Top 7 Agricultural Loan Programs to Help You Buy a Farm in Texas: A Detailed Guide for New and Growing Farmers

Purchasing farmland is a pivotal step in building a successful agricultural enterprise—but it also requires substantial capital. For new, socially disadvantaged, and even seasoned farmers in Texas, navigating the maze of available loan programs can be overwhelming. Fortunately, there are numerous federal, state, and cooperative lending options that cater specifically to agriculture. This blog offers a comprehensive breakdown of the seven best loan programs that can help you purchase a farm in Texas, tailored to diverse financial backgrounds, farming experience levels, and business sizes.

1. USDA Farm Service Agency (FSA) – Direct Farm Ownership

Loans

The Farm Ownership Loan program by the USDA Farm Service Agency (FSA) is one of the most accessible paths to owning a farm for beginning and underserved farmers.

📌 Key Features:

• Loan Amount: Up to $600,000 (as of current limits)

• Interest Rates: Fixed, below-market rates set by USDA

• Terms: Up to 40 years

• Eligibility: Must be the operator of the farm with experience (or supervised credit/training programs)

✅ Eligible Uses:

• Purchase of farmland, buildings, and improvements

• Construction or repair of essential farm infrastructure (barns, irrigation systems, fencing)

• Soil and water conservation improvements

• Closing costs associated with land purchase

This loan is ideal for new and undercapitalized farmers who cannot obtain financing from commercial sources. FSA also prioritizes funds for socially disadvantaged and beginning farmers, offering targeted access to capital.

2. FSA Down Payment Farm Ownership Loan Program

This specialized version of the Farm Ownership Loan is designed to help beginning farmers acquire a farm with minimal upfront capital.

📌 Program Highlights:

• Borrower Contribution: Only 5% down payment required

• FSA Loan Limit: $300,150 (45% of purchase price or appraised value)

• Repayment Terms: 20-year maximum with a 1.5% interest rate (as of publication)

• Balance: Remaining 50% financed through a commercial lender (with potential FSA guarantee)

This option is a strong fit for first-generation farmers or military veterans transitioning into agriculture who are ready to purchase but short on a large down payment.

3. FSA Microloans (Farm Ownership or Operating)

For small-scale and niche farm operators, Microloans offer quick, simplified financing with reduced paperwork and flexible eligibility requirements.

📌 Features:

• Loan Limit: Up to $50,000

• Ownership Microloan Use: Buy small tracts of farmland, build greenhouses or tunnels, install fencing, or implement conservation projects

• Streamlined Application: Designed for smaller operations and requires limited financial documentation

Microloans are particularly popular with urban farmers, organic growers, specialty crop producers, and those entering the industry through alternative farming models (e.g., CSA, direct-to-market).

4. Texas Agricultural Finance Authority (TAFA) – Agricultural Loan Guarantee Program

The TAFA Agricultural Loan Guarantee Program supports agricultural producers in Texas by backing loans made by private lenders—reducing the risk to lenders and making loans more accessible to borrowers with limited collateral.

📌 Program Structure:

• Guarantees range from 70% to 90% of the loan, up to $750,000

• Used for:

  • Farm acquisition

  • Facility upgrades

  • Equipment purchases

  • Operating capital

📋 Eligibility:

• Texas residency and agriculture operation within the state

• Credit score of 650+

• Equity contribution of at least 15% of the project

• Strong debt service coverage (1.25+) and manageable debt-to-equity ratio (≤ 2:1)

This is an excellent complement to private financing and is especially helpful for farmers who are creditworthy but don’t meet all commercial bank criteria.

5. Texas Farm Credit

Texas Farm Credit is a borrower-owned cooperative that provides financing for rural land and agricultural businesses across Texas. With over 100 years in ag lending, they understand local challenges and provide solutions that align with Texas farmers’ needs.

📌 Loan Types:

• Farm and ranch land loans

• Operating loans and lines of credit

• Equipment and livestock loans

• Agribusiness loans (processing, storage, etc.)

🤝 Advantages:

• Patronage refunds: Borrowers receive a share of the lender’s profits, lowering the effective interest rate

• Personalized service from local offices

• Flexible underwriting for unique farming models

This lender is well-suited for established operations with plans to expand landholdings or invest in vertical integration (e.g., processing, retail).

6. Capital Farm Credit

Another Farm Credit System cooperative, Capital Farm Credit serves much of Texas and is one of the largest rural financing institutions in the country. It offers a full suite of farm loan products and is deeply invested in rural development.

📌 Services Include:

• Agricultural land purchase and refinancing

• Equipment and vehicle financing

• Young, Beginning, and Small Farmer loans

• Real estate improvement loans

Capital Farm Credit has strong outreach programs for new producers, including mentorship and workshops. Their Young and Beginning Farmer program includes financial training, reduced loan fees, and support with business planning.

7. AgAmerica Lending

AgAmerica is a private ag lender with national reach and a strong footprint in Texas, known for their innovative and flexible land loan structures. They cater to large-scale and established operations but also support transitioning and multi-generational farms.

📌 Loan Programs:

• Land purchase loans: Based on land equity and productivity, not just credit score

• Interest-only lines of credit: Ideal for seasonal or high-cash-flow operations

• Refinancing solutions: Consolidate existing debt or access working capital

AgAmerica is especially helpful for farmers looking to refinance and restructure debt, or who have substantial land equity and want to leverage it for expansion.

BONUS: Farmer Mac (Federal Agricultural Mortgage Corporation)

Farmer Mac doesn't lend directly to borrowers, but works behind the scenes by purchasing and guaranteeing agricultural loans from banks and rural lenders. If your bank works with Farmer Mac, you may benefit from:

• Longer repayment terms

• Lower interest rates

• Flexible loan structures

Ask your lender if they are a Farmer Mac participant to access these benefits.

🧭 Preparing to Apply: What You’ll Need

Before approaching a lender, gather the following:

• Farm Business Plan: Clearly outlines your goals, production model, and revenue streams

• 3 Years of Financials: Including tax returns, cash flow projections, and a personal balance sheet

• Credit History: While some programs work with poor or limited credit, having a good record helps

• Land Details: Sale agreement, appraisal, and legal land description (for ownership loans)

✅ Final Thoughts

Buying a farm in Texas is a significant milestone, and these loan programs make it possible for more people—especially new, young, and underserved producers—to enter or expand in agriculture. From government-backed loans to cooperatives offering profit-sharing, each program offers unique benefits. Matching your needs to the right financing structure can position your farm for long-term success.