Financing for Rural Property

Federal loan programs offer funding for farm owners and rural home buyers.
Federal loan programs offer funding for farm owners and rural home buyers. (Image: Jupiterimages/Creatas/Getty Images)

Rural property buyers and owners can obtain financing through government programs and commercial lenders. The U.S. government also offers a range of financing programs for borrowers to make farm improvements, renovate farmhouses, purchase land, develop affordable housing or repair equipment. Private lenders provide funding for primary homes, country houses, hunting land and recreational property. Rural property borrowers can obtain fixed- or adjustable-rate loans and select programs may offer up to 100 percent financing.

Farmer Mac Mortgage Loans

The Federal Agricultural Mortgage Corporation, also known as Farmer Mac, backs loans made for rural properties. Farmer Mac doesn't not make direct loans, but provides loan products through commercial lenders. Only agricultural property such as ranches, farms and agribusinesses can qualify for the Farmer Mac program. The program only extends eligibility to properties that produce agricultural products and makes loans for properties of any sizes. Loans offered through the Farmer Mac program are guaranteed by the U.S. Department of Agriculture. Loan products include fixed-rate and adjustable-rate mortgages. Individual borrowers must hold U.S. citizenship or legal residency and corporations seeking funding must be majority owned by U.S. citizens or legal residents.

USDA Rural Development Loans

USDA's Rural Development division offers multiple guaranteed and direct loan programs for rural property owners. The Business and Industry Guaranteed Loan program backs loans made by private lenders. Corporations, Indian tribes, individuals and partnerships can qualify for the program. Borrowers can use Business and Industry Guaranteed Loans to purchase land, buy equipment or modernize facilities. The program only extends eligibility to properties used for business purposes. USDA's Rural Housing Site Loan program helps fund developers seeking to develop or purchase land to build homes for moderate- and low-income families. Only nonprofit organizations can obtain funding through the Rural Housing Site Loan program.

USDA Home Loans

USDA offers direct and guaranteed home loans for rural property owners. Low-income families can obtain federal funding to buy a home through the Rural Housing Direct Loan program, also referred to as Section 502 Direct Loans. Home buyers can receive up to 100 percent financing to buy a home site, build a home or purchase an existing home in a rural area. Borrowers can also obtain funding through the USDA's Single Family Housing Guaranteed Loan program, which backs loans for low-income rural borrowers. The program offers funding for borrowers to purchase a home, buy a home site, renovate a house or build a home. Lenders offering Single Family Housing Guaranteed Loans include state agencies, Farm Credit System lenders and the U.S. Veterans Administration.

Private Rural Property Financing

Certain private lenders offer financing specifically for rural property owners. Farm Credit provides loans throughout the U.S. for ranches, farms, country homes, recreational property and hunting land. The company offers fixed- and adjustable-rate mortgages and loans for borrowers to make property improvements. Farm Bureau Bank also offers mortgage loans for homes in rural areas. The company provides financing for manufactured and constructed homes and offers adjustable- and fixed-rate mortgages. As of March 2011, Farm Bureau Bank makes loans up to $269,807 and only finances single-family owner-occupied homes.

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