Hello again, friends!
The 2008 farm bill made several changes to Farm Service Agency farm loans.
The Down Payment real estate loan program has been expanded and improved. It is now available to beginning farmers and socially disadvantaged persons.
A beginning farmer is defined as someone who has operated a farm for less than 10 years. To qualify as a beginning farmer for the real estate loan, the farmer cannot own farm real estate greater than 30 percent of the median sized farm in the county.
For FSA Farm Loan programs socially disadvantaged persons are defined as women, African American, American Indian, Alaskan Native, Hispanics, Asian American and Pacific Islander farmers.
The applicant must be able to make a cash down payment of at least five percent of the purchase price.
The FSA loan cannot exceed 45 percent of the least of the purchase price of the farm to be acquired; the appraised value of the farm to be acquired or $500,000.
This limits the maximum FSA down payment loan to $225,000.
The balance of the purchase can be financed by a commercial lender (bank, Farm Credit) or a private party, such as the seller. This could assist a retiring farmer in transferring farm real estate, their land, to a young farmer.
The term of the FSA loan is 20 years. The interest rate is four percent below the direct Farm Ownership loan rate but not lower than 1.5 percent.
To qualify for the Down Payment farm ownership loan assistance, the loan applicant must meet all of the regular loan eligibility requirements. All eligible applicants for direct farm ownership loans must have participated in the business operation of a farm for at least three years.
The Farm Bill also increased the direct farm ownership and direct farm operating loan limits to $300,000 each. The FSA guaranteed maximum loan limit has increased to $1,094,000 based on the farm prices paid index.
FSA continues to offer operating loans, farm ownership loans, emergency loans for declared disasters and rural youth loans. Each year Congress targets a percentage of farm ownership and farm operating loan funds to beginning and socially disadvantaged farmers.
Information on Farm Service Agency farm loan programs can be obtained by contacting your local FSA office or visit the FSA Web site at www.fsa.usda.gov and click on farm loans.
That’s all for now,
FSA Andy
