topic USDA Direct Subsidy in Mortgage Loans

USDA Direct Subsidy

Anonymous — Thu, 20 Feb 2014 16:13:28 GMT

Hello! I'm *almost* through this USDA maze. I'm under contract on a house and just got word that USDA approved the home for the program. My question is this: when do they tell you if you are eligible for the subsidy? I haven't been able to find a whole lot about that online anywhere. On my certificate of eligibility it stated that I may be eligible for the mortgage subsidy and down payment assistance through CHIP. I do qualify for CHIP and am taking advantage of everything they offer, but still no idea about the subsidy. I would imagine if I qualify for the direct loan program and CHIP that I would be eligible for some sort of subsidy, but I don't want to assume anything. Does anyone know at what point you learn whether you'll receive the subsidy and how much it will be? Thanks!

Re: USDA Direct Subsidy

DanTheMan77 — Thu, 20 Feb 2014 16:30:57 GMT

They told me what subsidy I qualified for when I got my Certificate of Eligibility. It wasn't on the certificate itself, but the person from the USDA office told me over the phone when she was explaining the program to me after she told me I was approved. I would call the office and ask them. They should have told you already.

Re: USDA Direct Subsidy

Anonymous — Thu, 20 Feb 2014 16:43:10 GMT

I spoke with my local office and they told me that the price of the home is taken into consideration when giving a subsidy. So had I purchased a more expensive house I would get a subsidy, but since the purchase price of the house is $109,500 I am ineligible for a subsidy due to my income($35,000/yr- employment + child support). I was approved for the max for my county, but I didn't feel comfortable going that high ($160,000). If I had reached the limit they would give me a subsidy. I wish I would have known that. I thought you received the subsidy as long as you met the income requirements. Lesson learned! I feel like I cheated myself now. I was trying to be more financially responsible. Apparently I could have been looking at better homes and ended up with a payment equal to what I'm paying now without the subsidy.

I really like the house I'm getting and the land is perfect! It's 1.39 acres with mature trees. It's exactly the kind of yard I wanted for my kids. I'm not disappointed with the house I'm getting. However, had I known that I would only get the subsidy with a more expensive house, I wouldn't have limited myself as much. I wouldn't go near the $160k, but would have looked higher than $120k. So that is my lesson for everyone else...the subsidy is not only based on your income, but the purchase price as well.

Re: USDA Direct Subsidy

Anonymous — Thu, 20 Feb 2014 16:45:58 GMT

@DanTheMan77 wrote:
They told me what subsidy I qualified for when I got my Certificate of Eligibility. It wasn't on the certificate itself, but the person from the USDA office told me over the phone when she was explaining the program to me after she told me I was approved. I would call the office and ask them. They should have told you already.

I have only spoke on the phone with the woman from my RD office once. Every other communication has taken place via email. I didn't think to ask about the subsidy aspect at that time. Stupid, I know. I was just in shock of how much they approved me for.

Re: USDA Direct Subsidy

DanTheMan77 — Thu, 20 Feb 2014 17:27:37 GMT

@Anonymous wrote:
I spoke with my local office and they told me that the price of the home is taken into consideration when giving a subsidy. So had I purchased a more expensive house I would get a subsidy, but since the purchase price of the house is $109,500 I am ineligible for a subsidy due to my income($35,000/yr- employment + child support). I was approved for the max for my county, but I didn't feel comfortable going that high ($160,000). If I had reached the limit they would give me a subsidy. I wish I would have known that. I thought you received the subsidy as long as you met the income requirements. Lesson learned! I feel like I cheated myself now. I was trying to be more financially responsible. Apparently I could have been looking at better homes and ended up with a payment equal to what I'm paying now without the subsidy.

I really like the house I'm getting and the land is perfect! It's 1.39 acres with mature trees. It's exactly the kind of yard I wanted for my kids. I'm not disappointed with the house I'm getting. However, had I known that I would only get the subsidy with a more expensive house, I wouldn't have limited myself as much. I wouldn't go near the $160k, but would have looked higher than $120k. So that is my lesson for everyone else...the subsidy is not only based on your income, but the purchase price as well.

That makes sense. They want your total payment (principal, interest, taxes, insurance) to be equal to or less than 24% of your monthly income. I was approved for $235,500 (my county limit). We looked at two houses... one for $175,000 and one for $235,000. They told me that the payment would be the same since they would give me a lower interest rate for the more expensive house.

