Down Payment Loan Program
The Down Payment Loan program can be used by a qualifying Missouri resident to more readily secure a loan from a participating lender, either providing the full down payment, or supplementing the down payment amount available. It may be used in conjunction with MASBDA programs, for example the Beginning Farmer Loan Program, providing the borrower meets the criteria for both programs. It may also be used in conjunction with non-MASBDA programs.
A qualified borrower can borrow up to 30% of the purchase price, or $200,000, whichever is less, for:
- Agricultural land
- Agricultural machinery, equipment, livestock, trees, nursery stock, or specialty crops
- Purchase, construction, or improvement of a qualifying agribusiness, agricultural buildings, livestock facilities, agricultural facilities, or a processing facility
The loan may not be used to refinance existing debt, provide operating capital, or finance a residence.
- Minimum Loan: None
- Maximum Loan: 30% of the purchase prices, or $200,000, whichever is less
- Interest rate is fixed for the life of the loan, with the option of a one-time rate change
- • The interest rate will be adjusted quarterly – on January 1, April 1, July 1, and October 1 - to be equal to Wall Street Journal Prime as of that date. Please call MASBDA to confirm the current interest rate.
- Specialty crops or nursery stock – 3 years
- Machinery, equipment, or livestock– 7 years
- Construction, or purchase of livestock facilities, or agricultural facilities – 12 years with a balloon at the end of year 10
- Real estate, qualifying agribusiness, or processing facility – 20 years with a balloon at the end of year 10
- Real estate if using an FSA program – 30 years with a balloon at the end of year 10
- Collateral: MASBDA will take a second deed of trust, or second position on real estate or chattel. A lower position may be considered if the borrower is utilizing an FSA joint participation program. In that circumstance, a guarantor is required and the guarantor must meet the same financial ratio requirements (current ratio, debt to asset ratio, and debt service coverage ratio) as the borrower. If a borrower is utilizing an FSA participation loan program, a third position may be considered if the borrower will have a guarantor who meets the financial eligibility criteria.
Down Payment Loan Program Qualifications
|Age||At least 18 years old|
|Lender’s Certification||Certify that no other private or state credit can be obtained|
|Previous Land Ownership||No restrictions (unless used in conjunction with a Beginning Farmer Loan)|
|Purchase from Close Relatives||Yes|
|Refinancing or Operating Capital||No|
|Maximum Down Payment Loan||30% of total purchase price, or $200,000, whichever is less|
|Maximum Net Worth||None|
|Closing Fee||1.50% of down payment loan ($300 minimum). The closing fee may be financed as a part of the loan. The borrower is also responsible for all closing costs and filing fees associated with the down payment loan.|
|Current Ratio||Cannot be less than 1:1 without guaranteed source of repayment, or guarantor|
|Debt to Asset Ratio||Cannot exceed 80% without guaranteed source of repayment, or guarantor|
|Debt to Service Coverage||Cannot be less than 120% without guaranteed source of repayment, or guarantor|
|Guarantor||If the borrower does not meet the underwriting criteria, the Down Payment Loan can be approved if there is a guarantor. The guarantor would have to meet the credit criteria. If there will be a guarantor for the loan, the guarantor’s financial statements and credit bureau report must be included with the application.|
|Collateral||Second deed of trust or second position on real estate and chattel. A lower position may be considered if the borrower is utilizing an FSA joint participation program. In that circumstance, a guarantor is required and the guarantor must meet the same financial ratio requirements (current ratio, debt to asset ratio, and debt service coverage ratio) as the borrower. If a borrower is utilizing an FSA participation loan program, a third position may be considered if the borrower will have a guarantor who meets the financial eligibility criteria.|
|Off-Farm Income||No restrictions (unless used in conjunction with MASBDA’s Beginning Farmer Loan Program)|
How Does the Program Work?
The lender and borrower submit a completed application packet and the $100 application fee to MASBDA.
This program may also be used in conjunction with the following MASBDA programs:
- Animal Waste Loan Program
- Family Farm Breeding Livestock Tax Credit Program
- Single-Purpose Animal Facilities Loan Guarantee Program
- Value-Added Agriculture Loan Guarantee Program
Borrowers qualifying for the Down Payment Loan Program or the Beginning Farmer Loan program may also qualify for the Missouri FIRST Program administered by the Missouri State Treasurer’s office. The Missouri FIRST program makes funds available at reduced interest rates to lenders who in turn pass the savings along to agricultural borrowers. To find out more about the Missouri FIRST Program, call the state treasurer’s office at 573-751-2372 or visit their website at www.treasurer.mo.gov.