FARM Home Loans Act Expands Rural Housing Finance to Towns Up to 10,000, Includes ADUs

The newly proposed FARM Home Loans Act of 2025 aims to make it easier to buy or build homes in growing rural communities by updating how the Farm Credit system handles housing finance. This bill makes two key changes to the Farm Credit Act of 1971: first, it drastically expands the population limit for eligible towns; and second, it modernizes the definition of what counts as an eligible housing facility.

Bigger Towns, More Options

If you live in a small town that’s been growing, this change is for you. Previously, Farm Credit financing for housing was generally limited to areas with a population of 2,500 residents or less. The FARM Home Loans Act raises that cap to 10,000 residents (Section 2). This four-fold increase means that thousands of communities—often those just outside metropolitan areas that are experiencing population shifts—will now have access to this specialized rural housing finance.

For a young family looking to buy their first home, this expansion means more competitive financing options might be available in their community, potentially easing the squeeze of rising housing costs in those desirable, semi-rural locales. It recognizes that the definition of “rural” has changed since 1971; many towns between 2,500 and 10,000 people are still facing housing shortages and need targeted support.

Financing Your In-Law Suite

The second major update is a nod to modern housing trends and multi-generational living. The bill explicitly expands the definition of eligible housing to include accessory dwelling units (ADUs) as part of the “related facilities and appurtenances” that can be financed (Section 2). ADUs are those smaller, secondary housing units—like basement apartments, garage conversions, or backyard cottages—that many homeowners build for family members, rental income, or home offices.

This is a big deal because ADUs are a crucial tool for increasing housing density and affordability without large-scale development. For a property owner, this means they could potentially use Farm Credit financing to build that in-law suite for aging parents or construct a rental unit to help cover the mortgage. It provides a clear path for financing these increasingly popular housing solutions, which can be a lifeline for families trying to manage caregiving or find passive income in the face of rising expenses.