The thing to keep in mind is that the subsidy needs to be repaid. So even though they give you a lower payment, they keep a running total of the difference between the subsidezed payment and the normal payment. This is then repaid when you sell or refinance the house.

Also, good for you for knowing what you can and can't afford. I think too many people get excited by the amount they're approved for and go out and buy houses they can't afford. I know I could never afford the amount that I was approved for, but it sure is tempting to look at houses in that price range. It's a good reminder that if I bought one of those houses, it most likely wouldn't still be mine in a year or two and I'd be living somewhere else.

Re: USDA Direct Subsidy

Anonymous — Sat, 29 Mar 2014 19:45:22 GMT

wawa84

Any update ? Have you closed yet?

Re: USDA Direct Subsidy

Anonymous — Mon, 31 Mar 2014 13:10:39 GMT

rideswithchrist1, no I have not closed. I'm actually quite frustrated! We were supposed to close today. In our contract we had a 45 day period instead of a 30 day to closing because we assumed the USDA would need a little extra time. Plus I'm getting some CHIP money as well so we wanted to make sure everyone had enough time to get everything done. I emailed my contact at the USDA 11 days ago asking what was going on because I hadn't heard from her in a few weeks. She said that they just received the appraisal, so it would be another 3 weeks before we could close- 2 weeks for the title company and 5 days for the USDA.

I had to vacate my apartment this weekend because I had to give them a 30 day notice to move out in order to get my deposit back. Thankfully the owners let me store things in their garage until we close and I have a wonderful friend who is letting my children and me stay until we close. It should have been only a week and a half left til closing, but I got an email from the USDA this morning saying that it will be another 3 weeks. So basically they've had almost 2 weeks already and have done absolutely NOTHING with my loan. She told me to get a 30 day extention. I just want to move in and I feel bad for telling my friend we'd be staying with her for 2 weeks and it will be a month instead. Why have they accomplished nothing in the last 2 weeks????

Re: USDA Direct Subsidy

Anonymous — Wed, 02 Apr 2014 19:40:27 GMT

Hope to hear something soon!

We finally went under contract this week only to be told they messed up our certificate of eligibility and we actually qualify for $5K LESS Than they sent!

Re: USDA Direct Subsidy

Anonymous — Mon, 07 Apr 2014 20:56:20 GMT

Any word on your closing?

We just got our list of repairs and they are sending our commitment letter for funding and we should havre the orientation this week.

I hope there are no snags after this!

One lady on this board closed 10 days after she signed the funding letter, that would be great!

Re: USDA Direct Subsidy

Anonymous — Mon, 07 Apr 2014 21:05:33 GMT

I talked to the USDA today and we are shooting to close next Tuesday. They sent me the pre-closing paperwork today. The funds have been obligated and hopefully everything will go without a hitch.

I'm working with community action to get CHIP money and there is a new form the USDA is requiring that they haven't seen before. they're waiting to hear how to fill it out and then I'll be set to send everything back to the usda.

Re: USDA Direct Subsidy

Anonymous — Tue, 08 Apr 2014 16:22:22 GMT

That is so exciting!!! Make sure you come back and update us when you close

Did you go in for the orientation? They are sending our commitment letter to us today I hope

Re: USDA Direct Subsidy

Anonymous — Tue, 08 Apr 2014 16:27:08 GMT

I didn't have to go in for the orientation. They just emailed the pre-closing paperwork for me to fill out and return. she marked the box stating that we did via phone, but really we've done everything via email. So I can't tell you what the orientation encompasses.

Re: USDA Direct Subsidy

Anonymous — Thu, 10 Apr 2014 18:35:25 GMT

oh- that would be great if we could do it all through email haha.

Waiting for our packet to come in the mail right now. I am hoping today so I can return it to them by tomorrow! (ie, before the weekend)

Re: USDA Direct Subsidy

Anonymous — Thu, 01 May 2014 21:18:28 GMT

wawa84- Did you close yet? How was the process?

Re: USDA Direct Subsidy

Anonymous — Tue, 06 May 2014 12:47:31 GMT

@Anonymous wrote:
wawa84- Did you close yet? How was the process?

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