Rural Home/Hobby Farm Loans
Are you interested in buying a home with land for growing food or perhaps raising fowl or livestock? If so, a rural home/hobby farm loan may be a great option to help make your dream come true. A hobby farm is defined as a rural property used for the purposes of small-scale farming (usually as a hobby or self-sustainability rather than for commercial profitability). It can consist of a few acres of land to hundreds of acres), including housing/structures.
Greendale Ag Lending understands the nuances of part-time farming and specializes in financing solutions to allow for such farm purchases as:
- Housing/land
- Livestock, fowl, and other animals
- Livestock structures
- Fencing
- Utility vehicles/small tractors
- Miscellaneous equipment
- Building improvements
- Expenses related to hobby farm activities
Greendale Ag Lending will assess the value of the land and structures and take into account the borrower’s credit, debt structure, and income to determine a rural home/hobby farm loan that suits the purchaser’s needs. There are no steadfast guidelines as to what constitutes a farm, thus leaving room for interpretation, and sometimes confusion, in the loan process. Greendale Ag can walk you through the qualifications for each option and help determine which rural home/hobby farm loan product best suits your situation.
Loan Benefits
Rural home/hobby farm loans are designed specifically for non-conventional properties, so they account for the intricacies of farm ownership. Other benefits include:
- Enable purchasers to finance one note and mortgage for the home, other structures, and acreage
- Allow purchasers to lock in long-term financing at a fixed rate
- Offer a competitive pricing structure
The U.S. Department of Agriculture (USDA) backs financing for properties located in eligible designated rural areas. Such USDA loans require no down payment, have relatively flexible credit guidelines, low annual mortgage insurance premiums, and more. They’re also not limited to first-time homebuyers.
Common Qualifications for a Rural Home/Hobby Farm Loan
In most cases, the qualifications for a rural home/hobby farm loan include the following:
- Minimum of five acres.
- 80% maximum loan-to-value
- 680 credit score (and no history of bankruptcy or foreclosures).
Importance of Using a Lender Specializing in Hobby Farms
No two hobby farms are alike. They differ in size, operations, and purpose, so it’s difficult — if not impossible — to find comparable sales with equal characteristics, and thus lenders must have flexibility with appraisals on this type of property. This and other related issues pose problems for inexperienced residential brokers who don’t understand the nuances of hobby farm loans. You can trust Greendale Ag as a trusted advisor and source for rural home/hobby farm loan financing options that are right for you.
Contact us today to speak with a loan specialist.