USDA DIRECT and loan term

[rideswithchrist1]

We have the USDA Direct and I know it comes in 33 or 38 year. We DON'T want to go to 38 if we can help it, but if it would lower our payments more, we would be better off and could double pay some months. 

They said we were not eligible, BUT I though if we were below 50% AMI we do qualify for the 38 year as well as the 1%. 

24% of our income for the monthly payment would be $763 but our payment is going to be $820- since it is so close, is that why we are able to keep the 33 year term?

Honestly,  I am worried that during closing, the loan docs are going to say we have the 3.75% rate and don't get the subsidy...then we have to walk away

[daisyday22]

I actually asked my office about the 38 yr term bc I was curious, all she said was "If you can afford the 33 year term then you'll stay with 33". They aren't really helpful! I didn't necessarily want 38 years either, but technically I fall into the income bracket to do it.
Do you know if it's their rule of thumb to keep your payments at 24% of your monthly income? I know my GFE said 3.75% but it also had bold letters saying that would be my interest rate without subsidy to give me an idea.

[rideswithchrist1]

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@daisyday22 wrote:
I actually asked my office about the 38 yr term bc I was curious, all she said was "If you can afford the 33 year term then you'll stay with 33". They aren't really helpful! I didn't necessarily want 38 years either, but technically I fall into the income bracket to do it.
Do you know if it's their rule of thumb to keep your payments at 24% of your monthly income? I know my GFE said 3.75% but it also had bold letters saying that would be my interest rate without subsidy to give me an idea.

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Yeah- I have NO clue! We fall into the income bracket for 38 years. I think what happened is they messed up and gave us 149,700 for our amount when it should have been $144,500- and they had to honor it because we were under contract for $148,300. SO technically our payment is now over the 24% (like 25.5%)

Without debt, our payment at 24% is $780 (which is our rent now) with our debt, it should be $765

 Our house should be around $820 with taxes and insurance 

40% which is house and debt (back end ration I think) would be $1300, which may be why we won't qualify at the 38 year mark, we only have $70 a month of debt.

 I read in the guide that if you are Very Low Income which we are, they want your term to be at 22%, which would mean a payment of $701-715 for us. 

So honestly, I don't know how they calculate it. BUT I think they reserve that for the bottom of the very low income bracket.

I just want to make sure we can afford our house too! We love this house and could honestly stay here for 30 years or more unless we really decide we want a micro-farm.

They may start with the subsidy (because we CAN'T afford the payments at 3.75%! ) And then after that, see where you are at. BUT we had to give them a letter stating we could afford the$820 that we would be spending with the 1% so I think 38 years is rare.