Buying Farmland the Smart Way: What Every Farmer Must Know Before Purchasing Land

Malik Miller
Aug 4
3 min read

Whether you’re a first-time farmer or expanding your operation, purchasing agricultural land is one of the most consequential decisions you'll ever make. The process goes far beyond finding a piece of ground with a “For Sale” sign—it's a calculated investment in your business’s future. If you skip the groundwork, you may end up saddled with debt, poor soil, or unusable acreage.

Here’s a brutally honest guide to purchasing farmland, with everything you need to know to make a financially sound, USDA-compliant decision.

1. Start with Purpose: What Will You Produce?

Before calling a realtor, define your production goals.

Are you raising grass-fed beef or growing organic vegetables?
Will your farm rely on irrigation or natural rainfall?
Do you need access to markets, feedlots, or grain elevators?

Each enterprise dictates what kind of land you need. For example, pastureland suitable for cattle is vastly different from loamy fields required for row crops or high tunnels for organic produce.

2. Inspect the Land: Soil, Water, and Zoning

Always inspect and verify:

✅ Soil Quality:

Have a soil test done. Poor pH, compaction, or lack of organic matter can cripple crop yields—and rehabilitation takes time and money.

✅ Water Access:

Is there a well? What are the irrigation rights? Don’t assume—you need legal documentation of water access, especially in western states.

✅ Zoning & Legal Use:

Ensure the land is zoned for agriculture. Don’t rely on verbal assurances; zoning changes, setbacks, easements, and environmental restrictions must be confirmed with the county clerk or planning office.

3. Create a Realistic Budget

Too many farmers underestimate the true cost of ownership. Your upfront and ongoing budget should include:

Purchase price and closing costs
Improvements: fencing, barns, drainage, roads
Annual costs: taxes, insurance, utilities
Operating costs: seed, feed, fuel, labor, repairs
Debt service: interest and principal payments

Tip: Always assume your farm will lose money for the first 2–3 years. Build a financial cushion into your projections.

4. Understand USDA Loan Options

The USDA Farm Service Agency (FSA) provides financing for eligible borrowers who meet specific experience and income thresholds. Popular options include:

🔹 Farm Ownership Loans

Max: $600,000
For land purchase, improvements, buildings, and conservation practices

🔹 Microloans

Max: $50,000
Simpler paperwork, ideal for small-scale or urban farms

🔹 Beginning Farmer Down Payment Loan

Requires only 5% down from you
FSA finances up to 45% of the purchase

To apply, you’ll need: A feasible business plan 3-year financial projections A credit report Form FSA-2001 and supporting documents

Incomplete or unrealistic applications will be rejected. Double-check your cash flow, break-even point, and assumptions.

5. Get Legal Protection Before You Close

Before signing a purchase agreement:

Hire an agricultural real estate attorney
Get a title search and land survey
Confirm legal road access and easement rights
Look for liens, leases, or environmental restrictions

Avoid handshake deals and verbal promises. If it’s not on paper, it won’t hold up under scrutiny by USDA, banks, or investors.

6. Know the Risks and Setbacks

Farmland can look like a dream until you uncover:

Floodplain exposure
Pesticide residues
Disputed property lines
Unusable acreage due to wetlands or easements

Be skeptical. Always request documentation. Walk the land. Talk to neighbors.

Final Thoughts: Farm Smarter, Not Just Harder

Buying farmland is a high-stakes decision. With the right planning, it builds generational wealth, equity, and independence. Without it, you could jeopardize your financial future.

Take the time to prepare your application, vet the property, and build a business plan that stands up to lenders and grant reviewers. If you need help, contact your local USDA service center or agricultural advisor.

Resources You Should Use:

FSA Farm Loan Programs Overview
USDA Service Center Locator
Environmental Quality Incentives Program (EQIP)

Need Help Preparing Your Application?I can help you assess feasibility, prepare projections, and complete the FSA-2001 package with accurate financials and land suitability reports.