Farm Loans in Texas: FSA, TAFA, and Farm Credit Options

Farm loans in Texas come from three places: the USDA Farm Service Agency, which lends federal money directly or guarantees commercial loans; the Texas Agricultural Finance Authority at the Texas Department of Agriculture, which guarantees loans and buys down interest rates; and the Farm Credit System cooperatives, chiefly Capital Farm Credit and Texas Farm Credit, which lend as member-owned co-ops. Which one fits depends on how much you need to borrow, whether a commercial bank will lend to you on reasonable terms, and whether you are buying land, financing a crop, recovering from a disaster, or just starting out.

FSA Direct Loans

Direct loans are funded and serviced by the Farm Service Agency itself through local loan officers. For fiscal year 2026, the maximum direct farm ownership loan is $600,000, and the maximum direct operating loan is $400,000.¹ As of June 2026, the interest rate on direct farm operating loans is 5.000%, and the rate on direct farm ownership loans is 5.875%. A joint-financing farm ownership loan carries a lower rate of 3.875%, and the down payment loan rate for beginning farmers is 1.875%.² FSA recalculates these rates on the first of each month.

FSA Guaranteed Loans

When the direct limits aren’t enough, a commercial lender can make the loan with the FSA guaranteeing up to 95% of principal and interest against loss.³ The fiscal-year 2026 ceiling for guaranteed operating, farm ownership, and conservation loans is $2,343,000, a figure that adjusts annually for inflation.¹ You and the lender negotiate the rate, but it cannot exceed caps tied to the Secured Overnight Financing Rate or the five-year Treasury, depending on whether the rate is variable or fixed.⁴ Guaranteed operating loans generally run up to seven years; farm ownership loans can extend as long as 40 years.

Specialized FSA Loan Types

Alongside the core programs, FSA runs several smaller loan categories tailored to specific situations:

Microloans are capped at $50,000 with repayment terms of one to seven years and a simplified application. They cover livestock, equipment, seed, supplies, minor improvements, and family living expenses for small and beginning operations.⁵
Youth loans are available to applicants aged 10 to 20 for educational agricultural projects tied to groups like 4-H or FFA.⁶
Emergency loans cover up to 100% of actual production or physical losses in designated disaster counties, capped at $500,000. Terms run one to seven years for crop and livestock losses and up to 40 years for real estate damage. The June 2026 emergency loan rate for actual losses is 3.750%, and applications must be filed within eight months of the disaster designation.²⁷
Conservation loans are guaranteed-only, up to $1,825,000, for NRCS-approved practices such as transitioning to organic, installing water conservation measures, and establishing permanent pasture or forest cover. Borrowers do not need to prove they cannot get credit elsewhere, and the family farm requirement does not apply.⁸
Farm storage facility loans finance on-farm storage construction over three to twelve years, with rates between 4.000% and 4.625% as of June 2026.²

Who Qualifies for an FSA Loan

Eligibility is set by federal regulation under 7 CFR Part 764 and applies the same way in Texas as everywhere else. You must be a U.S. citizen or legal resident alien, have the legal capacity to incur debt, and be the operator of a family-size farm after the loan closes.⁹

For direct loans, the central test is that you cannot obtain sufficient credit elsewhere at reasonable rates and terms. FSA weighs what loan amounts, rates, and terms are available in the marketplace against your property, income, and non-essential assets.⁹ The Texas FSA office puts it plainly: you must be unable to get commercial credit from a bank, Farm Credit System institution, or other lender.¹⁰

There is no minimum credit score. FSA instead looks for a pattern of failing to repay debts when you had the ability to do so. Foreclosures, judgments, or delinquencies more than 36 months old don’t automatically disqualify you, and having no credit history isn’t disqualifying either. Isolated incidents, or trouble caused by temporary circumstances beyond your control, count as mitigating factors.⁹

You also have to demonstrate managerial ability. That can be a four-year agriculture-related degree, on-the-job training such as an apprenticeship, or at least one full production cycle running or managing a farm. For microloans, participation in 4-H, FFA, or a self-directed apprenticeship can meet the requirement.⁹

Extra Help for Beginning Farmers and Ranchers

FSA reserves a portion of its loan funds each year for beginning farmers, meaning those who have operated a farm for ten years or less and own no more than 30% of their county’s average farm size. Acreage limits do not apply to women farmers or members of historically underserved groups.¹¹

