A Common Misconception When Buying Farms and Land

One of the biggest misconceptions we hear from buyers looking at farms, farmettes, and land is:

“I need a farm loan to buy a farm.”

The answer is… maybe, but probably not.

Many lenders will say — or buyers will assume — that they cannot purchase a farm, farmette, or property with acreage using a traditional mortgage. We regularly hear from frustrated buyers saying:

“My lender told me they won’t give me a loan if the property is over 10… 20… 25+ acres. What do I do?”

The reality is, there are multiple financing options for buying farms and land, and the right choice depends on how you plan to use the property.

Key Questions to Ask Before Choosing a Farm Loan

Before deciding between a traditional mortgage and a farm credit or agribusiness loan, there are a few important questions to consider:

• Are you buying the home as your primary residence?
• Will you be using the land to generate income that you need to pay your mortgage?
• If you are moving a business to the property, is your business dependent on the land itself to operate?

These answers play a major role in determining which loan type is the best fit.

Traditional Mortgages for Farms and Acreage

Traditional mortgages can be a great option for many buyers purchasing farms or land — especially in Maryland and south-central Pennsylvania, where we see a wide range of acreage sizes and property types.

Traditional mortgages can work well if:

• You are using a federally backed loan (FHA, USDA, or VA)
• You are looking for lower down payment options (often 0%–20%)
• You plan to use the property as your primary residence, not as your primary source of income
• You prefer a more standardized (“in the box”) underwriting and approval process

Some additional things to keep in mind:

• Interest rates are typically lower than farm or agricultural loans
• There may be access to down payment assistance or grant programs
• Many traditional lenders can lend on large acreage properties — sometimes 20, 40, 60, or even 80+ acres

The key factor is that your qualifying income is not dependent on the property itself.

Farm Credit, Agribusiness, and Agricultural Loans

Farm credit services and agribusiness lenders serve a different (but equally important) purpose in the market.

These loan types are often a better fit for:

• Income-producing farms or agricultural businesses
• Properties with extensive infrastructure, equipment, or multiple dwellings
• Buyers who need more flexible or customized loan structures

Here’s what to expect with farm or agricultural loans:

• Typically require a higher down payment
• May involve a business plan or more detailed underwriting process
• Often have a longer closing timeline (sometimes 60+ days)
• Interest rates can be slightly higher
• More flexibility for future refinancing, modifications, or lines of credit

One unique benefit many buyers don’t realize: some Farm Credit institutions operate as co-ops, meaning borrowers may receive annual patronage dividends (a portion of profits returned to members).

Choosing the Right Loan for Your Farm Purchase

There is no one-size-fits-all answer when it comes to financing a farm or land purchase. Some buyers are best suited for a traditional mortgage, while others truly benefit from working with a farm credit or agricultural lender. In many cases, the difference comes down to:

• How the property will be used
• Whether income is tied to the land
• The complexity of the property itself

This is why working with a knowledgeable real estate team — and the right lender — is so important when navigating farm and land purchases.

Buying a Farm or Land in Maryland or South-Central Pennsylvania

Buying a farm, farmette, or land with acreage comes with unique considerations, especially in markets like Maryland and south-central Pennsylvania, where land is limited and demand remains strong.

At Homes and Farms Real Estate, we specialize in helping buyers navigate these decisions — from finding the right property to connecting you with trusted lenders who understand farm and land financing.

If you have questions about buying a farm, financing options, or where to start, we’re always happy to help guide you in the right direction!