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June 1, 2022

Top 10 Questions Your Lender Asks When Buying Ag Land 

Learn more about the information required to finance land purchases and expedite the loan approval process. 

American farmers and ranchers wear many hats—often juggling competing priorities to care for their operations and personal lives. Your time is valuable. That’s why at AgAmerica we are constantly seeking ways to make our loan approval process as efficient as possible with minimal required paperwork.   

To help you prepare for a smooth loan approval process, here are the top 10 questions lenders ask borrowers when applying for an agricultural land loan. 

*Note: While these are the most common questions asked, questions can vary based on each individual loan.

What to Know When Buying Ag Land 

Throughout the loan process, it’s important for both parties to be transparent and to stay on top of their communication. Providing timely answers to these questions will help to expedite the process—allowing you to focus on what matters most. 

1. What Is the Purpose of the Loan?

The needs of each farmer and rancher are unique—and so is our financing. One of the first things we’ll need to know is whether you seek to purchase land, refinance land, or secure working capital. This helps us determine which type of financing solution would best meet your needs.

2. What Is the Acreage of the Land?

Our loans are backed by the value of land—whether purchasing new farmland or leveraging the value of existing farmland. So, we’ll want to learn more about the land you’re purchasing or obtaining a loan with to help us build the best loan package for you.  

First, we’ll need to know how many acres the land is to determine if it meets our 25-acre minimum threshold. 

3. What Is the Land Value?

While we’ll need an official appraisal of the land later on in the process, bringing an estimate of the land value will help us determine the loan amount needed and the optimal structure. 

4. Does the Land Have Potential for Ag Use?

Because we are an agricultural land lender, the land needs to have the potential for ag use. Whether you plan to use portions for recreational use, grazing, or agricultural production, it’s important that the land can be used for agricultural purposes. 

5. What Is the Loan Size?

The total loan amount must be $50,000 or more. The loan could be used for financing a new land purchase, increasing working capital, or refinancing existing debt. 

6. How Much Equity Do You Currently Have in the Land?

When looking to refinance or borrow working capital, we’ll need to know the amount of your current land note (if applicable) to determine which type of product you may be qualified for.  

7. Do Our Down Payment Requirements Meet Your Needs?

When you work with AgAmerica, we place your financial health at the forefront. Making sure you’re not overleveraging yourself with too high of a debt-to-asset ratio is important. 

8. What Is Your Credit Score?

For our conventional loan programs, the minimum credit score is around 680. However, we have other programs that are not as sensitive to credit scores and depend more on the loan type and current loan-to-value ratio (LTV). As a result, exceptions to the credit score minimums can be made on a case-by-case basis.   

9. How Do You Plan to Use the Funds?

You know your operation best. That’s why we believe you deserve the flexibility and freedom to decide how your funds should be used. We only ask that the funds go towards your agribusiness or ag improvements to your property.  

10. Can You Provide the Requested Documents?

Finally, it’s important to have access to up-to-date documents that help us build your custom loan package. Some of the documents we look at include: 

  • Loan application 
  • Federal tax returns 
  • Balance sheets 

Having these documents readily available when you contact AgAmerica can help expedite the loan approval process and prevent unexpected roadblocks down the road. 

Buying Ag Land with AgAmerica 

Now that you know what to expect when buying ag land, it’s important to find a lender that meets your needs—and understands the ins and outs of the agriculture industry. Over the years, AgAmerica has worked hard to optimize the loan application process—minimizing the time you spend answering questions and maximizing the time you spend on your operation. 

Take our three-step loan verification quiz to begin your journey today. 

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AgAmerica Lending® LLC is a licensed mortgage lender. NMLS ID# 372267
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