The standout program is the Direct Farm Ownership Down Payment Loan. You contribute at least 5% of the purchase price, FSA finances 45% up to $300,150, and the balance comes from a commercial lender, private lender, cooperative, or the seller. The June 2026 rate on this loan was 1.875%, well under the standard farm ownership rate.¹¹² On the guaranteed side, beginning farmers get a 90% guarantee on conservation loans instead of the standard 80%.¹²

How to Apply for an FSA Loan

For a direct loan, start at your local FSA Service Center. You will build a farm business plan, meet with a loan officer, and fill out FSA forms covering your financial history, production history, creditors, property, and a balance sheet. Supporting documents include three years of tax returns, copies of leases and contracts, and proof of legal identity. If you are applying for a farm ownership loan, you also need legal descriptions of the property and a ratified purchase agreement.¹³

Individual applicants can now file through FSA’s Online Loan Application tool using a USDA Level 2 eAuthentication account or a Login.gov account. After you submit, FSA sends a letter within seven calendar days confirming whether the application is complete or listing what else is needed.¹⁴ Married couples applying jointly and other legal entities cannot use the online tool yet and still have to apply at the local office.¹⁵

For a guaranteed loan, you work with a USDA-approved commercial lender, and the lender submits the application to the local FSA Service Center on your behalf.³ Before any of this, the USDA’s Loan Assistance Tool at lat.fpac.usda.gov lets you check eligibility, compare loan types, and see what documentation you’ll need.¹⁵

Texas Agricultural Finance Authority Programs

The Texas Agricultural Finance Authority, run by the Texas Department of Agriculture, offers state-level financing that can either complement or stand in for FSA programs.

Agricultural Loan Guarantee Program

TAFA guarantees loans made by state or nationally chartered banks and Farm Credit lenders. The guarantee is tiered: up to 90% on loans of $500,000 or less, up to 80% on loans up to $750,000, and up to 70% on loans up to $1,000,000. It cannot exceed ten years or the useful life of the financed assets, whichever is shorter. You need a credit score of at least 650, 15% equity in the loan, a debt-to-equity ratio of 2:1 or less, and a debt service coverage ratio of 1.25 or better. A $100 non-refundable application fee and a minimum 1% origination fee apply.¹⁶

Interest Rate Reduction Programs

TAFA also runs linked-deposit programs that lower the rate you actually pay. The standard Interest Rate Reduction program covers agricultural loans up to $500,000; the Farmer Interest Rate Reduction program covers loans up to $1,000,000. The state deposits bring down the borrower’s effective rate, with the maximum calculated from Treasury rates plus a fixed spread. There are currently no fees for participation.¹⁷

A separate Young Farmer Interest Rate Reduction program is open to applicants who are at least 18 and younger than 46, with a $500,000 maximum. TAFA’s approval turnaround is typically five to eight working days.¹⁸

Farm Credit System Cooperatives

The Farm Credit System is a network of privately owned, government-sponsored lending cooperatives serving agriculture and rural communities. Two serve most Texas producers.

Capital Farm Credit is the largest rural lending cooperative in Texas, operating in 192 counties through nearly 70 offices with more than 24,000 members.¹⁹²⁰ It finances agriculture (operating, livestock, equipment), land purchases, home construction, and specialized agribusiness categories including dairy, poultry, grain, greenhouse and nursery, and viticulture. It also runs programs for beginning and small producers under the NextGen, AgVista, and AgStart names.²¹²²²³ Those returns lower the net cost of borrowing.

Texas Farm Credit is a smaller customer-owned cooperative offering agriculture loans, home loans, and land financing statewide. Borrowers are member-owners and stockholders who receive patronage as cash dividends and reduced borrowing costs tied to the co-op’s financial performance.²⁴ It also runs a Young, Beginning, and Small producer program.²⁵

Farm Credit System institutions are regulated by the Farm Credit Administration, and the Farm Credit System Insurance Corporation insures the timely payment of principal and interest on the debt securities System banks issue to fund their lending.²⁶ The underlying authority is the Farm Credit Act of 1971, as amended.²⁷

