At Rural 1st, we don’t just finance rural projects. We live the rural lifestyle. This means that our expert team of loan officers deeply understands what you want and how to finance the perfect land loan for you.
Purchasing rural land to start or expand an agricultural operation is a major investment that often requires financing. For many farmers ranchers, and rural homebuyers securing an affordable loan can be the difference between achieving their dreams or not. Thankfully, there are specialized loan programs through the USDA that provide access to low-interest financing for qualifying borrowers looking to buy land in rural areas. In this article, we’ll break down the key details on USDA rural 1st land loans, interest rates, eligibility, and how to apply.
An Overview of USDA Rural 1st Land Loans
The USDA Farm Service Agency (FSA) offers direct farm ownership loans, also known as rural 1st loans, to help eligible applicants purchase farmland, construct or repair buildings, and promote soil and water conservation. These loans can also be used to refinance debt under certain conditions.
Rural 1st loans provide low-interest financing for up to 40 years with no down payment required The USDA guarantees qualified lenders will finance up to 100% of the purchase price to buy a farm or ranch,
What Are the Current Interest Rates?
As of June 2024, the USDA has set rural 1st loan interest rates at:
- 5.625% for standard direct farm ownership loans
- 3.625% for joint financing direct ownership loans
- 1.625% for down payment ownership loans
These rates are fixed for the full term of the loan, which gives borrowers predictability when budgeting for land purchase costs. The interest rates are generally below rates offered for conventional mortgages, making rural 1st loans very attractive financing.
Who Qualifies for Rural 1st Land Loans?
To qualify for a rural 1st loan, applicants must meet certain eligibility requirements:
- Have sufficient education, training, or experience for the anticipated farming operation
- Be a citizen, legal resident alien, or partnership/corporation of citizens/legal residents
- Have an acceptable credit history
- Be unable to obtain sufficient credit elsewhere
- Have the legal capacity to incur loan obligations
- Not have federal debt written off as uncollectible in the last 7 years
- Not be delinquent on any federal debt over the last 7 years
The purchased land must be used for farming and located in an eligible rural area. Applicants must be able to show they can repay the loan debt through sufficient income from farming or other sources.
How Do I Apply for a Rural 1st Land Loan?
The first step is to contact your local USDA Service Center and explain you’re interested in the rural 1st land loan program. A loan officer will guide you through the application process. Here are the key steps:
- Gather required documents like ID, financial statements, credit report, etc.
- Complete form RD 410-1 Application for FSA Direct Loan Assistance
- Provide 5 years of financial history demonstrating repayment ability
- Allow FSA to appraise the property and determine its value
- Interview with loan officer and submit application
- Receive decision on loan request from FSA national office
The loan request decision can take 2-6 weeks. If approved, closing on the land purchase can proceed and the rural 1st loan funds will be issued.
Tips for Successfully Getting a Rural 1st Loan
- Have a solid business plan for how you will use the land profitably
- Know your target purchase price range before applying
- Have good credit – scores above 650 ideal
- Make sure to fully disclose all financial obligations
- Gather documents early so application is complete
- Be prepared to guarantee loan with personal assets
- Seek guidance from USDA loan officers throughout
With interest rates still near historic lows, now can be an advantageous time to utilize the rural 1st program for purchasing agricultural property or rural home sites. By understanding the loan specifics, requirements, and application process, prospective borrowers can position themselves for the best chance of approval. Reach out to the USDA FSA today to find out if you may qualify for low-rate financing that makes your rural land ownership dreams achievable.
Let us get you Closer to What Matters®.
As the leader in rural lending, we understand what it means to find that piece of land that’s perfect for you. We live out here as well and enjoy the land just as much as you do. From riding ATVs around the woods with your buddies to reeling in that record-breaking smallmouth, we know what gets the blood pumping. And you’ll find working with an experienced lending professional who understands rural property and knows the geographical area can be invaluable in finding land that’s just right. Let’s get a jump start on your rural journey today.
It can be difficult to find fixed-rate financing for bare land. At Rural 1st we offer the security of a fully fixed-rate loan as well as adjustable-rate options to choose from.
When you own your own bare land, you have the freedom to use it how you want, and Rural 1st has the lending solutions to make it happen. We can help you finance bare land and lots for construction to secure your familys future for generations to come and help them get Closer to What Matters®.
We can finance your bare land and get you outside to explore and enjoy it. Get ready for your next outdoor adventure.
Lower rates without the hassle
If a lower interest rate becomes available after you’ve closed your loan, you can reduce your rate without the hassle of refinancing.* Learn more about our Conversion Program.
Financing Your Next Farm or Land Purchase | Rural 1st Lending | IBAF #5
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