How to Get a Farm Loan With no Down Payment


Did you know you can buy a farm with no down payment? It is possible with the FSA Direct Farm Ownership Loan. You don’t need any experience in farming or any money down. They provide everything you need to get started as a beginning farmer.

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The Uses for the FSA Farm Loan

You can use the FSA Farm Loan to do any of the following:

  • Buy a new farm
  • Make an existing farm larger
  • Improve an existing farm
  • Cover the down payment or closing costs on a farm loan

The most common use for the program, however, is to buy a new farm. It’s the most popular way new farmers get started in their farming career.

The Terms of the Farm Loan

Under the Direct FSA Farm Loan, you can borrow up to $300,000. You do not need any money down, but you cannot borrow more than this amount. The interest rate the FSA will charge is the rate that is prevalent when you apply and/or close the loan. You get the lower of the two rates. FSA rates are released the 1st of each month.

You can borrow the funds for up to 40 years, if you want to make your payments lower. The longer the term, the lower your payments will be. However, the longer you borrow the money, the more interest you pay over the life of the loan. If you are trying to build capital and expand your farm, you may want to try paying the loan off faster than 40 years.

Who is Eligible for the 100% Down Payment Loan?

There are two aspects of qualifying for the FSA Direct Loan – personal and farm requirements.

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The personal requirements are as follows:

  • You cannot have any federal or state convictions
  • You must have decent credit
  • You must be a citizen of the United States
  • You cannot have any defaulted federal loans
  • You cannot be eligible for any other type of financing for the farm
  • You must prove some type of training to show you can operate/own a farm

As far as the property itself, it must be a farm. It cannot be property considered non-farm property that you try to pull off as a farm.

Dealing With Your Credit History

The FSA Direct Loan does not have a minimum credit score requirement. However, the FSA will look at your credit history. They expect to see a decent payment history with timely payments throughout your recent past.

They do allow exceptions to the rule, though. If you had any issues paying your debts back, but the issues were temporary and you can prove it, the FSA will likely overlook it. You must be able to prove that you overcame the issue and are back on track financially in order to get approved.

The FSA Direct Loan provides would-be farmers with 100% financing for a farm worth up to $300,000. You can use the funds to start your farm and hopefully expand on it one day. As long as you have sufficient experience in farming (not ownership) and have a decent credit history, you should be in good shape to secure this financing for farm ownership.

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