USDA Direct cert -- too low?

[Anonymous]

I've read that there may possibly be huge cuts to the USDA if the current budget proposals are passed.  There is 0 funding for the Direct program.  

What does that mean for its future if it is cut?

I just learned about USDA Direct this week.  I'm a teacher at a Catholic school and I make around $28k.  I'm 30 and still live at home, feeling stuck since even an apartment is this area of PA is close to $1,000 a month to rent.

I sent in the pre-qual paperwork to my local rep and got an email the next day (Tuesday 7/18) with the formal application.  Gathering all the paperwork and hope to send out tomorrow.

I'm worried that I won't be approved for several reasons:

1. I have good credit.  Scores are around 790-810
2. I do have "safe and adequate housing" currently since I live with my parents
3. I have been able to get pre-approved for FHA loans, but with an amount that really only allows me to buy a rowhome in the city, which I would not feel safe/comfortable doing.  Was preapproved for I think $120k

Do those things really matter?  Do I still have a chance at an approval?  I hate that I am 30 and still living at home; I graduated from college in 2009 and in PA, at that time, there was a large swath of teaching job cuts across the state.  Really has not improved since then.  I had a series of long term sub jobs for teachers on maternity leave, and in between those I was daily subbing.  Finally decided 2 years ago to take a job in a Catholic school with low pay, just to have something steady.  I do enjoy it, but don't make enough to rent by myself (where I'd want to live), and same with buying.

I have no credit card debt, own my vehicle, and have about $17k in student loans.

I've learned a lot from this forum already, so thanks to all the previous threads I have read!

[Anonymous]

#1 is that your mortgage scores?
#2 they never really asked about our current living situation.
#3 we could too but like you, wouldn't be enough to buy anything worthwhile
You're dti should help getting you to a higher loan amount approval. I think you have a good chance of getting approved. Good luck!

[Anonymous]

1. When I was preapproved for an FHA loan, they did a hard credit check and the 3 scores I got in a letter a few weeks later were 790-810.

I have another question with the "subsidy" - isn't it really just more like a deferral?  I would like to think that I won't spend 38 years in a house ... and when I finally get a job in a public school and make almost twice my salary now, right away, I could pay that back?  And then choose to not keep the subsidy?

[Anonymous]

Sorry, I'm not really knowledgeable with the subsidy process.

[Anonymous]

I sent my stuff via Priority Mail last Friday, they got it on Tuesday.  Haven't heard anything yet (though I assumed I wouldn't at this point).

[Anonymous]

So I got a certificate of eligibility today, $118,700 for 33 years or $133,500 for 38 years.  I was a bit disappointed.  It mentioned that my monthly payment would be $710.21, which seems awfully high to me.  My monthly gross income is around $2,300.  And net aboyut $812 biweekly.  Seems to me that a $710 mortgage payment seems like too much.  This was based on average taxes of $3,000 and insurance of $696/year.

On the USDA website I found a calculator that supposedly is what is used to determine these numbers, and I can't for the life of me figure out how they got these numbers. (https://www.rd.usda.gov/programs-services/single-family-housing-direct-home-loans - "Worksheet for computing...")

I fall under very low income for my area.  I was under the impression that very low income, they tried to keep your monthly payment to be 24% of your gross monthly income, which for me would be $552.  When I used this worksheet, I thought that I had come up wiht a monthly payment, with subsidy, of about $443.

Very few houses in my area are less than $133,500, and if they are, I don't consider them "safe and adequate" housing.

Can I ask this to be reviewed, or at least ask how the numbers were determined?  I'm a teacher and my salary will also be increasing when the current school year starts in about 3 weeks.  Perhaps I could have it re-evaluated after that.

Anyone have advice?  Do the numbers seem low?  Or was I just dilusional in thinking I'd get approved for, say, $150k, which is what I more or less calculated.

[Anonymous]

You could ask them to reevaluate your numbers or explain them to you but it seems you have safe and adequate housing and they have given you a very fair approval amount for your income. We paid 725,00 a month on our first home that was 93000.00 and had taxes of 700.00 a year and insurance of 1000.00. Good luck.

[Anonymous]

I currently live with my parents.  My only monthly expense, besides rent to them, is a $223 student loan payment.  That balance is about $17k.  It's actually 2 loans paid at once, I recently called and asked about paying one of them.  It would be about $5800 (I have the money) and would reduce my payments to $155 a month.

I'm just confused, because it doesn't seem to make sense with anything I've read, which is to keep your monthly payment at 24% of your income.

[Anonymous]

I spoke with the USDA rep and she said the taxes were based on homes they've closed on in the past year, I suggested an amount for taxes based on homes that I'd checked out online, and she said with that amount I would qualify for up to $168,000!  Which seems more reasonable to me and I won't try to spend that much.  So I am less discouraged now.

[Anonymous]

Very good. There are some items besides debt that really effect borrowing power as they are monthly and indefinitely and those are HOA fees, taxes and insurance, they can eat hundreds of dollars per month of your "buying power". The lower you can keep these costs the more house you can purchase. It is part of the reason we chose to buy where we did, 1800 average property tax versus 1000.00 for the same price house and approximate square footage for taxes. More house for the money