How to: Applying for the FSA Beginning Farmer Loan with AgriFinancial

Let’s rewind and give a little background on us and our farm buying journey so far. About a year ago, Daniel and I got serious about purchasing some farmland. We started looking at property for sale. We set up meetings with FSA to learn more about the FSA Beginning Farmers Loan. And we met with AgriFinancial to discuss our loan options. We shared all about it here.

Then it seemed like the whole real estate market went wild with the continuing pandemic. Farmland prices were soaring. Everything seemed to be sold before we even had a chance to look. So we put the brakes on everything. Stopped looking for land, stopped preparing for loans.

Beginning Farmer Loan

Fast forward to now. Things are still a little crazy. But with the almost guarantee of interest rates going up this year, we are feeling the pressure to start our search again. Our search (so far) has led us to two pieces of property we are interested in. Interested enough to start the process of looking at loan options all over again.

So last week we met with AgFi to discuss all the options and to get some of our questions and your questions (that you submitted via Instagram stories) answered. The main questions we had were how to maximize the FSA Beginning Farmer loan with a loan from AgriFinancial. Here is what we learned.

Maximum Farm Loan Amount

FSA Beginning Farmer Loan - Dairy Farmer Couple on their Dairy farm in New Mexico

The first thing we talked about was our budget. How much can we realistically loan? Well, AgFi walked us through the option of utilizing the FSA Beginning Farmers and Ranchers loan in addition to a loan through them.

Farmers and ranchers can combine the FSA Beginning Farmers Loan with a loan from another. What does this look like? Well, it's a 50/50 loan. Half comes from FSA and half comes from a lending institution like AgFi. The maximum loan amount you can get with both loans combined is just over $1.8 million. This is with zero down payment (more on this later). There are some fees incurred from the loan (including appraisal, title insurance, title search, fees specific to the lending institution, etc. to give a few examples which can add up), but you can either pay these out of pocket or roll them into the loan.

The FSA beginning farmer loan can have a term as long as 40 years. Whereas the loan from the lender would likely be a 30-year note. It’s worth mentioning, there is no prepayment penalty on the FSA beginning farmer loan.

There is also the option to secure additional funds if you have some of your own money to put down for a down payment. So maybe there is a property you are looking at that is just over that $1.8 million. You can use a down payment to apply for an additional loan.

Applying for a Farm Loan

Alright, you found a piece of property. You have decided to move forward with a loan from a lender combined with the FSA Beginning Farmers Loan. Now what? AgFi recommends putting together a Financial Package. Taxes, balance sheets, applications, etc. AgFi has a great Credit Application Checklist. Enter your email address below and I will email this checklist directly to you.

Sign Up For The Checklist Here

In addition to the Financial Package, AgFi told us they HIGHLY recommend including a letter with your package. Share a little bit about yourself, your goals, your farm plans. If the Financial Package is your resume, this is your cover letter so to speak. This is especially helpful if you don’t have an existing relationship with the lender.

For a lender like AgFi, their team firmly believes that a loan is more than just paperwork. It is a 30-year relationship. And this letter can give them the chance to get to know you and start building that relationship.

Young Farmer Loan - Image of dairy cows on a dairy in New Mexico

Farm Loan Timeline

You found your property. You are ready to go with AgFi. And now you need to start the processing of applying for the FSA Beginning Farmers Loan in order to secure the loan with the lender. Now it's time for the paperwork. Applying for a loan comes with a lot of paperwork. Do not expect this process to happen overnight. The good news is that AgFi can help you navigate through the process.

I mentioned above that we are making it a priority this year to get serious about looking for land to purchase. With the news about interest rates being on the rise this year, it feels like now is the time to lock in these lower rates. The good news is there is still time. This isn't something that is going to happen right away. But by starting now, we hope to give ourselves plenty of time to work through the entire process.

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AgriFinancial

If you want to learn more about your options for applying for a farm loan and the FSA Beginning Farmers Loan, I highly recommend starting with a call to AgriFinancial. Taking that initial step can honestly feel like the most intimidating part, but getting your questions answered by the experts can go a long way in helping you through the process.

Head to their website and get started on making your farm dream a reality: https://www.cgb-agfi.com/Loan-Programs/Get-Started-Now