The best loan for low-cash land buyers: USDA vs Farm Credit

SUMMARY

A land-buying enthusiast who purchased rural property in 2023 compares Farm Credit and USDA loans, highlighting pros like no farming experience needed for Farm Credit and low-income options for USDA.

STATEMENTS

• The Farm Credit System is a private institution established by the federal government 100 years ago but now independent, offering loans without requiring prior farming experience or business plans.
• USDA loans, as part of the federal government, provide multiple programs with lower interest rates but often demand three years of farming experience, apprenticeships, or detailed farming and income plans.
• Farm Credit requires 20-30% down payment and a minimum credit score of 620, reviewing tax returns and bank statements similar to a standard mortgage process.
• The application process with Farm Credit is faster, often issuing pre-approval the same day and full approval within four weeks, appealing to those seeking quick closings.
• USDA offers five main land loan programs tailored for low-credit, low-down payment, or underserved groups like minorities, women, and low-income individuals, including microloans for small acreages.
• A key difference lies in flexibility: Farm Credit focuses on repayment ability without dictating land use, while USDA enforces rules to ensure viable farming outcomes.
• Everyday people can and should buy farmland to counter purchases by solar farms, Wall Street investors, and developers, promoting stewardship, chemical cleanup, and food autonomy.
• Approximately $24 trillion in U.S. farmland will change hands over the next decade as farmers retire, creating an opportune time for new buyers.

IDEAS

• Loans for raw rural or farmland exist without needing structures on the property, debunking common misconceptions about land purchases.
• Farm Credit's independence from government allows novice buyers to secure financing based solely on financial reliability, not agricultural expertise.
• USDA's bureaucratic structure provides subsidized rates as low as 1.5% but trades speed for extensive verification of farming viability.
• The influx of non-traditional buyers like corporations threatens farmland availability, urging individuals to act for personal and national food security.
• Personal anecdotes reveal that even inexperienced buyers can close deals rapidly with private lenders, fostering confidence in unconventional real estate ventures.
• Government programs like USDA apprenticeships bridge gaps for beginners, turning inexperience into a structured path toward ownership.
• Microloans from USDA enable urban or small-scale rural acquisitions, democratizing access beyond large-scale farming.
• Substack series on 20 unconventional land-buying methods, from grants to crowdfunding, expand options beyond traditional loans.
• Quick lender responsiveness, like hosting client dinners, builds trust and community in the lending process.
• Global applicability of U.S. land-buying strategies suggests transferable knowledge for international aspiring stewards.

INSIGHTS

• Private lending prioritizes financial stability over expertise, enabling diverse entrants into land ownership and diversifying agricultural landscapes.
• Government subsidies lower barriers for marginalized groups but impose accountability that filters committed stewards from casual investors.
• The retirement wave of farmers represents a pivotal demographic shift, transforming land markets into opportunities for regenerative, community-driven futures.
• Bureaucracy in public programs ensures long-term sustainability but may deter impatient novices, balancing accessibility with agricultural integrity.
• Encouraging everyday ownership counters corporate consolidation, preserving biodiversity and local food systems against industrial encroachment.
• Rapid personal experiences demystify land acquisition, proving that action amid uncertainty yields empowerment and resilience in real estate pursuits.

QUOTES

• "I thought you had to pay out of pocket for it. I did not even know loans existed for such things, or I thought there had to be a structure on it. I was wrong."
• "I genuinely believe we will have a better future if everyday people start buying this farmland."
• "What are we going to do when there are no longer farms in the United States of America?"
• "They issued me a pre-approval letter that night after I applied, and it took them only four weeks to issue the full approval to close on the deal."
• "Don't be afraid to buy land. I'm here to tell you, I've been doing this almost alone."

HABITS

• Conducting thorough personal research on land financing options before pursuing purchases, including exploring Substack for unconventional methods.
• Applying for loans swiftly to capitalize on quick pre-approvals, aligning with a preference for rapid decision-making in real estate.
• Maintaining ongoing engagement with lenders post-closing, such as attending community events they host to build lasting relationships.
• Writing weekly in-depth articles on Substack to document experiences and share knowledge, prioritizing consistent content creation.
• Embracing risk in land buying despite inexperience, using trial-and-error as a learning tool while staying adaptable.

FACTS

• $24 trillion worth of U.S. farmland is expected to change hands over the next decade due to retiring farmers.
• The Farm Credit System was established by the federal government 100 years ago but operates independently today.
• USDA land loans can offer fixed interest rates as low as 1.5%, compared to Farm Credit's 6-7% in 2023 market conditions.
• Most USDA programs require at least three years of prior farming experience or enrollment in approved apprenticeships or mentorships.
• Farm Credit mandates a 20-30% down payment and a credit score of at least 620 for loan approval.

