Down Payment Loan Program

The Direct Farm Ownership Down Payment loan is the only loan program specifically for historically underserved and women farmers and beginning farmers. Down Payment loan funds may be used only to partially finance the purchase of a family farm. Loan applicants must contribute a minimum downpayment of 5 percent of the purchase price of the farm and the Agency will finance 45 percent to a maximum loan amount of $300,000. The balance of the purchase price not covered by the down payment loan and the loan applicant's down payment may be financed by a commercial lender, private lender, a cooperative, or the seller.

To qualify:

• The applicant must make a cash down payment of at least 5 percent of the purchase price;

• The maximum loan amount does not exceed 45 percent of the least of the purchase price of the farm or ranch to be acquired, the appraised value of the farm or ranch to be acquired, or $667,000 (Note: This results in a maximum loan amount of $300,150);

• The term of the loan is 20 years. The interest rate is 4 percent below the direct FO rate, but not lower than 1.5 percent;

• The remaining balance may be obtained from a commercial lender or private party. FSA can provide up to a 95 percent guarantee if financing is obtained from a commercial lender. Participating lenders do not have to pay a guarantee fee;

• Financing from participating lenders must have an amortization period of at least 30 years and cannot have a balloon payment due within the first 20 years of the loan.

Repayment terms for direct Farms Ownership loans vary but never exceed 40 years.

Interest rates for direct loans are set periodically according to the government’s cost of borrowing.

Guaranteed loan terms are set by the lender. Interest rates for guaranteed loans are established by the lender.

Fact Sheet: Loans for Socially Disadvantaged Farmers and Ranchers

Commercial Lenders