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Is an FSA Downpayment Loan right for you?

March 1, 2017

Access to land and financing for beginning farmers--the two barriers mentioned most by veterans we've surveyed.

 

If you aren't inheriting and haven't amassed the funds to purchase land outright, one option is USDA FSA funding.

 

U.S. Department of Agriculture FSA has a down payment loan for 'beginning farmers', who:

   -Have not operated a farm or ranch for more than 10 years

   -Don't own a farm or ranch greater than 30% of the average size farm in the county

   -Meet the loan eligibility requirements of the program

   -Substantially participate in the operation

 

A Down Payment loan  partially finances the purchase of a family size farm or ranch; it does not provide 100% financing. Down Payment loans require the borrower provide 5% of the purchase price of the farm.

 

Downpayment Loan Example (from the USDA FSA website)

$200,000 Purchase Price

Beginning Farmer - $20,000 cash downpayment

FSA - $80,000 loan @ 4%/15 yr. Term = $7,195

Commercial Lender - $100,000 loan @ 8%/30 yr. Term = $8,883

Total Annual Cash Flow Requirement / Real Estate = $16, 078

 

Find your local FSA office for more information on the particulars of this and other farm land and operating loans, and get help applying, at https://offices.sc.egov.usda.gov/locator/app

 

One year of the 3 year education requirement for FSA loans may be waived with military service. The remaining two years don't require you to be operating a farm as the sole manager, but they do want you to show that your training/education has equipped you with "significant knowledge of at least some facets of the operation".

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