Land loans and home mortgages are normally similar, but land buyers often require longer terms and more flexible repayment schedules. This is especially true if the income earned from the land, such as the sale of agricultural crops, is the primary source of loan repayment. A lender that specializes in making loans for real estate is most likely to offer flexible financing. 

Commercial banks, mortgage companies, insurance companies, private lenders (owner financing) and Farm Credit lending co-ops are all sources of financing for rural real estate. Some are more active in financing certain types of real estate, such as working farms, than other types. Farm Credit institutions finance the entire spectrum of rural real estate, from recreational property and part-time agricultural operations to country homes. 

Both variable-rate and fixed-rate loans are available for rural real estate loans. Each type of mortgage offers advantages, depending on the customer’s situation and market conditions.

Buyers wanting to take advantage of low interest-rate markets often choose variable-rate mortgage loans, which are held by the lender and not sold to other financing institutions. Variable-rate loans are generally more desirable for shorter terms. Farm Credit financing institutions offer Prime- or LIBOR-based floating rates for up to 15 years.

Fixed-rate loans up to 30 years are often preferred in a rising interest-rate market, but many rural lenders do not offer fixed rate terms, especially for land loans.

Choose a lender who is knowledgeable and experienced in financing rural real estate. An experienced rural lender can offer advice on agricultural-use tax exemptions, environmental factors and insurance sources that an out-of-state lender might not. A local lender will be familiar with land values and comparable real estate sales prices in the area.

Farm Credit loan officers typically have extensive education and experience in agricultural financing, banking, business and/or mortgage lending. In most cases, they live in the community, often grew up in an agricultural or rural area, and have a good understanding of local land values. Some loan officers are also certified rural real estate appraisers.

No, it is a network of privately owned cooperatives.

Yes, Farm Credit is regulated by the Farm Credit Administration, an independent federal agency, whose board members are appointed by the President of the United States. For more information, visit www.fca.gov.

The Farm Credit System is a nationwide network of cooperatively owned banks and lending cooperatives established by Congress in 1916 to provide agricultural producers and rural America with a reliable source of credit at reasonable cost.

When Farm Credit cooperatives do well, they typically share their earnings with their borrower-stockholders in the form of patronage payments or dividends. These payments can have the effect of significantly reducing a customer's overall cost of borrowing.

Farm Credit co-ops are owned by their borrowers, who also are co-op stockholders. The stockholders elect the board of directors who set policy and oversee management of the association. This ownership structure assures that a Farm Credit institution is accountable to its customer-stockholders, and decisions are made in the best interest of the customers.