[email protected]

Can you buy a farm with a USDA loan?

Written by - March 02, 2023

Yes, you can buy a farm with a USDA loan. Here’s how:

What is a USDA Loan?

First, let’s understand what a USDA loan is. The United States Department of Agriculture (USDA) offers loans to those who want to purchase a home, farm, or even an undeveloped lot in a rural area. These loans are also known as Rural Development Loans.

What are the Requirements for a USDA Loan?

To qualify for a USDA loan, you must meet the following criteria:

  • You must intend to use the property as your primary residence
  • Your income must be below 115% of the median income in your area
  • The property must be located in a qualifying rural area
  • You must have a credit score of at least 640

Can You Buy a Farm with a USDA Loan?

Yes, you can use a USDA loan to purchase a farm. However, there are some restrictions.

  • The farm must be a working farm (i.e. producing crops, raising livestock, etc.)
  • The farm must be owner-operated, meaning the owner must live on the property and be actively involved in the farming operation.

What Type of Farm Can You Buy?

A USDA loan can be used to purchase several types of farms, including:

  • Crop farms
  • Livestock farms
  • Dairy farms
  • Poultry farms

How Much Can You Borrow with a USDA Loan?

The amount you can borrow with a USDA loan varies depending on a few factors:

  • Your income
  • Your debt-to-income ratio
  • The value of the property

You can borrow up to 100% of the value of the property.

What are the Advantages of Using a USDA Loan to Buy a Farm?

There are several advantages of using a USDA loan to buy a farm:

  • No down payment required
  • Lower interest rates than traditional loans
  • Flexible credit requirements
  • No private mortgage insurance (PMI) required

How to Apply for a USDA Loan to Buy a Farm?

To apply for a USDA loan to buy a farm, follow these steps:

What Happens if You Default on a USDA Loan?

If you default on a USDA loan, the government will step in and foreclose on the property. However, there are several steps they will take before getting to that point.

  • They will work with you to create a repayment plan.
  • They will explore other options, such as loan modifications or refinancing.
  • They will give you several notices before beginning the foreclosure process.

How to Find a USDA-Approved Lender?

To find a USDA-approved lender, you can visit the USDA’s website and search for lenders in your area. You can also work with a mortgage broker who specializes in USDA loans, such as Mortgage Brokers Pro .

Conclusion

In conclusion, buying a farm with a USDA loan is possible. However, there are some restrictions and criteria you must meet. If you’re interested in using a USDA loan to purchase a farm, work with a USDA-approved lender, such as Mortgage Brokers Pro , to ensure a smooth and successful transaction.

Get Free Consultation

Get free consultation