#151 FSA Joint Financing
- Grant Wiese
- Aug 3
- 9 min read
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SW Financial Literacy
FSA Joint Financing
The question that I get asked from producers more than anything would have to be, "What do you know about the FSA joint financing programs?” The answer, “A lot”.
Today I'm going to share everything that I have learned over the past 10 years with these programs. That includes three of my own loans, two of which were the down payment program and the most recent being the 100% financing program. I’ve also walked through the program with dozens of farmers as I provided the front end funding for their own joint finance purchases.
There are different rules for both programs, but I have learned quite a few tricks of the trade to help you make the most of each of them. I know that if you are eligible for the financing, you absolutely should be using it.
For this article, I’m starting with how I have used and taken advantage of the programs first, which will then be followed by a FAQ at the bottom half of this lengthy article. Feel free to skip ahead to the FAQ if you like.
**Disclaimer. While I’m sharing my experiences, your experience won’t be the same. I’ve had nothing but good luck working with the USDA officers. Please note they are working with a very strict rulebook which they must follow. Those rules can vary by county or by the interpretation of the individual officer, creating inconsistency in how they are enforced. Just because I tell you something here does not mean that is how it will work for you. These are my experiences with my officers in my counties. They do a good job, so I have patience and listen to them. Hopefully my suggestions here will help you think and work outside of the box to make the most of your program experience.
The Basics
The FSA joint financing program is meant to help young producers buy their first farm/farms. To be eligible for the program it is expected that you have three years of a Schedule F filing or farm income. You can get by with just two years of farm income if you get an agricultural degree through a university or by having another ag professional vouch for you, stating that you have been making detailed farm management decisions without receiving income in the past. These last two can substitute for your third year but not all FSA offices will accept a voucher from another individual. Either way if you plan on coming back to the farm and are in college, it is valuable to start working to become eligible in case ground comes up for sale as soon as you graduate.
I began renting farm ground from family in 2019 to try to become eligible for the program. I already had an agribusiness decree and only needed 2 years of income. In November of 2020, I won the bid at public auction to buy my first farm, which happened to be the very start of my eligibility. The 50/45/5 was financed in the spring of 2021.
Once you become eligible for financing, you have 10 years to start using the program. Let's say after 5 years of being eligible, you finally buy the farm. Once you put on your first loan, your 10-year window starts over. From that 5-year point of the first purchase/loan you would have 10 years to remain in the program and apply for additional funding. If you're able to pay off your loan, let's say in year 7, then your clock resets back to the 5-year window for you to use the funding. I've never seen this done before, but it is a little trick to extend your eligibility.
The program is intended to help producers get started who are not financially able to do it on their own. At some point they expect you to pay off the loan. Bi-annually you will need to provide financials to FSA for review to see if you could get refinanced with traditional lending.
I repeat. Even if you sign up for a 20- or 40-year loan with them, it is highly unlikely you will have that loan through the FSA for the full 20 or 40 years. Either you will pay the loan off early, or they will make you go to another lender for refinance. There's nothing wrong with this. Just know that as you become financially stronger you could lose these loans at premium interest rates.
The application process has a lot of pages, but it is no different than applying for a home loan in town. It is very possible to complete the full loan application within two hours. If you already have a balance sheet created within the past 90 days and a cash flow projection for the upcoming year, then you should not be the reason for the hold up for the application to be completed.
I have known of individuals who take months to complete this application because they are not taking care of business on their end. Get the information and get it submitted ASAP because the process can be slow on the back end. Their clock doesn’t start until you provide every detail they need.
Tips & Tricks
I submitted the online application and it was frowned upon by my county's FSA office. My online application was the first one ever submitted to their county online, and they didn’t know how to pull it from the system. They prefer that you sit down and go over everything with them in person. They made me resubmit information manually via email that had already been sent in through the online application form. We made it work but it extended the length of my application process. Check with your office on their comfort level with the online application before moving forward.
Always expect the FSA loan to take 60-90 days to close. I’ve only heard of an FSA loan that closed in less than 30 days once in my life, and that was on my second time through the program (29 days). That means that you cannot bid on, buy, or sign the purchase agreement for ground that is selling through an auction and will require a closing or transfer of ownership within a shorter window than that. If you sign the purchase agreement and get financing with someone else first or close on the property and have it deeded into your name before FSA is ready to close, you are no longer eligible for financing on that property. Know the rules before you prepare to bid on ground.
A trick to speed things up: FSA can sometimes use your lender’s appraisal or vice versa. Communicate with both parties to make sure only 1 appraisal is done so you can close faster and only pay for 1 appraisal.
