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. 
@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.