Financing agricultural land can be a complex process with many factors to consider. One of the most important steps is estimating your potential loan payments to determine if the land purchase is feasible for your farm operation. Agriculture land loan calculators are online tools that allow you to estimate your payments by inputting a few key details about the loan.
In this article, we’ll walk through the step-by-step process of using an agriculture land loan calculator We’ll also discuss some of the key factors that impact your loan payments and how you can use these tools to evaluate different loan scenarios.
Getting Started with an Agriculture Land Loan Calculator
Most lenders that provide agriculture land loans have loan calculators available on their websites Here are a couple options to check out
These calculators allow you to input details like the loan amount, interest rate, payment schedule, and amortization term to estimate your payments. They also give you the flexibility to compare an amortized loan versus an interest-only loan.
To get started, simply go to the lender’s website and find their loan calculator page. You’ll input the loan details in a form, then the calculator will provide estimated payment amounts.
Key Inputs to the Agriculture Land Loan Calculator
There are a few key inputs that significantly impact your estimated loan payments:
Loan Amount
The loan amount is the total amount you need to borrow to purchase the agricultural land and cover any related costs. Be sure to factor in the purchase price, appraisal and origination fees, title insurance, and any other closing costs.
Interest Rate
The interest rate is the annual rate charged on the loan balance. Rates for agriculture land loans are often variable and tied to an index like Prime or LIBOR. The rate will impact the amount of interest owed each payment period.
Amortization Term
The amortization term is the total length of time to repay the loan principal. Common terms for agriculture land loans are 20-30 years. A longer term means lower payments but more interest paid over time.
Payment Schedule
You can select how often payments are made – monthly, quarterly, semi-annually, or annually. More frequent payments mean smaller individual amounts.
Comparing Loan Scenarios
One of the best uses for an agriculture land loan calculator is testing out different loan scenarios to find the most affordable option.
For example, you can compare a 20-year amortized loan to a 30-year amortized loan. Or you can compare an amortized loan to an interest-only loan.
By adjusting the inputs and comparing payment estimates, you can optimize the loan structure for your budget and goals.
Here are some scenarios to consider:
- Amortized vs. interest-only payments
- Longer vs. shorter amortization term
- Faster vs. slower payment frequency
- Lower vs. higher interest rate
Playing around with the numbers will help you make an informed financing decision.
Estimating Payments on an Agriculture Land Loan
Let’s walk through a detailed example of estimating payments on a $1 million agriculture land loan using FCSAmerica’s calculator:
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Enter the following inputs:
- Loan Amount: $1,000,000
- Interest Rate: 5%
- Amortization Term: 25 years
- Payment Schedule: Annual
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Review the estimated payment schedule. The annual payment is $67,765.
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Now let’s compare an interest-only loan by changing the Amortization Term to “Interest-Only”.
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The estimated annual interest-only payment is $50,000.
In this example, the interest-only loan has lower annual payments of $50,000 compared to $67,765 for the amortized loan. But the interest-only option means you are not paying down principal over time.
Running through scenarios like this provides an apples-to-apples comparison so you can make the best financing decision for your farm.
Other Features of Agriculture Land Loan Calculators
In addition to estimating payments, some agriculture land loan calculators have other helpful features:
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Print or export the payment schedule – This allows you to save or share the payment estimates.
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** principal balance** – See how much of the original loan amount remains over the full repayment term.
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Amortization schedule – Review how much of each payment goes to interest vs principal each period.
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Extra principal payments – See how making additional principal payments impacts the loan payoff.
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Points – Calculate how discount points impact the interest rate and payments.
Using these additional tools provides even more insight into optimizing your loan.
Factors That Impact Agriculture Land Loan Payments
When using a loan calculator, keep in mind some additional factors that influence your actual loan payments:
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Credit – Your credit score impacts the interest rate offered by lenders. Better credit means better rates.
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Income and expenses – The lender will review your farm’s financials to ensure you can afford the payments.
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Loan-to-Value (LTV) ratio – Your down payment amount and land value affect loan qualification and pricing.
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Loan fees – Origination fees and other charges at closing will impact your total repayment amount.
