Leave A Lasting Legacy With Land Contract Guarantee Program

The greatest barriers for beginning farmers and ranchers are access to land and capital they can afford. The Farm Service Agency recently made the Land Contract Guarantee Program available nationally to address that challenge. The program encourages private land contract sales by providing protection to landowners whose retirement savings is often locked up in their farm or ranch.
Sellers need to self-finance the sale of their land. And buyers must be a beginning or socially disadvantaged farmer or rancher; must not be larger than a family farm (most management and labor provided by family members); have an acceptable credit history; be the owner or operator of  the farm or ranch when the contract is complete; and be unable to obtain sufficient credit elsewhere without a guarantee at reasonable rates or terms.

Sellers can choose one of two guarantee options:
  • A “prompt payment” guarantee covering three amortized annual installments; or
  • A standard asset guarantee covering an amount equal to 90 percent of the outstanding principle of the loan.

For either option, the loan guarantee stays in effect for ten years.  The purchase price of the farm or ranch subject to the contract sale cannot be greater than $500,000 and the buyer must make at least a five percent down-payment.

If interested, contact your local Farm Service Agency office or call the Center for Rural Affairs Farm Bill Helpline at (402) 687-2100, where beginning farmers and ranchers can get guidance on other farm and conservation program options.

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