real estate

VA Loan Reader Questions: Farm Loans

March 14, 2019

VA Loan Reader Questions: Farm Loans

A reader asks, “I would like to get a VA loan to purchase a 350 acre farm. Is it possible or not? I have heard yes and no…. the farm already has a house on it.”

The VA loan rulebook covers farm loans in Chapter Seven. According to the VA Lender’s Handbook;

“A loan for the purchase, construction, repair, alteration, or improvement of a farm residence which is occupied or will be occupied by the veteran as a home is eligible for guaranty.”

So the technical answer to this question is “yes” but with a set of conditions the borrower should definitely know:

“The loan cannot cover:

  • The nonresidential value of farm land in excess of the home site,
  • The barn, silo, or other outbuildings necessary to the operation of the farm, or
  • Farm equipment or livestock.”

VA loan rules add that for approved borrowers, some of the proceeds of a VA home loan to construct a farm residence (on encumbered land owned by the veteran) may be used “to pay off the lien or liens on the land only if the reasonable value of the land is at least equal to the amount of the lien(s).”

In cases where the borrower’s farm purchase meets the VA loan requirements listed here, there are additional considerations.

Chapter Seven states, “If some or all of the income necessary to support the loan payments comes from farming operations, the veteran’s ability and experience as a farm operator must be established. The procedures and analysis provided under ‘Self-Employment Income’ in section 2 of chapter 4 apply generally.”

As you can see, there is much that goes into the decision to approve or deny a VA loan application for a farm residence. For more information on this unique type of VA home loan, contact the VA directly at 1-800-827-1000.

Do you have questions about VA home loans? Ask us in the comments section.

2 Comments
  1. DAVID SHIRLEY

    I KNOW THE V.A. LOANS CAN FINANCE UP TO 30 YEARS. IS THERE ANY WAY TO RAISE THE LENGTH OF LENDING TIME TO 32 YEARS??

    • Joe Wallace

      VA loans can be no more than 30 years and 32 days.

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