Thanks to COVID-19, more and more people are ditching life in the city and buying homes in more affordable areas. For some, this means fulfilling their dream of owning lots of land in a rural area and starting their own farm. Others just want the solace that comes with rural living.
If you’re thinking of putting down roots out in the country, then farm loans might be the right way for you to go. Never heard of farm land loans? Read on to learn about the benefits and how to apply!
No Down Payment Required
Farm loans, also known as agricultural loans or USDA farm loans, are one of the best loan products on the market right now thanks to the fact that they do not require a down payment. Instead of throwing money toward a down payment, you can use your cash to make improvements to the home or build your dream farm.
Conventional loans require anywhere from 3 to 20 percent down, which is simply not feasible for many people in today’s world. The trade-off, however, is that you are limited to purchasing a home in specific areas, and there is an income limit for qualification.
Lower Credit Scores Accepted
Any time you buy a home, one of the biggest factors that impact your chances of being approved is your credit score. The USDA recognizes that credit scores are a major barrier to homeownership, especially in rural areas. That’s why their threshold for credit acceptance is much lower than you would expect.
People with credit scores as low as 640 have a high chance of being approved. If your credit score is below 640, however, you will need to demonstrate your creditworthiness through things like your rental history.
How Do You Qualify for Farm Loans?
Before you make an offer on a home, it’s important to learn more about the qualification process for farm loans.
The first step is to pre-qualify through a USDA-approved lender. This process will help guide you on your search because the lender will give you an estimate of how much you can spend on your home. You’ll need to show things like monthly income and your monthly payments.
Next, you have to find a home in an approved area. If you aren’t sure if a home you’re looking at is in the right area or meets the eligibility requirements, speak to your real estate agent. From here, the process looks a lot like buying a home through a conventional lender!
Do You Think Agricultural Loans are Right for You?
Farm loans are a great way for people who would otherwise not be able to qualify for a mortgage to get the home of their dreams. Not only can you buy a home without a down payment, but you don’t have to worry about the minor dings in your credit bringing your approval chances down. All that’s left to do now is to get the application process started!
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