United Farm Mortgage > Hobby Farm Mortgage Loans
There can be many definitions for a hobby farm home loan or hobby farm mortgage loan. In a nutshell, a hobby farm is a small-scale farm that is primarily used for pleasure rather than that of a business venture. The owner of a hobby farm will typically have a main source of income. The revenue is usually from an off-farm job, retirement income, a pension, or even a trust fund. Regardless of income source, the idea is that the farm does not need to make money, it can be those who use it as a hobby, hence the term, “Hobby farm”.
So if you do not have a great quarter or “session” it can disappointment, rather than a financial loss or business loss.
At times, some hobby farmers will not have the money to invest in their new farming ventures, or they might have little capital or operating budget. Unlike homesteaders, hobby farmers are not typically motivated by having ultimate goes of being self-sufficient.
Some farmers are content to continue their day-to-day jobs and only farm on the weekends. Additionally, there are farmers who invest their retirement income to invest in farm animals they would like to keep on their farm. Farms can add value to a your home, so retain that value there could be minimal upkeep plan if needed.
There can also be overlap with homesteaders when it comes to hobby farming, but its a pretty broad scope if you look at it as a whole. There are also hobby farmers who choose to maintain their farm with a part-time job so they can spend a majority of their time farming. Farmers can also keep aside a small budget for farm implement investments, and other investments in animals and infrastructure. It all depends on the immediate goals and focuses of the farmer and what they want to achieve in the short and long term. Our hobby farm home and mortgage loans are created to help farmers achieve their goals and keep them heading in the direction they see fit.
There are times where hobby farmers are not too far from a homesteader, and the choice to run a hobby farm can be great because hobby farms have wiggle room due to the fact there is more wiggle room when its comes to the rules and what constitutes as a farm or not.
Here is some good information to notes when you plan to launch a hobby farm or plan to apply for a hobby farm home loan. The U.S. Internal Revenue Service will disqualify hobby farms from receiving tax breaks designated to small-farm owners. Some farmers and residents claim hobby farms as tax shelters in order to avoid paying taxes on horse shelters and ranches that they maintain and use for personal pleasure.
Tax allowances for hobby farms can be explained in Section 183 of the U.S. tax code, but small farms that are in business should be have documentation and be prepped and ready to prove business operations and income. This is so the farmer and/or resident doesnt miss out on being designated as a hobby farm and miss out on the tax benefits.
Residents and farmers choose United Farm Mortgage because we understand the benefits and the complications. There can be many finance challenges on these types of properties, which can balance on the thin line between residential home and commercial. Take Fannie Mae and Freddie Mac for example, secondary market residential investors. These investors will generally reject rural properties that have agricultural characteristics.
This is why brokers who are interested in obtaining loans on these specific property types will generally need to seek out lenders that offer affordable, and have 15 or 30-year fixed-rate solutions. Moreover, in order to successfully underwrite these loans, the originators will need to request documentation from those who apply apply for hobby farm loans. The document must be relative to their business in order to account as self-employed, hobby-farm income.
What Should Documentation Generally Include for Hobby Farm Mortgage Loans? Detailed projected income, expense reports and if applicable – your business plans. If you need help give us a call and let’s talk about it!
Our customers are important to us because we genuinely appreciate the value the agricultural industry brings to our nation. Farming and ranching is hard work, and in times of unyielding weather and struggling economies, the challenges are even greater.
We understand complex financial structures as well as the issues attached with family-owned farms with multiple owners, and specialize in sibling buyouts. We have done many ranch loans for families in various states, and offer farm loans to the agricultural community.
Our services are designed to fit your financial needs and enable you to grow your business in the easiest way possible. Location is not an issue as we service farm and agricultural properties in all 50 states.
250
Minimum Loan Amount
50
Maximum Loan Amount
35
Years Mortgage Experience
20
Loan Programs
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United Farm Mortgage 6500 W. 132nd Terr. Leawood, Ks. 66209
Phone: (913) 549-3776. Fax: (913) 273-0560
Our services are designed to fit your financial needs and enable you to grow your business in the easiest way possible.