Loans for Beginning

Farmers and Ranchers

Overview

Building a successful farm is a significant financial 

investment and can be especially challenging for beginning 

farmers who are not financially ready to access credit from 

commercial lenders. The U.S. Department of Agriculture’s 

(USDA) Farm Service Agency (FSA) makes and guarantees 

loans to beginning farmers. While FSA is fully committed 

to all farmers and ranchers, there is a special focus on the 

credit needs of farmers and ranchers who are in their first 

10 years of operation. 

Each year Congress targets a percentage of farm ownership 

and farm operating loan funds to beginning farmers. 

Providing loan programs is important as beginning farmers 

have historically experienced more difficulties obtaining 

financial assistance. 

A beginning farmer is an individual or entity who: 

• Has not operated a farm for more than 10 years; 

• Substantially participates in the operation; 

• For farm ownership loans, the applicant cannot own a 

farm greater than 30 percent of the average size farm in 

the county, at time of application. 

• If the applicant is an entity, all members must be 

related by blood or marriage, and all entity members 

must be eligible beginning farmers. 

In addition, beginning farmers must meet the loan eligibility 

requirements for the program.

Maximum Loan Amounts

• Direct farm ownership: $600,000

• Direct operating loan: $400,000

• Microloan: $50,000 each for operating and farm 

ownership 

• Guaranteed farm ownership or operating loan: 

$2,236,000

• EZ Guarantee: $100,000 ($50,000 if the lender is 

a micro lender) 

Down Payment Program

FSA has a special loan program to assist beginning 

farmers in purchasing a farm. Retiring farmers may use 

this program to transfer their land to future generations. 

Requirements: 

• Cash down payment of at least 5 percent of the 

purchase price. 

• Loan amount limited to 45 percent of the least of: 

- The purchase price of the farm; 

- The appraised value of the farm; or 

- $667,000 ($300,150 maximum). 

- 20 years loan term. 

- Interest rate is 4 percent below the direct farm 

ownership rate, but not lower than 1.5 percent.

The remaining balance may be obtained from a 

commercial lender or private party. FSA can guarantee 

up to 95 percent of the loan 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.

USDA is an equal opportunity provider, employer, and lender. fsa.usda.gov
LOANS FOR BEGINNING FARMERS AND RANCHERS 2

More Options for Accessing Capital

Beginning farmers may choose to participate in a joint 

financing arrangement. FSA will lend up to 50 percent of the 

amount financed and another lender provides 50 percent or 

more. The applicant will use funds from the joint financing 

arrangement along with FSA funds for any authorized 

farm ownership purpose. The interest rate is 2 percent less 

than the direct farm ownership rate but not lower than 2.5 

percent. The term of the loan will not exceed 40 years or the 

useful life of the security.

Land Contract Guarantees

FSA provides financial guarantees for land sale contracts 

to a beginning farmer. The seller may request either of 

the following: 

• Prompt Payment Guarantee: A guarantee up to the 

amount of three amortized annual installments plus the 

cost of any related real estate taxes and insurance. 

• Standard Guarantee: A guarantee of 90 percent of the 

outstanding principal balance under the land contract. 

The purchase price of the farm cannot exceed the lesser of 

$500,000 or the market value of the property. The buyer 

must provide a minimum down payment of 5 percent of the 

purchase price of the farm. The interest rate is fixed at a rate 

not to exceed the direct farm ownership loan interest rate in 

effect at the time the guarantee is issued, plus 3 percentage 

points. The guarantee period is 10 years for either plan 

regardless of the term of the land contract. The contract 

payments must be amortized for a minimum of 20 years. 

Balloon payments are prohibited during the 10-year term of 

the guarantee. 

How to Apply

Farmers may apply for direct loans at their local FSA 

offices. Your local FSA offices are listed in the telephone 

directory under U.S. Government, Department of 

Agriculture or Farm Service Agency or find your local FSA 

office at farmers.gov. 

For guaranteed loans, applicants must apply to a 

commercial lender who participates in the Guaranteed 

Loan Program. Contact your local FSA office for a list of 

participating lenders.

More Information

For more information visit, fsa.usda.gov/farmloans or 

farmers gov. Find your local USDA Service Center at 

farmers.gov /service-locator. 

SEPTEMBER 2023 fsa.usda.gov