Financing -- Loans/loan
so, I live in MO. I am a first time land buyer. i'm looking at 80 acres FSA did not except my application because I am a full student at college. so I am trying to get a loan through a bank. but I am not able to come up with the down payment of 13,600.00 at 20%. what are my options through a bank. I am supposed to go talk to them in a few days about options but I wanted to be prepared. what options are there?
I'm wondering why FSA turned down your application. Obviously, you have to be able to show repayment ability no matter where you borrow the proceeds but if you are employed or have other income to be able to do so being a full time student should not impact your eligibility. FSA programs are a great way to go if you do not have a minimum of 20% down. FSA also has another program where they loan you 50% and a participating lender loans you the other 50%. Benefit to you is the rates and terms on the 50% FSA loans to you. You asked about other options; One option would be to borrow the down payment against another asset that is paid for such as a vehicle, home equity, livestock, or machinery. Another option would be to utilize someone else ground as equity in the loan. For example using a relatives other farm parcel that is paid for as collateral in addition to what you are purchasing.
All of this being said, be careful in borrowing such a high percentage. After 15 years in this industry I can tell you those who struggle are those that are to highly leveraged going in. The individuals that I have seen utilize the FSA programs to the fullest extent without other strong income or other producing land have had a difficult time all the way through. The only thing that has saved most of them is the appreciation of their real estate and none of us know how long that will last.
Best of luck to you in your endeavors. My suggestion is to be patient, save the down payment, and have as much liquidity (cash on hand) that you can have going into the deal.
Land Loan Specialists.com, LLC