Starting or expanding a farm can be an expensive prospect. From the equipment and barn to the livestock and fencing, it may require enormous capital and a sizable down payment. The good news is, if you don’t have the cash for a down payment, you may have some options. The USDA Farm Service Agency (FSA) Direct Farm Ownership Loan program may be one of the best methods if your goal is to get a farm loan without a down payment.
FSA Direct Farm Ownership Loan
The FSA Direct Farm Ownership Loan is a low-interest loan program specifically for farmers (especially beginners) that also doesn’t require a down payment. Instead of requiring a large upfront investment, eligible applicants can finance up to 100% of the purchase price.
Who Qualifies for an FSA Direct Farm Loan?
FSA Direct Farm loan applicants have to meet certain eligibility requirements for qualification, which include, but are not limited to:
- Farm management experience (or take part in an approved training program)
- Meeting the USDA’s definition of a farmer, which can include beginning farmers
- Acceptable credit history
- Inability to obtain credit elsewhere under reasonable terms.
Additional No-Down Payment Options
If you don’t qualify for the Direct Ownership Loan, you might consider:
- FSA Joint-Financing loans: The FSA partners with a commercial lender to provide funding, potentially reducing the need for a down payment, and with maximum loan amounts of up to $600,000.
- Beginning Farmer Down Payment loan: Sometimes known as the 5/45/50 loan, it requires a 5% down payment from the borrower, 45% financing from the FSA, and 50% financing from an ag lending institution like Peoples National Bank of Kewanee.
- Leasing with an option to buy: Some sellers allow farmers to lease land with the option to purchase later.
You may have more options for financing a farm loan than you realize, even if you have limited down payment funding. Contact the lending professionals at People’s National Bank of Kewanee and find out what agricultural loan programs can make financing possible.
