FINANCING
By David Whitaker
SPECIALIZED AGRICULTURAL LENDERS
FARM CREDIT SERVICES OF AMERICA
• Co-op Membership Benefits: 1% annual dividend to borrowers *Disclaimer: Returns may vary based on market conditions
• Loan Types: Real estate, operating lines, equipment financing
• Terms: Fixed and adjustable rates; 15-30 year amortization
• Expertise: Deep understanding of Iowa agricultural markets
• Additional Services: Crop insurance, appraisal services
• Patronage Program: Cash-back dividends based on business volume
• Website: www.fcsamerica.com
RABOBANK/RABO AGRIFINANCE
• Global Perspective: International agricultural banking expertise
• Loan Types: Land purchase, refinancing, operating capital
• Farm Management: Advisory services for operational efficiency
• Terms: Competitive rates with flexible structures
• Market Intelligence: Access to agricultural commodity research
• Website: www.raboag.com
FARMER MAC (FEDERAL AGRICULTURAL MORTGAGE CORPORATION)
• Government-Sponsored Enterprise: Created by Congress for Farm Credit
• Specialty: Secondary market for agricultural loans
• Advantages: Competitive long-term fixed rates
• Loan Size: $75,000 minimum
• Terms: 3-30 year fixed and adjustable rate products
• Website: www.farmermac.com
METLIFE AGRICULTURAL INVESTMENTS
• Institutional Strength: One of America’s largest agricultural lenders
• Focus: Commercial-scale operations and larger land purchases
• Loan Types: Long-term fixed rate agricultural mortgages
• Terms: 5-30 year fixed rates; minimum loan typically $1M+
• Website: www.metlife.com/agricultural-investments
CONTERRA AG CAPITAL
• Alternative Financing: Options for complex or unique situations
• Flexibility: Creative solutions for special circumstances
• Loan Types: Traditional, alternative, and bridge financing
• Expertise: Restructuring and transitional lending
• Website: www.conterraag.com
GOVERNMENT PROGRAMS
USDA FARM SERVICE AGENCY (FSA)
• Beginning Farmer Programs: Special rates for new entrants to agriculture
• Direct Farm Ownership Loans: Up to $600,000
• Guaranteed Farm Loans: Up to $2,251,000 (2025 limit)
• Down Payment Program: Only 5% down for qualified beginning farmers
• Terms: Lower interest rates than conventional loans
• Website: www.fsa.usda.gov
IOWA FINANCE AUTHORITY
BEGINNING FARMER LOAN PROGRAM
• Tax-Exempt Bond Financing: Below-market interest rates
• Eligibility: First-time farmland buyers with net worth under $820,000
• Loan Types: Land, improvements, breeding livestock
• Maximum: Up to $667,500 per borrower
• Website: www.iowafinance.com/beginning-farming-programs
TRADITIONAL FINANCING OPTIONS
LOCAL & REGIONAL IOWA BANKS
• Community Knowledge: Understanding of local land markets
• Relationship Banking: Personalized service and local decision-making
• Typical Terms: 30-40% down payment; 15-30 year amortization
• Advantages: Potential for faster loan processing and flexibility
• Considerations: May have lending limits for larger purchases
NATIONAL BANKS WITH AGRICULTURAL DIVISIONS
• Examples: Wells Fargo, Bank of America, U.S. Bank
• Resources: Extensive lending capacity for large purchases
• Additional Services: Wealth management, succession planning
• Terms: Conventional loan structures; typically higher down payments
FINANCING CONSIDERATIONS FOR IOWA FARMLAND
LOAN-TO-VALUE RATIOS
• Typical Requirements: 50-70% loan-to-value (30-50% down payment)
• Prime Farmland: May qualify for lower down payment requirements
• CSR Ratings: Higher CSR farms may receive preferential terms
INTEREST RATE STRUCTURES
• Fixed Rate: Protection from rising rates; typically 5-30 year terms
• Adjustable Rate: Lower initial rates; repricing at 1-10 year intervals
• Interest-Only Options: Available from some lenders for qualified borrowers
TAX CONSIDERATIONS
• Mortgage Interest Deduction: Tax-deductible interest expenses
• Section 179: Deductions for drainage tile improvements ($1,200/acre average)
• Section 180: Nutrient depreciation benefits ($1,700/acre average)
• 1031 Exchanges: Tax-deferred property exchange for farmland investors
David Whitaker Broker / Champion Auctioneer (515) 460-8585
David@wmgauction.com
Get expert guidance on financing your Iowa farmland.
STEPS TO SECURE FINANCING
1. Determine Your Budget: Establish clear financial boundaries
2. Check Your Credit: Review and address any credit issues
3. Gather Financial Documents: Tax returns, financial statements, asset listings
4. Research Lender Options: Compare rates, terms, and agricultural expertise
5. Request Term Sheets: Compare offers from multiple lenders
6. Consider Loan Structure: Evaluate fixed vs. variable options
7. Review Prepayment Terms: Understand any penalties for early payoff
8. Analyze Closing Costs: Factor in all fees and expenses