Farm and Ranching Loan or Grant Programs

[Colin Williams]

My wife is obsessed with farming and ranching. She grew up on a farm and really wants to get back into it. We're looking at places with land and barns and horse stables. I'm just curious if anyone can help me out with information for any specific loans, or grant programs for this? We would like to grow and produce crops commercially, and really turn it into a business. Is there a combination of business loans, USDA loans and commercial loans that could be used? 

Thank you all

[Chandler Rounds]

@Colin Williams, being an ag lender and farmer that has looked into this myself, my recommendation would depend on how far you want to take your farming and/or RE investing if you plan on buying other property. The way it was explained to me is that the USDA compares the target property to others in your area and will only go up to a certain portion of the local median value (bad if yours is larger or higher priced). The income cap was also somewhat restrictive and made the rural home loan program useless for us. Personally, I would prefer to keep primary residence parceled separate from productive land greater than 10-15 acres to ensure easier financing/refinancing since the land poses complexity to the standard mortgage underwriting. Also, it could allow greater liquidity as a lower total LTV (greater down payment) would be required on the ag styled loans with more than a few acres. Would provide easier access to funds if you wanted to later refi/pull a HELOC out of your primary for other investments. I've noticed ag style loans are typically 1-1.5% more than a standard mortgage for the added due diligence and illiquidity of the land collateral. Local bank or credit union may be your best bet or some farm credits have special programs just for smaller acreage home loans. The great thing about USDA though is the generally longer amortizations on their loan products. Best of luck to you.