Emergency Loans After a Disaster Designation

When your county receives a federal disaster designation for drought, flooding, storms, or other natural disasters, producers in that county and its contiguous counties become eligible for FSA emergency loans. You have eight months from the designation date to apply, and you have to show you cannot get adequate commercial credit by producing written declinations: one letter for loans between $100,001 and $300,000, two letters for loans over $300,000.²⁸

In April 2026, the USDA designated two Texas counties as primary natural disaster areas. San Patricio County was designated under a fast-track drought trigger after eight or more consecutive weeks of severe drought, pulling in contiguous Aransas, Bee, Jim Wells, Live Oak, Nueces, and Refugio counties. Runnels County was designated for drought and excessive heat between July and December 2025, with contiguous Coke, Coleman, Concho, Nolan, Taylor, and Tom Green counties also covered. The application deadline for both designations is November 19, 2026.²⁹

Current Lending Conditions in Texas

The Federal Reserve Bank of Dallas reported in its first-quarter 2026 agricultural survey that demand for farm loans continued to decline overall, though cattle-related lending remains strong because national cow herds are shrinking and replacement costs are higher. Bankers tightened credit standards, citing a weak farm outlook and cattle price risk. Rates did drop across loan categories compared with the prior quarter: fixed-rate feeder cattle loans fell to 7.76%, and long-term farm real estate fixed rates dropped to 7.34%.³⁰ Nationally, the delinquency rate on agricultural production loans at commercial banks was 1.37% in the first quarter of 2026, up from 1.00% in the third quarter of 2025.³¹

Land values keep pushing the amount Texas producers need to borrow. The statewide median price reached $4,827 per acre in the first quarter of 2025 and climbed to a record $5,214 per acre by the fourth quarter.³²³³ Prices vary sharply by region, from under $3,000 per acre in Far West Texas to more than $11,000 per acre on the Gulf Coast and Brazos Bottom.³⁴ A 200-acre tract in central Texas at roughly $7,000 per acre runs $1.4 million on the purchase price alone, past the FSA direct ownership limit and squarely in guaranteed-loan territory.

1
USDA Farm Service Agency. FY 2026 Loan Limits
2
USDA Farm Service Agency. USDA Announces June 2026 Lending Rates for Agricultural Producers
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USDA Farm Service Agency. Guaranteed Farm Loans
4
USDA Farm Service Agency. Current FSA Loan Interest Rates
5
USDA Farm Service Agency. Operating Microloan
6
USDA Farm Service Agency. Farm Loan Programs
7
USDA Farm Service Agency. Emergency Farm Loans
8
USDA Farm Service Agency. Conservation Loan Program Fact Sheet
9
eCFR. 7 CFR Part 764 – Direct Loan Making
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USDA Farm Service Agency. Texas FSA Programs
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USDA Farm Service Agency. Beginning Farmers and Ranchers Loans
12
National Sustainable Agriculture Coalition. Conservation Loans
13
Farmers.gov. Farm Loan Application Quick Guide for Individuals
14
Farmers.gov. FSA Online Loan Application Guide
15
Farmers.gov. Farm Loans
16
Texas Department of Agriculture. Agricultural Loan Guarantee Program
17
Texas Department of Agriculture. Interest Rate Reduction Program
18
Texas Department of Agriculture. Young Farmer Interest Rate Reduction FAQs
19
Farm Credit. Capital Farm Credit
20
Capital Farm Credit. 2024 Annual Report
21
Capital Farm Credit. Loans
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Capital Farm Credit. Capital Farm Credit Returning $20.8 Million Allocated Equity to Its Members
23
Capital Farm Credit. Patronage
24
Texas Farm Credit. Land Loans
25
Texas Farm Credit. Texas Farm Credit
26
Farm Credit System Insurance Corporation. FCSIC
27
Farm Credit System Insurance Corporation. Laws and Regulations
28
USDA Farm Service Agency. Emergency Farm Loans
29
USDA Farm Service Agency. USDA Designates Two Texas Counties as Natural Disaster Areas
30
Federal Reserve Bank of Dallas. Agricultural Survey, First Quarter 2026
31
Federal Reserve Bank of St. Louis. Delinquency Rate on Loans to Finance Agricultural Production
32
Texas Real Estate Research Center. Texas Rural Land Markets, First Quarter 2025
33
Texas Farm Bureau. Rural Land Values Climb, Market Steadies Across Texas
34
Texas Farm Credit. Texas Land Pricing Guide