Growing up on a farm in rural Central Missouri, I can assure you that I was ready to fly the coop as soon as I graduated, however after a tour in California and another in North Carolina I can tell you that I was ready to head back to the homestead. The problem however was that I was unable to move back to the family farm, which had been sold, and finding a plot of land I could afford with the cash I had stashed in my bank account was proving to be impossible. Now I have to say that I was not looking for 100+ acre farm, I simply wanted a few acres for goats, chickens, a few pups and a nice garden that would keep my family fed. I never imagined that finding a plot of land could be so hard; however I had become accustomed to the fast life of no wait lines and getting what I wanted automatically.
Finding and owning a piece of land, whether it be for a ; hobby farm, homestead, prepping or bug out shelter or your good ol’ American crop farm is not as hard as it may seem as long are you are patient and go in knowing as much as possible about what you want and more importantly what you can handle. For instance, as a writer I am very able to care for chickens, ducks, dogs, and kids however I would never be able to find the time to dabble in hog farming or cattle ranching. That being said, there are plenty of people out there who are in fact able to handle these types of farms but simply are unable to find the right path to follow in order to obtain the land. Thatâ€™s where this article comes in, we are going to look at a few programs that can assist anyone in getting funding for the land they need and/or want.
There are many reasons why people today are looking to purchase their own land. Some of the reasons are as follows; knowing where your food comes from, gaining self-sufficiency, reconnecting to nature, having a safe place to take the family to once our economy really takes a nose dive or simply having animals that are not allowed in certain townships or cities. Whatever the reason may be we are going to get you headed in the right direction.
USDA, isnâ€™t that the government agency that grades our beef? Well, yes and no, USDA is the abbreviation of the United States Department of Agriculture. USDA is also a government entity that backs rural property loans, similar to the FHA program, however USDA works exclusively with properties in rural communities that are under developed. The USDA offers loans to not only established farmers but also beginner farmers and ranchers. The government has allocated a certain amount of funds to beginners wanting to purchase their own land and/or farm. Question, what if you owned a farm 13 years ago, does that mean you do not qualify? No, that is not correct, a beginner farmer or rancher, according to the USDA guidelines is explained as someone who “Has not operated a farm or ranch for more than 10 years, does not own a farm or ranch greater than 30% of the average size farm as determined by the most current census for agriculture, meets the loan eligibility requirements of the program to which he/she is applying, and substantially participates in the operation” (FSA.USDA.Gov) . So in normal terms, if you have a hobby farm but want to upgrade or previously owned a farm more than ten years ago you are able to be considered, also note that you have to be a large part in the working of this land as well. This is all great for someone wanting a farm, but what if you simply want an acre or two? USDA does not have a limit on the size of the property, so whether its 150+ acres or Â¼ an acre, they can finance it.
It must be said that the USDA with the assistance of the FSA (Farm Service Agency) has created programs or moreover select funding sources for minority and women farmers exclusively. This file of the USDA portfolio is noted as being for â€œSocially Disadvantaged Applicantsâ€ or SDA. The SDA includes but is not solely exclusive to Hispanics, Asians, Native Americans, African-Americans, Alaskan Natives, and women of all races and ethnic backgrounds. It must be noted that the loan requirements are the exact same as the basic USDA loan however in order to be considered the applicant must volunteer their ethnicity and gender at time of application.
What will you need for the loan process? USDA is more lenient than say a conventional loan, for instance they lend at 100% LTV which means no money down; however there are a few things to keep in mind. A minimum credit score of 640 is required. This score is figured by a medium which is all 3 scores added up then divided by 3, so if you have say 640 and above with all three bureaus you are fine, however if not make sure you check your credit report before the application process to fix any in accuracies. Also, this agency runs on fiscal year and deadlines in which it has to use the money from the congress before it loses it. What that means for you is that new farmers or ranchers are more likely to get approved over others who are looking for a basic USDA loan.“The Farm Service Agency is required to target specifically to beginning farmers a portion of the funds Congress gives to it. This means beginning farmers donâ€™t have to compete with established farmers for very limited funds. Seventy percent of funds available for direct farm ownership loans are targeted to beginning farmers through September 1 of each year (the first 11 months of the governmentâ€™s fiscal year).” (CFRA.org)
Capital Farm Credit
So what do you do if you are not overly jazzed about getting indebted with the government, is there another route you can take for a loan? Absolutely, Capitol Farm Credit is a lending institution, ie bank, that loan on a whole slew of items. I have to say that this company is the best Iâ€™ve found in regards to the average person getting some land they can call their own. The following items are just a handful of things they loan on; Hunting property, weekend escapes, Property to retire on and they also loan over the LTV in order to facilitate upgrades or improvements. Some of the improvements found on their website are as follows;â€ High fencing, Earthen tanks, Land clearing, Barns and storage facilities, Construction of country homes and cabinsâ€ (Capitalfarmcredit.com)
Capital Farm Credit seems like an excellent choice for someone who wants to deal with people who are well aware of your situation and can help you out better or more efficiently than a general retail banking institution. They have both conventional and in-house financing. Conventional is the same program that most banks use, and it can be a little hard for the first time buyer, mainly due to the 20% down required. If you are buying up an acre, for say $5,000 then you are only having to come out $1,000 however if you are looking to buy a larger farm it could take a lot of cash out of your savings to qualify. You will also need to have great to excellent credit for this type of financing. On the flip side, they offer in house financing, which means they can make their own rules for a borrower who doesnâ€™t qualify for conventional.
What this all means
If you are in the market for a piece of land but keep hitting road block, do not give up, there are programs out there to help you. We live in a world today with a very unsteady and painfully unreliable economy and honestly one of the best investments you can make is in land. Knowing that even if the economy falls you will still be able to feed yourself and your family is a piece of mind we should all have the luxury of having. Thank you for reading and good luck.