Hobby Farm Mortgages.

We are often approached by individuals that are looking to purchase a hobby farm, or those that currently own a hobby farm and require financing. Obtaining financing from a traditional lender is not an easy feat. There is usually a very fine line between a banks ability to ‘fit’ a hobby farm property into their residential lending box given the property’s characteristics, similarly, the bank may also not be able to ‘fit’ the hobby farm into their agricultural lending box. Banks might have an issue with the property location, the property zoning, the amount of acreage, as well as the income and credit profiles of the borrowers. To make matters more difficult, in general, with rural and agricultural properties, bank lenders typically only lend based on the value of the house and 5-10 acres only. This means that banks will not take into account the value of additional acreage or outbuildings, which might hold considerable value. We have seen cases where mortgage lenders will not provide financing at all if the property consists of more than 5-10 acres. Naturally, this provides a dilemma for hobby farm purchasers and owners and requires an alternative financing solution designed for hobby farm and working farm owners.