative extension service, a community college, an adult trade farming program, a non-profit company, or a land grant college or university; and/or.

- successfully completed a farm mentorship, apprenticeship, or internship program with an emphasis on management requirements and daily farm management decisions; and/or.

- effectively paid back an FSA Youth loan; and/or.

- have a recognized relationship with an individual who has experience in farming or ranching, or is a retired farmer or rancher, and is taking part as a counselor in the U.S. Small company Administration's Service Corps of Retired Executives (SCORE) program or with a local farm or cattle ranch operator or organization, approved by the Secretary, that is devoted to mentoring the farmer or rancher.


There are 2 methods to by-pass the 3 year farm management experience requirement entirely:

- use the Guaranteed Farm Ownership loan program, which overcomes a business lender; or.

- have at least 1-year experience as hired farm labor with significant management duties and be working with a rating mentor.


Credit Rating Basics

Many answers are found in our booklet, "Your Guide to FSA Farm Loans" (pdf, 3.53 MB). It is likewise advised that you call and make a consultation with your nearest Farm Loan Officer or Farm Loan Manager. Agency authorities are needed to:

- assistance loan applicants complete FSA types and collect information necessary for a total application;.

- describe the application treatment, process, and the requirements for a complete application;.

- help loan applicants in finishing FSA types and determining sources of info required for a total application, if help is requested;.

- notify loan applicants of other technical support providers who may be of support at very little or no charge. Some examples consist of, and are not restricted to, the Cooperative Extension Service, non-profit companies and institutions, the Intertribal Agriculture Council, and other similar companies; and.

- advise applicants of alternatives that will assist conquer any possible barriers to being figured out eligible for an FSA loan.


Advice for First Consulting With a Farm Loan Officer

1. Have a basic idea of what it is you wish to do and be able to recognize your goals. What kind of operation do you have or wish to have? What do you require to run that farm or ranch? How will you market your item( s)? What kind of loan(s) will you require? Just how much do you require? What are your projections?

2. Good recordkeeping is extremely essential. If you do not have your records arranged, it is a great idea to try and put all your income and expenses into a reasonable format. It does not need to be fancy. Also, what is taking place inside the home is just as crucial as your company requirements. Expenses such as food, clothing, mortgage or lease, insurance, taxes, medical costs, charge card payments, education expenses, and other customer financial obligation become part of the farm plan estimations. Know your expenses. Bring your records with you.

3. If you do not have complete monetary or production records, it is best to present your farm company plan as reasonably as possible. If your anticipated prices or yields go beyond typical industry requirements, it will be difficult for you to support your data.

4. Remember to bring your tax returns for the last 3 years; your last few pay stubs if you have off-farm income; and your newest credit card statements.

5. If you want a farm ownership loan, you will require to bring a signed purchase choice, agreement to buy, or other similar type.

6. Bring copies of any composed leases to the office with you if you are renting land or devices.


Additional Information

We encourage you to contact your regional workplace or USDA Service Center to find out more about our programs and the information you will need for a total application. You should find a listing in the telephone directory site in the section reserve for governmental/public organizations under the U.S. Department of Agriculture, Farm Service Agency.