With the passage of the new Farm Bill in 2014, FSA has some changes to its Farm Loan Program rules and limitations. These new rules should allow for more farmers and ranchers to be eligible while also increasing some loan limits to allow FSA to have a positive impact on more farming operations.
The Down Payment assistance loan amount has been increased from $225,000 to $300,000. This program requires a 5% down payment. A commercial lender will lend 50% of the purchase price with a 30 year amortization and FSA will lend 45% of the purchase price with a 20 term. The current interest rate for this program is 1.5% for the FSA portion. The FSA portion cannot exceed 45 percent of the lesser of the following: purchase price, appraised value of the farm to be acquired, or $667,000.
Historically, to be eligible for this program the applicant had to own less than 30 percent of the median size farm in his/her respective county to be considered a Beginning Farmer. This eligibility requirement has been changed to 30 percent of the average farm. This change will significantly increase the amount of land a borrower is allowed to own and still be considered a Beginning Farmer for all counties serviced by the Pettis County FSA office.
FSA has reduced the interest rate on the Joint Financing Farm Ownership program. This program allows for FSA and a commercial lender to both lend a portion of the farm purchase price and does not require a down payment from the borrower. If FSA’s portion of the loan does not exceed 50 percent of the purchase price, the FSA interest rate will be the Regular Farm Ownership rate minus the 2.5 percent but can never be less than 2.5 percent. The April 2014 rate would be 2.5 percent. The term of the loan would be 40 years and the interest rate would be fixed for the life of the loan.
FSA has also removed the term limits on Guaranteed Operating Loans. Prior to the passage of the Farm Bill a borrower was limited to 15 years of obtaining a Guaranteed Operating Loan. An applicant now has unlimited years of eligibility.
Further information and applications for FSA loan programs are available at the Pettis County Farm Service Agency at 1407 W. 32nd St., Sedalia, Mo., 65301 or call (660) 826-3339 Ext. 108.