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

You want to buy land. You want to buy rural land, farm land, whether it's one acre or 100 acres. You just know that you want to buy land. I just did this in 2023. So in this video, I'm going to make a very simple overview comparing and contrasting your two main options for getting a loan to buy this land. Back when I found my land in 2023, 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 have since learned so much and I'm now breaking down in a series on my sub stack I'm going to link to below. For the next 20 weeks, I'm going to cover 20 different unconventional ways to buy land in our country. These are going to cover everything from using state grant programs to crowdfunding campaigns. For the first two weeks, I have been covering what I will be explaining in this video, the farm credit system, which is where I got my loan, and the USDA. These two systems are different. They are separate from one another. The USDA is part of the federal government. The farm credit system is not. This can confuse people because the farm credit system was established by the federal government 100 years ago. It is no longer part of the federal government. So I just want to make that clear. My loan is with farm credit. It is in the farm credit east office. Since I am in the northeast, depending on where you are in the country, your farm credit office will have a different name. You can find it easily on their website. I genuinely believe we will have a better future if everyday people start buying this farmland. Solar Farms, Wall Street, and developers are chomping at the bit to buy this farmland. They are currently buying the farmland. I'm not saying that we can stop them completely, but I really do think it will be a better future if everyday people are grabbing even just a few acres to steward, to clean up, to get the chemicals off, and also from a food autonomy point of view that no one has talked about. What are we going to do when there are no longer farms in the United States of America? Here's a very elementary overview and approach to this that is based off of my personal experience and the research I have been doing for my Substack series. Starting off with farm credit, the pros to farm credit. It is a private institution. It's not the federal government, which means I did not need prior farming experience or to have to submit a farming business plan to them to get approved for this loan. If you are as novice as I am, I had no idea even how to write a farming business plan. You don't need to for farm credit. They don't need that type of background on you. Instead, to know you're going to be a reliable borrower from them, they did need between 20 to 30 percent down to secure the loan. You needed a minimum credit score of 620 or higher for them to determine if you are a responsible borrower or not. And they did go through my tax returns and bank statements. They function as any normal borrower would for a mortgage, for example. Since they are not the federal government, it was a very speedy process, which is why I ultimately did go with farm credit. First, because I had no prior farming experience. Second, I appreciated how quick they were. So 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. If you know anything about me, you know I like to do things rather quickly, probably to a fault. And I just appreciated how quick they were with the whole process. They have since been very responsive, loving. They put on a dinner for all of us a couple weeks ago, and I have enjoyed working with them more than any other lender I've ever worked with. I'm not shy about that on here. No, they have never paid me to write such nice things or say such nice things about them. I've never been paid by them. It's just my honest review and experience working with them. The USDA is part of the federal government, which means you have more options and variations with them if you have, let's say, low credit or you don't have the 30% down to secure the loan. You don't even have that. That's okay. With the USDA, there are five different main programs you can enter into to get a loan for your land. Again, I will link to the article below where I break down all five of these programs for you. Since it's the federal government, they have a lot of options available to you. They also have better interest rates. So for some of the USDA land loans, they have fixed interest rates. I saw one was only 1.5%, another one was 4%. Farm credit, since it is not part of the federal government, had higher interest rates. Mine was, I believe, 6% or 7% when I locked in my loan. Again, that was also indicative of the greater economy and market in 2023. So with USDA, you're going to get better interest rates. However, you do need prior farming experience to access almost all of their land loan programs. So if you don't have the three years of prior farming experience, which is what I generally saw across the board, you need to be entered into either an apprenticeship with already one or two years of experience and then a registered apprenticeship to finish out those three years, or you need to sign up for a mentorship that is registered or approved by the USDA so they have some type of idea that you are going to be able to successfully see through these farming plans and dreams that you want the loan for. So with farm credit, you don't need any of that. Again, because the interest rate is higher, you need to put money down and you just have to pay it back. They don't really care what you do, which I liked because I didn't know what the heck I was doing here and I still don't know what the heck I'm doing here. There's a little more pressure with the USDA for some of their loan programs. You need to submit a farming plan, business plan, an income projection, and a breakdown of how you plan to actually turn a profit by cropping your land or doing something farming related. Again, with the USDA, since it's the government, they do have programs for underserved communities, minorities, women, and also low-income individuals. So if farm credit knocked you out of the market because you can't put that 20 or 30 percent down or you can't qualify with the credit score requirement, that is where the USDA is going to pick up the slack. Major difference between the two. Since the USDA is the government, there are more rules that come along for the ride, more bureaucracy, which means it's a slower process. That was a no for me. Might be a yes for you, though. They have a lot of options. They even have something called a microloan that I may be considering in the future. If you want to just get one acre in a rural or urban setting, you want to seriously consider the USDA microloan option for that. But since it's the federal government, they have to go through, you know, their processes. They got to make sure the the t's are crossed and the i's are dotted and it's going to be a much slower process. If you want to access the goodies, there's going to be some rules like needing prior farming experience or having to be registered in some type of apprenticeship related program. That is a very simple overview of the two. One is private, one is public, one is the government, one is not the government. One needs more proof that you can pay back your loan, one doesn't. One needs to know what you're going to do with the loan, and one doesn't. I hope this helps you a little bit in the beginning of your exploration with buying land. Please, please, please, we really do want everyday people to buy this land. I hope to be a top resource for you guys here on it. If you haven't subscribed already, please do. And I really, really do recommend checking out my sub stack. I still am a writer, first and foremost. I put a lot of thought, research, and effort into these articles and I write them every week. Again, linked below, highly recommend. Don't be afraid to buy land. I'm here to tell you I've been doing this almost alone. Are there some scary elements to it? Sure. Do I know what I'm doing half the time? No. Am I still alive? Yes. So allow me to be the example. If you are on the fence about this or considering it, do follow along. Again, I'm hoping to create content that makes it easier for you guys to decide how to make a smart decision with something like this. Of course, buying land will always come with a certain element of risk. That's the fun and the beauty of getting into real estate. It can be fun. And I'll, of course, create more videos about how to find the right land for you too. So if you guys like this video, let me know below. Are you considering buying land this year? I'd love to hear about it. Did you get a loan through farm credit? Did you get a loan through the USDA? I'd love to read about all of your experiences below. And I will be back next week with more information on unconventional ways to buy land in the US. Actually, it's probably ways you can buy land all across the world. I think there will be a lot of transferable information in these videos to help you globally too. So stick around. Bye.