USDA FSA Direct Farm Ownership Loan
USDA Farm Service Agency
Up to $600,000
Buy your first farm with a USDA direct mortgage
Direct loans from USDA's Farm Service Agency to help farmers buy, enlarge, or improve farmland, and construct or repair farm buildings. The primary path for beginning farmers who cannot get a commercial agricultural mortgage. Loans at below-market interest rates with down payments as low as 5% for beginning farmers. No commercial lender intermediary — FSA is the direct lender. Down Payment Loan is a special joint-financing variant for beginning farmers buying their first farm.
- Funding type
- Loan
- Level
- Federal
- Amount range
- $10,000 – $600,000
- Realistic amount
- Most direct farm ownership loans fall in the $100,000–$400,000 range. Beginning farmers buying smaller operations (50–20…
- Deadline
- Rolling — no application deadlines. Apply any time at your local FSA county office. Subject to annual congressional appropriations; some offices may exhaust direct loan funds late in the fiscal year.
- Status
- active
- States
- Nationwide
- Payment model
- loan
Who qualifies
- Must be a U.S. citizen, non-citizen national, or qualified alien
- Must be unable to obtain sufficient credit from commercial lenders at reasonable rates and terms (lender of last resort)
- Must be the operator of a family farm after the loan is made — not absentee ownership
- Must have 3 or more years of farm management experience (or 1 year for beginning farmers with special exception) including at least 1 crop year in the past 10 years
- Beginning farmers (never operated a farm, or operated for fewer than 10 years) are priority recipients and have separate loan sublimits
- Down Payment Loan variant: only for beginning farmers buying their first farm from a willing seller
- Must not have caused FSA a loss through a prior debt write-down
- Cannot have outstanding federal non-tax judgments
- Socially disadvantaged farmers (women, minorities, tribal) receive priority processing
Hard requirements
- US citizenship required
What it covers
Eligible expenses
- Purchase of farmland or ranchland
- Purchase of water rights, mineral rights, and other real property interests associated with farming operations
- Construction, alteration, repair, or improvement of farm buildings (barns, grain bins, irrigation systems, drainage)
- Land clearing, soil preparation, and permanent improvements
- Refinancing existing real estate debt on reasonable terms when necessary to improve the farm's financial position
- Purchase of rural housing for the farm operator when co-located with farm operations
Ineligible expenses
- Operating expenses (seeds, fertilizer, feed — covered by operating loans)
- Personal property not integral to farming (vehicles, personal equipment)
- Land not used for farming
- Recreational properties without farming purpose
- Construction of facilities that serve no agricultural purpose
How to apply
-
1
Contact your local FSA county office
Farm ownership loans are processed through FSA county offices, not online portals. Find your office at farmers.gov/contact/fsa-service-center. Discuss your property interest, farming experience, and financial situation with the loan officer before submitting documentation. This relationship is key — the loan officer guides the process.
~6 hrs
-
2
Identify the property and get an appraisal
For farm purchases, identify the farmland and get a USDA-approved appraisal. FSA will only lend against the appraised value — if purchase price exceeds appraised value, you fund the difference. FSA requires a licensed appraiser; your loan officer will advise on acceptable appraisers. Allow 4–8 weeks for appraisal.
~6 hrs
-
3
Assemble financial documentation
Gather: 3 years of farm tax returns or farm financial statements, current balance sheet, cash flow projections showing repayment ability, proof of farming experience (lease records, prior crop records, employment history), personal credit information, and property legal description. For Down Payment Loan: seller's terms and agreement.
~6 hrs
-
4
Complete FSA application forms
FSA loan officers provide and assist with form FSA-2001 (Direct Loan Application) and supplemental forms for real estate. The process is guided — the loan officer reviews your package and requests additional information as needed. Environmental and title review also required.
~6 hrs
-
5
Loan processing, closing, and servicing
FSA processes the application (typically 30–60 days for complete packages), orders appraisal review, and issues conditional approval. Closing requires title insurance, hazard insurance, and a security instrument. FSA holds the first lien on the property. Annual reviews are required — FSA monitors the farm operation and loan balance over the life of the loan (up to 40 years).
~6 hrs
Industry & certifications
NAICS codes: 111110, 111120, 111130, 111219, 111310, 112111, 112112, 112210
Beginning farmers should specifically ask about the Down Payment Loan — FSA lends up to 45% of purchase price at 1.5% interest, you only need 5% down, and the seller or a bank covers the rest. It's the lowest-cost path to land ownership for first-generation farmers.
Deadline & timing
Rolling applications year-round. Process takes 30–60 days for complete applications. FSA direct ownership loan funds are often exhausted before the end of the fiscal year (especially for beginning farmers in high-demand agricultural states). Apply early in the year (October–March) for best availability.
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Last reviewed 2026. GrantCompass is an independent funding-discovery tool and is not affiliated with any government agency. Always confirm details on the official program page.