Finding a Mortgage Loan to Purchase a Farm Property

Owning a home with plenty of land to have livestock and grow your own food is growing in popularity. Omaha has long been a desirable area to live and the ability to purchase a property for a small personal farm or homestead makes moving here even more desirable. 

But what about financing the purchase of a home on land or that is already on a small working farm? What are the best options for mortgaging a small farm or homestead property?

What is the Best Type of Loan for Omaha Area Farm Properties?

Using a USDA Loan

The USDA is the United States Department of Agriculture. Not everyone is aware that they actually have a mortgage loan program. You do not have to be purchasing farmland to utilize the loan program but it is a nice way to more easily obtain approval for a farm or homestead purchase. 

A bonus to a USDA loan is that they often require a lesser down payment as compared to other loan types. An important thing to note about a USDA home loan, however, is that they are reserved for homebuyers in a lower income bracket. 

It is also good to note that with a lesser down payment made, there will be a mandatory requirement to pay for private mortgage insurance. These can be an added couple of hundred dollars a month until the homeowner has paid enough into the home to request the insurance be canceled. 

FHA Loans

FHA Loans are backed by the Federal Housing Administration. This is another program to help homebuyers purchase properties with a lesser down payment requirement as compared to a traditional conventional loan. 

Omaha homebuyers can apply for an FHA loan through any lender offering FHA-backed mortgage products. Often the downpayment requirement for an FHA loan is 5 percent of the home purchase price but it can also be less. 

It is important to note that FHA mortgage program borrowers will be required to carry mortgage insurance and that FHA loans often come with a higher interest than other loan types. 

Conventional/ Traditional Loans

Some people believe that standard mortgage loans all automatically come with a 20 percent down payment requirement. Not all conventional loans will require a higher down payment some programs may only require a 10 percent down payment. 

Conventional loans will offer the best mortgage rates, especially with a higher down payment and a higher credit score from the borrower, but some conventional loans may be more difficult to seek approval for the purchase of a home that is less than traditional (common suburban and urban style properties.) 

The best way to discover what type of loan would be most beneficial to you when shopping for an Omaha homestead or farm property is to work with a local mortgage broker, or ask a real estate professional if they know of lenders in the area offering loans on special property purchases. 

For more information on purchasing a home in Omaha and surrounding areas please contact us any time.