Are You Eligible for an FSA Direct or Guaranteed Loan?

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Are you looking for a farm loan? You may have found just what you need with the FSA. They offer two loan programs. The first is a direct program, which means you go directly through the FSA. You can borrow less money, but you may get lower rates and/or fees. The second program is a guaranteed program, which you obtain from an FSA-approved lender. You may be able to borrow more, but you’ll need more money down on the loan and may pay more fees.

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Keep reading to learn the difference between the loans and what they can do for you.

FSA Direct Loans

In order to be eligible for FSA Direct loans, you must meet certain requirements.

  • You can use the loan to buy farmland, expand existing farmland, or construct dwellings on a farm
  • You can borrow up to $300,000 to purchase or expand your farm
  • You must have a decent credit history
  • You must not have any defaulted federal debts
  • You must have sufficient experience in farming and farm management
  • You must own and operate a farm after closing on the loan
  • You must be ineligible for any other farm financing programs

If you qualify, you can get a term of up to 40 years on the FSA Direct Loan.

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FSA Guaranteed Loans

FSA Guaranteed Loans come from any FSA-approved lender. You don’t go through the FSA, but you will have to meet the FSA requirements as the FSA guarantees a portion of the loan. This means that they will pay the lender back a portion of the amount they lose should you default on the loan. In order to qualify, you must:

  • Have good enough credit history according to the lender’s standards
  • Be ineligible for any other loan program without the FSA guarantee
  • Not have any federal defaulted loans
  • Prove that you will own and/or operate a farm after closing on the loan
  • You can borrow up to $1,750,000 for this loan program

If you borrow the money for farm ownership, you can borrow it for up to 40 years. If you use the loan program for an operating loan, you may only have a term of up to 7 years.

As you can see, there are a few options when you need money for your farm. Both options use the FSA, but one is direct and the other is through FSA-approved lenders. Either way, you must meet the FSA requirements in order to get the funding that you need.

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