FSA Offers Joint Financing Options on Direct Farm Ownership Loans
Article By: Teresa Engel, Vernon County FSA
The USDA Farm Service Agency's (FSA) Direct Farm Ownership loans are a resource to help farmers and ranchers become owner-operators of family farms, improve and expand current operations, increase agricultural productivity, and assist with land tenure to save farmland for future generations.
Participation Loans Overview:
- Joint Financing: Commonly known as the 50/50
- 50% of financing from FSA, 50% of financing from another lender.
- This program does not have the beginning farmer requirement - it is open to everyone that meets FSA eligibility criteria.
- Our interest rate is 2% lower than our direct FO rate or no lower than 2.5%.
- March 50/50 rate = 2.875%
- Maximum loan amount from FSA is $600,000.
- FSA's term is generally 30 years but can go up to 40 years.
- The participating lender will be in 1st position on real estate.
- The participating lender determines their rate and terms.
- Beginning Farmer Down Payment: Commonly known as the 5/45/50
- 5% down payment from borrower, 45% financing from FSA, 50% financing from another lender.
- This program is only available to beginning farmers = those that have not operated a farm for more than 10 years.
- Our rate is 4% lower than our direct FO rate or no lower than 1.5%.
- March 5/45/50 rate = 1.5%.
- Maximum loan amount from FSA is $300,150.
- FSA's term is 20 years.The participating lender will be in 1st position on real estate.
- The participating lender must have an amortization period of least 30 years and cannot have a balloon payment due within the first 20 years of the loan.
To be eligible, the operation must be an eligible farm enterprise. Farm Ownership loan funds cannot be used to finance nonfarm enterprises and all applicants must be able to meet general eligibility requirements. Loan applicants are also required to have participated in the business operations of a farm or ranch for at least three years out of the 10 years prior to the date the application is submitted. The applicant must show documentation that their participation in the business operation of the farm or ranch was not solely as a laborer.
Teresa Engel serves as a farm loan manager for Vernon County FSA in Viroqua, WI. She can be reached at 608.637.2183 or at Teresa.firstname.lastname@example.org.