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Property taxes and insurance – Don’t forget these costs are in addition to your loan payment.
While the calculator provides an estimate, the lender will take a holistic look at these factors to approve your loan and finalize terms.
Next Steps After Using the Agriculture Land Loan Calculator
Once you’ve used the calculator to estimate payments, here are some next steps:
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Verify the payment amounts work with your budget – Make sure you can afford the monthly, quarterly or annual payments.
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Check if you qualify for better loan terms – Your specific situation may allow better pricing.
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Submit a loan application – After deciding on loan terms, formally apply with the lender and provide financial documentation.
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Lock your interest rate – Rates change frequently, so lock in current pricing.
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Close on time – Work quickly to close the loan so you don’t miss out on purchasing the land.
Getting pre-approved early in the land purchase process is recommended. This allows you to make a strong offer with confidence in your financing.
Use an Agriculture Land Loan Calculator to Estimate Your Payments
Purchasing agricultural land is a major financial move for any farmer. Making use of online agriculture land loan calculators helps you estimate your loan payments and determine the best financing option.
I encourage you to spend time playing around with different loan amounts, rates and terms. Testing out various scenarios will provide you with the information needed to make a smart borrowing decision.
With estimated payments in hand, you can shop different lenders and evaluate how affordable it is to purchase the land you need to grow your farm operation.
How to calculate your loan cost
As a borrower, your loan cost primarily comes down to the loan amount you are seeking with determined interest. There are several other factors that should also be solidified to discover your overall loan cost. Payments toward the balance can be estimated using the Capital Farm Credit farm land loan calculator.
Follow these instructions to determine an estimated payment schedule and to understand the breakdown of how your payments are credited towards your loan:
- Insert your desired loan amount.
- Select the estimated interest rate percentage.
- Input your loan term (total years on the loan).
- Determine your payment frequency (if not monthly, quarterly, semi-annually, and annually).
- Select the amortization type for your loan (Regular Amortized (P&I) or Fixed Principal (P+I)
Interest may be the largest variable in your estimation, as rates fluctuate up and down, depending on market conditions, inflation, and a variety of other factors. You can select an estimation based on current rates to get a rough idea of how much total interest will be accrued over your payment cycles. This can help you determine the best plan for making actual payments.
*Note: The loan rate calculator is to be used for estimation purposes only and will never provide complete accuracy. Loans are subject to approval, terms of credit may vary, and the calculator is not to be used for any unintended purpose such as providing legal or investment advice.
Secure your property loan from Capital Farm Credit
When you select a land loan form Capital Farm Credit, you arent just introducing a payment schedule into your operation. If you need assistance, we are the team to trust. A loan with our professional lending team creates a lasting relationship, and our loan officers know your needs because they have knowledge of rural Texas, and backgrounds working on farms and ranches in communities across the state.
Ready to purchase or improve that precious piece of real estate? Our team will work with you to secure a land loan with a competitive interest rate and terms that fit your specifications. Get started by using our land loan calculator to receive an estimation. You can also visit us at any of our numerous locations across the state of Texas to speak with a qualified lender. For more information or to get started today, contact us or call 877-944-5500.
Getting Started with an FSA Loan – Kaitlyn Niemeyer
FAQ
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How do I use the Farm Loan Calculator?
Use the farm loan calculator to determine your payments on a land or ag loan. Simply enter the desired loan amount, down payment, interest rate, payment frequency and loan term in our farm loan calculator to get started.
What is a finance land calculator?
Finance Land Calculator – Estimate your payments on a land or ag loan. Enter loan amount, down payment, interest rate, and interest rate in our farm loan calculator to begin.
What is a Land Loan Calculator?
Our land loan calculator allows you to view estimated rates and fees to give you transparency on what to expect. By estimating rates and fees up front, the free loan calculator from FBN Finance helps you effectively plan and strategize your financial options for future land purchases, which can include farms, ranches, timberland, and hunting land.
How do I calculate land loan payments?
Calculate land loan payments using monthly, quarterly, semiannual or annual payment schedules. What will my land loan payment be? Ready to apply for financing? Get Started The actual loan payment amounts may vary depending on the interest rate, closing date and other factors. This is an estimate of loan payments.