The workaround for auctions or faster closings is to have someone else, usually a family member, buy and close on the property first, holding the land for you until you can complete financing with FSA. This will require a double closing with your relative or other party having to buy and pay for the deed and title insurance first and then a second purchase agreement being created with all the work being redone for you to buy the ground from them. I have done this twice myself and it is very possible to do. Just make sure you reimburse your relative or the beneficiary for their closing cost and the interest they accrued to hold the ground for you. They are doing you a favor and should not cover any of these expenses.
You can do a 1031 exchange while being in the program. Here's how it worked for me: I won the private sealed bid in 2023 and had a closing date that was set 30 days out. During those 30 days, I found a buyer for my existing, smaller property.
A relative bought the new property for me. At 30 days they closed and held the new property. While that was taking place, I sold my smaller property to a farmer who went through the FSA joint financing process. I had to wait for his loan to close with FSA first. Then, those sale proceeds came to pay off my FSA loan. Once my FSA loan money was paid back, I was eligible to reuse those funds for a new application. I could not start on the application until the old loan was paid off.
I then signed the purchase agreement to buy the ground from my relative who was holding the property, reapplied for my FSA joint financing, and closed 29 days later. This cost me about $20,000 to do the transaction between paying for double closings, attorney fees for the 1031 exchange, and accrued interest for the related party holding my ground for a close to three-month period.
This $1 million property was bought with the 50/45/5 down payment program. How is that possible? A 5% down payment was required on the purchase, which came from the proceeds of me flipping my first property at an $83k gain from the purchase just 2 years prior (I have written about this in other articles, around $12k and sweat equity was put into the property to create those earnings).
I then maxed out the $300,000 through FSA's 50/45/5 program on a 20-year note because I wanted to capture the lower interest rate and keep my funds available for the other 50/50 program if another property came up for sale in the future. (Reminder here that the maximum combined between both programs you can borrow is $600,000. The maximum just for the 50/45/5 program is $300,150. You can max out 50/45/5 at $300,150 and then borrow an additional $299,850 through the 50/50 or go all the way up to $600,000 on just the 50/50 if you choose.)
Roughly 65% of the purchase went to a traditional lender. 30% financed through FSA on 50/45/5, and 5% down payment made with sweat equity gains from the sold property. The 65% loan-to-value fit with the requirements of the first lien lending institution almost perfectly, so $1M was about the max you can do while still utilizing just the 50/45/5 program. This is stretching the program out and borrowing a chunk of money at a higher interest rate through the traditional lender but leaving me flexible to utilize more of the program in the future if I choose.
Another Level
My most recent purchase in 2026 was another 1031 exchange, but this time with the purchase being 160 acres. I switched to the 50/50 program because the purchase price was that much higher and didn’t fit within the 50/45/5. Again, I maxed out the FSA program (50/50 this time) of $600,000 and borrowed the rest through a local bank.
To try to speed up the process, however, I made a mistake along the way. I still had around $240,000 borrowed through FSA from my 2023 purchase. To speed up my application with FSA and reach a quicker closing on this 1031 exchange (trying to avoid $20,000 in interest and fees like last time), I used excess funds on my operating note and borrowed additional funds from my lender to pay the $240,000 through FSA off early. By doing this I could get a purchase agreement signed quicker and start their application immediately.
This created complications with my attorney and the 1031 exchange. When it came to the final closing and transfer of funds on the settlement statement, I did not have the FSA loan to pay off with the 1031 exchange funds. It did not make for a clean settlement statement with the title company and could create confusion when filing my taxes for the 1031 like-kind exchange. I chose to pull cash out of the transaction, but ‘extra’ cash that should have went to paying off FSA instead went to reimburse me for the budget note and the line of credit. I have a rabbit trail to back all this up, but it could raise some questions in the future. This created a lot of headaches and stress at closing (including getting new wiring instructions in the Atlanta airport on my way to Rome) and I would probably would do it differently if given the choice next time.
Joint financing is a fantastic program for young producers. Don't be intimidated by this article, I forced the program into some complex transactions that are extremely atypical. Make sure you know your numbers, identify the program of your choice, and work with your local FSA officer to get through the rest.
Oh, and sign-up here: FBT Wait List | Farm640 to join the live training I will be providing in just a few weeks.
This article blew up to over 2,000 words, so here is the FAQ I promised: FAQ FSA Joint Financing
Good luck with your purchase and reach out if you need help.
Have a great week!
Grant
