The U.S. Department of Veterans Affairs offers to guarantee home loans for eligible veterans residing in rural areas. These VA farm loans are different from
those offered by the USDA Rural Housing Service (RHS) or the Farm Service Agency (FSA) also within the USDA. Get to know why and how to obtain these loans.
Our lenders can answer your questions about VA loans here.
VA Farm Loans: An Intro
The program is designed for veterans buying homes in rural areas. A VA farm loan is used to buy a farm that has a house that will serve as the veteran’s primary residence.
It’s important to emphasize that veterans can’t just buy any farm, it should have a farmhouse or a residence that will be occupied by the veteran.
Indeed, the VA clarifies that its farm loans are not meant to finance a farming business or for veterans to start operating one. So there’s no need or a requirement for the farm to be operational.
However, if the veteran borrower wishes to use the income purportedly from the farm to qualify for the VA loan, then he/she should prove that the property is generating profit.
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Guidelines on VA Farm Loans
Appraisal. Whether the property is located in a rural or urban area, the same appraisal process applies. As far as VA is concerned, the valuation of the farm dwelling should not include farm supplies, crops, equipment/tools, or even livestock. In case where there is a stable, pasture, shed, corral, etc, each will be valued based on their fair market value.
Underwriting. The process and guidelines used in underwriting non-farm loans apply to VA farm loans. Let’s take the borrower’s income as we noted above as example. Per the VA
guidance, the borrower’s qualification as a farm operator must be established if he/she uses income from farming, in whole or in part, to repay the mortgage.
Application. To apply for a VA loan in general, secure a Certificate of Eligibility first. This you can request online or via mail through VA Form 26-1880. Coordinate with the realtor and lender regarding the process to
purchase the property using VA financing. Close the loan by complying lenders’ final conditions such as the completion of the property appraisal.
Is Your Property Eligible for a VA Loan?
Aside from farmhouses, VA purchase mortgage loans can finance a number of properties. There’s the standard single-family detached home, followed by townhouses, condominiums, modular and manufactured housing units. Find a VA-approved lender here.
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