Hobby Farm Home Loan

The Hobby Farm loan is for homes with 5 – 160 acres.

Rural areas, non-contiguous parcels permitted. Not eligible for full time Farming operations. This program is good for customers looking for a place to have horses, hunting property, etc.

What is it?

A hobby farm loan is a non-conforming conventional loan. Where does the name come from you may ask? Basically, a hobby farm is a small scale farm that is used for pleasure rather than income. That being said, the farm may produce income but it cannot be the owner’s main source of income.

The property cannot be a working farm but could produce some income, as long as it isn’t a main source of income. For example, you may be able to have 10 head of cattle but not hundreds, house a handful of show ponies, or garden to sell vegetables at a farm stand, as long as your main source of income was through some other means. With all that said, you don’t have to farm the land to qualify for a hobby farm loan. The property can have as few as 5 acres but up to 160 acres. You must plan to use your home as your primary residence in order to obtain this type of mortgage.

If you are considering purchasing a home in a rural area that doesn’t quite fit this description, you may want to check out the RHS loan.

Why is it different from other mortgages?

While this mortgage does mimic a conventional loan in some ways it does not conform to the requirements of a conventional when it comes to land value v. home value. The hobby farm loan allows you to finance a property where the land makes up more than 30% of the total property value, which is not permitted with a conventional loan.  It can be a bit difficult finding appraisers that specialize in hobby farms because hobby farms don’t fall into any sort of typical property that most appraisers deal with– your mortgage loan originator can help with that.

Talk to a mortgage loan originator to find out if this is the best option for you.