Finances to Consider When Owning a Farm: Mortgage Loans Part 1

There is a joy to living and working on a farm. There is a simplicity and a peace to a hard day’s work that only a farmer can appreciate. Though the idea of owning a farm can be dream-like, it is not as simple as buying farm land. When it comes to farming, the industry has grown and become quite complicated. For example, there are many different types of farms, ranging in produce, livestock, and size. Commercial farms tend to be large and controlled. All livestock or produce is systematically fed, grown, and shipped away. Subsistence farming is farming that produces enough food to provide for those that live on the farm.
In reality, there is no such thing as subsistence farming, as modern-day prices make it difficult for a family to live solely off of the contents of their farm. In many cases, subsistence farmers will produce a little more product and sell it in a local farmer’s market or to their neighbors. This way, farmers are able to receive more income and pay for modern-day items.
In this two-part blog series, we will discuss the costs of owning a farm and how getting a loan can help you keep your farm running. Specifically, we will discuss the following aspects of farming:

• Land Costs
• Equipment Costs
• Livestock Expenses
• Feeding Costs
• Fencing Costs
• General Living Costs
• Education
• Labor

By discussing these aspects of farming, you will be able to get a better idea of how modern farming works and the expenses associated with a farming career.


Whether a farmer has decided on a commercial or a subsistence farm, most likely, they will need to start their farming career with a financial loan. Unfortunately, land isn’t cheap, and farms especially are expensive to purchase. In many cases, a farm can be valued based on the acreage and the quality of the soil. If the farm has been in use for many years, the soil will be depleted of nutrients and not worth as much money per acre. For good land, each acre can be worth anywhere from $100 to $7,000. Of course, this number is only contingent on the location of the land and how rich the soil is. In the Corn Belt, which includes parts of Iowa, Illinois, and Indiana, land per acre can cost as much as $6,350.
The land in the Corn Belt is in high demand, which is why the prices for land are so high. However, other areas in the United States are utilized as major contributors to the American farming industry. Georgia, for example, has become a leader in agriculture and contributes around $9.2 billion a year in sellable produce. In Georgia, land is valued at around $110 an acre. Though this number is significantly less than that of the Corn Belt estimates, in order for a farmer to make a living, their farm must be anywhere from 1,000 to 1,500 acres. Of course, each farmer doesn’t have to purchase all 1,500 acres. In many cases, farmers can lease their acres of land. Because working farms can cost up to $5 million dollars, it is not realistic to assume farmers can come up with this sum on their own. That is why, most farmers lease their acres and stay working on their farm for almost their entire lives. Loans are essential in the farming industry because they give farmers the ability to afford their land and cultivate it for profit. Loans can be taken out on the purchase of land or if harvest hasn’t provided enough income. In both situations, a loan lender can help farmers afford their land and keep their farm running.


Farming, no matter the type, requires an excessive amount of equipment. Each piece of equipment, however, is important and extremely valuable to the process of cultivation and agriculture. Most essential equipment in farming is large and expensive. This is typical because farms have a lot of acreage and thousands of pounds of produce. Since the size and power of the machines is so great, the cost of certain mechanical equipment can be a huge investment. For example, a tractor for plowing and planting can cost $125,000 — the cost of a small house! Because these expenses are so great, most farmers either purchase their tractors second-hand or take out a loan to purchase them. Because a farmers livelihood is dependent on the performance of their farming equipment, most farmers strive to buy the best tractor at the lowest price. In many instances, if equipment breaks, a farmer must either fix the equipment himself/herself, hire a mechanic, or buy or lease a new piece of equipment. For smaller, subsistence farms, if a piece of equipment breaks or malfunctions, it could mean disaster. If a farmer does not have a backup or the money to replace the broken equipment, he/she will have to take out another loan. It is important for farmers to have a bank they can trust to assist them with their loans. Without a banker/farmer relationship, the farm will collapse and the land will be sold off.


If you have a family history of farming, breaking into the farming industry can be easier than you would expect. For example, half of the struggle with farming is learning the techniques and equipment needed for a healthy and lucrative harvest. Because knowledge is the driving force of success in farming, if you have relatives that are well versed in the farming industry, you could have an advantage.
However, if you do not have ancestors or relatives that understand farming, you will most likely need to receive an education. In America, an education in agriculture can cost anywhere from $20,000 to $120,000. For most adults, education is too expensive to pay out of pocket. Because of this, students must either apply for a scholarship or take out a loan.
However, if farming is your definite and permanent career path, a formal education is not necessary. But, in order to run a farm successfully, a farmer must receive some form of education in agriculture. One way to get the best the education on farming and farming life is to live on an actual farm. Organizations, such as Willing Workers on Organic Farms, allows people an opportunity to live and work on farms to receive their agricultural education. On your host’s farm, you can learn about equipment and the day-to-day life of a farmer.

Farming, though expensive, can be a relaxing form of employment. For example, you never have to make long commutes to work, you are your own boss, and can get an appreciation of nature. Part of the appeal with farming is that you’re given peace and solitude on your land. Farm work is simple and calming, and you never have to worry about urban life. In many ways, farming can be both a rewarding and an eye-opening career, especially concerning how food is grown and processed.
If you are interested in living the life of a farmer, the loan officers at The Mortgage House can help you get started. We offer farmers mortgage loans that can help them get started and begin their farm. If you are interested in farming, contact us today. We have mortgage loan officers ready and willing to help you!