The FSA Down Payment Loan is the cheapest money USDA offers for buying a farm. If you qualify, you can buy with as little as 5% down. FSA lends up to 45% of the price at a rate that was 2.25% in October 2026, and a bank or other lender finances the rest.
It is only for beginning farmers, socially disadvantaged farmers and veteran farmers, and it has firm rules about how the deal is put together. Here is how it works, straight from the federal regulation.
The deal, piece by piece
| Piece | Who provides it | Rules |
|---|---|---|
| Down payment | You | At least 5% of the purchase price |
| Down Payment Loan | FSA | Up to 45% of the purchase price or appraised value (whichever is less), figured on no more than $667,000 |
| The rest | A bank, Farm Credit or other lender | FSA can guarantee this loan |
Two caps hold it together: total borrowing from FSA and everyone else cannot go over 95% of the purchase price, and the 45% is figured on no more than $667,000, so the FSA piece tops out at $300,150.
An example: on a $300,000 farm, you bring $15,000. FSA lends up to $135,000. A commercial lender finances the remaining $150,000.
Rates and terms
- Rate: the regular direct farm ownership rate minus 4 percentage points, but never below 1.5%. FSA’s direct farm ownership rate was 6.25% on October 1, 2026, which made the down payment rate 2.25%. FSA sets rates monthly, so check the current one.
- FSA’s term: up to 20 years, in equal annual payments.
- The bank’s term: the other lender’s loan has to run at least 30 years, with no balloon payment in the first 20 years.
- Security: FSA takes a lien on the farm you buy, second only to the lender financing the rest.
Pairing a low-rate, 20-year FSA piece with a 30-year bank loan is what keeps the yearly payments manageable.
Who qualifies
You have to meet FSA’s regular farm ownership loan rules and be a beginning, socially disadvantaged or veteran farmer. In plain terms:
- Beginning farmer: you have not operated a farm for more than 10 years, you will do the day-to-day work and management yourself, and you do not already own farmland bigger than 30% of the average farm in your county.
- Experience: FSA looks for at least 3 years of farm business experience in the last 10. Up to 2 of those years can come from things like 16 or more college credit hours in agriculture, a farm management course, a year as a farm worker with real management duties, an apprenticeship, significant business experience, an honorable military discharge or a repaid FSA youth loan.
- Credit: you need an acceptable history of repaying debts, and you need to show you cannot get enough credit elsewhere on reasonable terms. Old problems are not automatic deal-breakers: the rules say foreclosures, judgments or late payments from more than 36 months before you apply do not automatically count against you if nothing similar has happened since.
- Owner-operator: you have to own and operate the farm after the loan closes.
Microloans can also be used this way: a Down Payment Loan made as a microloan can go up to $50,000, with less paperwork.
How to apply
- Find a lender for the rest of the price. Ask banks and Farm Credit lenders whether they work with FSA loans, and whether they would want an FSA guarantee on their part.
- Call your county FSA office and ask for the farm loan staff. Our guide to finding your local FSA office shows how.
- Build your farm plan: what the place will produce, what it will earn and how both loan payments fit.
- Bring the purchase details (contract or listing, and an appraisal when FSA asks for one) and your financial records.
- Line up the timing. FSA has no sign-up deadline, but your purchase contract does. Start months before closing and put a financing contingency in the contract.
How it compares to FSA’s other land loans
- Direct Farm Ownership Loan: FSA lends up to $600,000 itself, at the regular ownership rate (6.25% in October 2026), over up to 40 years.
- Joint financing: FSA lends up to 50% and a bank lends the rest. FSA’s part carries the ownership rate minus 2% (never below 2.5%), which was 4.25% in October 2026.
- Guaranteed Farm Ownership Loan: your bank makes the loan, up to $2,558,000, and FSA guarantees it.
For the full picture, including what to do if a seller will finance the farm, read are there grants to buy farmland? and our FSA farm ownership loan guide.
Frequently asked questions
How much down payment does an FSA farm loan require? With the Down Payment Loan, at least 5% of the purchase price. FSA lends up to 45% and another lender finances the rest, with total borrowing capped at 95%.
What is the FSA down payment loan interest rate? The direct farm ownership rate minus 4%, never below 1.5%. It was 2.25% for loans as of October 1, 2026. FSA updates rates monthly.
Who qualifies for the Down Payment Loan? Beginning farmers, socially disadvantaged farmers and veteran farmers who also meet FSA’s farm ownership loan rules, including experience, credit history and owner-operator requirements.
How much can FSA lend through the Down Payment Loan? Up to 45% of the lesser of the purchase price, the appraised value or $667,000. That puts the FSA piece at $300,150 at most.
Is there a deadline? No. FSA takes farm loan applications year-round at your county office.
The bottom line
If you are a beginning or veteran farmer, the Down Payment Loan is the best land deal USDA offers: 5% down, a low rate on FSA’s share and 20 years to pay it. Line up a lender for the other half, then sit down with your county FSA loan officer before you sign a purchase contract.
Want to see every program you qualify for? Run our free eligibility checker or see the FSA farm ownership loan page on our calendar.
Want to know which programs match your farm?
Answer 5 quick questions and see every program you qualify for. Takes about 2 minutes.
Find My Programs →Get deadline alerts for your state
One email a month with the deadlines for your state. Free, no spam.