Farm Real Estate Loans

Financing can be confusing and sometimes overwhelming. With so many options available, how do you know which one best suits you and your operation? That’s why we are here. We want to help you succeed. At American Farm Mortgage & Financial Services, our business is agriculture.

At American Farm, we understand the unique needs of each farmer and rancher. For this reason, we offer agricultural loans designed with you in mind, with terms as flexible as you have to be. Whether you’re looking to purchase your first farm, refinance existing debt, or leverage equity to build asset strength, feel secure knowing that you are putting your trust in a company that is nationally recognized as a leader in agricultural real estate lending.

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FSA Guaranteed Loans

The Farm Service Agency’s (FSA) guaranteed loan program is a resource for farmers and ranchers to obtain financing when they don’t meet the qualifications of a traditional loan. Whether you’ve experienced a drop in commodity prices, are purchasing your first farm, or just want to restructure your farm debt to improve your cash flow, this may be the resource you need to take your operation to the next level.

To qualify for an FSA Guarantee, a loan applicant must:

  • Be a citizen of the United States, or a legal resident alien
  • Have an acceptable credit history
  • Have the legal capacity to incur the debt
  • Be unable to obtain the loan without a guarantee
  • Not have caused FSA a loss by receiving debt forgiveness on more than 3 occasions
  • Not be delinquent on any federal debt
  • Have the ability to repay the loan
  • Provide sufficient security for the loan
Underwriting Standard Maximum/Minimum
Management ≥ Average
Credit Scores Acceptable credit history
Debt Coverage ≥ 1.10:1.00
Debt to Asset ≤ 50.00%
Loan to Value ≤ 70%
Current Ratio ≥ 1:1
Payment Frequency Monthly/Semi-Annual/Annual

Products Available:

  • Prime-indexed loan with the rate adjustable when the national prime rate changes
  • 3-month Adjustable
  • 5, 10 and 15-year Reset loans with a maximum 25-year amortization
  • 7, 15, 20 and 25-year Fixed Rate loans with applicable amortizations
  • Monthly, quarterly, semi-annual or annual payments
  • Interest rate is based on product selected and payment frequency selected

As one of the nation’s premier originators of FSA guaranteed loans, American Farm has the knowledge and experience to assist you with your financing needs. American Farm is a preferred lender, which means a faster loan approval for you.

Beginning Farmer Program

For most beginning farmers, the difficult part is not getting the experience, but putting together the down payment. You may have heard that one of the Farm Service Agency’s (FSA) missions is to assist beginning farmers and ranchers, but you may not be aware of a program that is offered to do just that. The program is designed to assist beginning and socially disadvantaged farmers in the purchasing of a farm or ranch. If you are a retiring farmer or rancher, this program may help with transferring your land to future generations.

Who qualifies?

A beginning farmer is an individual or entity who:

  • Has not operated a farm for more than 10 years
  • Meets the loan eligibility requirements
  • Substantially participates in the operation
  • Does not own a farm greater than 30 percent of the median size farm in the county
  • Must have at least 3 years experience on the business side of a farm

If the applicant is an entity, all members must be related by either blood or marriage and all must be considered beginning farmers.

How does it work?

Beginning Farmer

  • The applicant must make a cash down payment of at least 5 percent of the purchase price.

Farm Service Agency

  • FSA makes a loan to the applicant which does not exceed 45 percent of the least of 1) the purchase price of the farm or ranch to be purchase; 2) the appraised value of the farm or ranch to be purchased; 3) $500,000 (This results in a maximum FSA loan of $225,000).
  • The term of the loan is 20 years. The interest rate is 4 percent below the direct FO rate, but not less than 1.5 percent.

American Farm Mortgage and Financial Services

  • The remaining balance can be obtained from American Farm.
  • The term of the loan is 30 years.

Example

If the farm has a $400,000 purchase price, your cash down payment would be 5% of that, or $20,000. FSA will make a loan of up to 45% to you, or a maximum of $180,000. American Farm will lend you the remaining balance needed, in this case, $200,000.

Revolving Line of Credit

At American Farm Mortgage and Financial Services, we understand that you may have business needs arise unexpectedly. If you’re looking for a loan that offers both flexibility and easy access to your money, then look no further than an American Farm- Farm Real Estate Revolving Line of Credit. Funds may be used to improve real estate, purchase additional real estate, or for other agricultural uses.

How do you know if a Revolving Line of Credit is right for you?

  • Are you looking to leverage existing equity to grow your operation?
  • Do you see the need to borrow funds occurring more than once in the next 18 months?
  • Do you need financing for improvements to your permanent planting enterprise?

If you answered yes to any of these scenarios, then an American Farm Revolving Line of Credit may be what you are looking for.

Features:

  • Borrowing power up to 50% of your bare land value (45% for the 10-year draw period)
  • A 5-year interest-only draw period option, followed by a 10, 15, 20, or 25-year amortization
  • The option to renew the 5-year interest-only draw period for an additional 5 years (the maximum term of the loan including the draw periods is 30 years)
  • A 10-year interest-only draw period option, followed by a 5, 10, 15, or 20-year amortization
  • Option to convert to other loan products
  • Unlimited draws, $2,500 minimum
  • Semi-annual interest payments during the draw period
  • Tax-deductible mortgage interest*

Guidelines:

  • Minimum loan size of $100,000
  • Collateral for the loan is first lien on real estate

*Consult your tax advisor regarding tax-deductibility of interest.

Products Available

  • 1-month LIBOR-indexed ARM loan
  • 1, 3 and 5-year ARM loans
  • 3/1, 5/1, 7/1 and 10/1 ARM loans
  • 10, 15, 20 and 25-year Fixed Rate loans with matching amortizations
  • 25-year maximum amortization
  • Interest rate is based on loan quality, product selected and payment frequency selected
Call us today at (800) 876-2362 to speak with our knowledgeable underwriting staff. We will gladly answer your questions and take a look at your specific situation to help you determine which loan product best suits your individual needs.