REFERENCES

• Substack series: "Unconventional ways to buy farmland" covering 20 methods, including state grants and crowdfunding (houseofgreen.substack.com).
• Detailed breakdown of five USDA land-buying programs (houseofgreen.substack.com/p/b...).

HOW TO APPLY

• Research local Farm Credit offices via their website to identify the branch serving your region, then gather tax returns, bank statements, and credit details for initial application.
• Assess your farming experience; if novice, opt for Farm Credit by preparing 20-30% down payment and ensuring credit score exceeds 620 to streamline approval.
• For low-income or underserved status, explore USDA's five programs online, selecting one like microloans and preparing a basic farming plan if required.
• Apply for pre-approval immediately with chosen lender to gauge feasibility, comparing interest rates and timelines against your urgency for closing.
• Enroll in USDA-approved apprenticeships or mentorships if lacking experience, documenting progress to meet program criteria before full loan submission.

ONE-SENTENCE TAKEAWAY

Everyday people should compare Farm Credit's speed for novices against USDA's subsidies to seize retiring farmers' land opportunities wisely.

RECOMMENDATIONS

• Prioritize Farm Credit if you're a beginner without farming plans, valuing its quick process over lower rates.
• Investigate USDA microloans for small-scale urban or rural plots, especially if down payments are a barrier.
• Subscribe to educational resources like targeted Substacks for ongoing unconventional land-buying strategies.
• Engage lenders post-approval through events to foster supportive relationships for future financing needs.
• Act now on the farmland transfer wave, starting with personal research to counter corporate acquisitions.

MEMO

In the rolling hills of rural America, a quiet revolution is underway as $24 trillion in farmland prepares to change hands over the next decade, driven by waves of retiring farmers. For aspiring stewards like the video's creator—who clinched a deal on raw acreage in 2023 without prior experience—this shift presents not just opportunity, but urgency. Solar developers and Wall Street investors are circling, eager to snap up prime soil for panels and portfolios. Yet, the narrator argues passionately for everyday buyers to step in, reclaiming land for cleanup, autonomy, and a resilient food future. Her journey, marked by initial misconceptions about needing cash or structures, underscores a broader truth: accessible loans make ownership attainable for novices.

Diving into the options, she contrasts two pillars of rural financing: the private Farm Credit System and the federal USDA. Farm Credit, born from government roots a century ago but now independent, demands no agricultural pedigree. Approval hinges on solid credit—620 or higher—and a hefty 20-30% down, but skips farming business plans. The process? Lightning-fast: pre-approval in hours, closing in weeks. The creator, a self-described speed enthusiast, praises its responsiveness, from same-day letters to client dinners that feel more like community than commerce. In her Northeast locale, Farm Credit East handled the deal seamlessly, locking in rates around 6-7% amid 2023's economic churn—higher than government alternatives, but worth it for simplicity.

The USDA, by contrast, weaves a safety net with bureaucracy's threads. As a federal entity, it offers five tailored programs, including microloans for single acres in urban fringes and subsidies for women, minorities, and low-income applicants. Interest rates dazzle—some fixed at 1.5%—and down payments can shrink or vanish for qualifiers. But entry often requires three years of farming chops, via apprenticeships or mentorships, plus detailed projections on profits from crops or livestock. For the uninitiated, this scrutiny feels like pressure; for others, it's a roadmap to viability. The creator, lacking that background, bypassed it but eyes USDA microloans for expansions, highlighting how public options fill gaps where private ones falter.

This duality—private agility versus public equity—mirrors the land market's tensions. Farm Credit lets borrowers shape their plots freely, whether for whimsy or wilderness. USDA enforces purpose, guarding against speculative grabs. As corporate hooves thunder closer, the narrator's call rings clear: ordinary folks must mobilize. Her Substack series, unpacking 20 unconventional paths from grants to crowdfunding, arms readers with tools. Risks abound—uncertainty, isolation—but so does beauty. "Don't be afraid," she urges, her voice a beacon for the hesitant. In buying land, she found not just dirt, but defiance.

Ultimately, the choice boils down to profile: novices crave Farm Credit's ease, while those with modest means or missions lean USDA. Whichever path, the message is unequivocal—seize this generational handover. By stewarding even modest acres, individuals can thwart homogenization, revive soils stripped of chemicals, and secure seeds of sovereignty. As global echoes suggest, these U.S. lessons may ripple worldwide, inspiring a mosaic of mindful landowners. The future of fertile earth hangs in collective hands; it's time to grasp it.