The Farm Service Agency has a special loan program to assist beginning/socially disadvantaged farmers in purchasing a farm. The program offered is a Downpayment Farm Ownership Loan. The applicant must not have operated a farm or ranch for more than 10 years and must not be able to obtain financing from a commercial lender. This program also provides a way for retiring farmers to transfer their land to a future generation of farmers and ranchers.
Here is how the program works:
● The applicant must make a cash down payment of at least 5 percent of the purchase price.
● The maximum loan amount does not exceed 45 percent of the least of (a) the purchase price of the farm or ranch to be acquired; (b) the appraised value of the farm or ranch to be acquired; or (c) $500,000 (Note: This results in a maximum loan amount of $225,000).
● The term of the loan is 20 years. The interest rate is currently 1.5 percent and is fixed for the term of the loan.
● The remaining balance may be obtained from a commercial lender or private party. FSA can provide up to a 95 percent guarantee if financing is obtained from a commercial lender. Participating lenders do not have to pay a guarantee fee.
● Financing from participating lenders must have an amortization period of at least 30 years and cannot have a balloon payment due within the first 20 years of the loan.
For additional information about this loan program, or to learn about other loans available from FSA, contact the Pettis County FSA office at (660) 826-3339 ext. 108. All loan programs of the Farm Service Agency are conducted on a non-discriminatory basis.