USDA Rural Development DIRECT Loans - Subsidized Payment Loan Program

By
Real Estate Agent with RE/MAX Executive Realty - The Powell Team NC License# 202938
http://actvra.in/fyg

U S D A and Rural Development Logos    Committed to the future of rural communities

Do you know someone who has a job and works hard, but their income isn't high enough to afford a well maintained home in an area desireable to them?  If so, the USDA Rural Devolopment DIRECT Loan Program may be the perfect loan program for them.  This is a 100% financing (NO DOWNPAYMENT), no Mortgage Insurance, government subsized loan program!  I've seen this program dramatically change the lives of families for the better by helping them purchase a nicer home, than would have been possible using traditional financing programs, with an affordable payment.

CLICK HERE to view details about the USDA Rural Development Direct Loan Program (Section 502).

Unlike the Rural Development Guaranteed Program, buyers apply directly to their local USDA Rural Development Office for the Direct Loan Program and the funding comes directly from that agency as well. 

This program is for low and very low income buyers, usually below 80% of the median income in the county where the home they purchase is located.  CLICK HERE to view single family housing Direct Loan Income Limits.

The maximum loan amount also varies by county, CLICK HERE to view Area Loan Limits.

The property must also be located within the USDA Rural Development Program approved area, CLICK HERE to Check Property Eligibility.

Under the Direct Loan program, individuals or families receive direct financial assistance directly from the Housing and Community Facilities Programs in the form of a home loan at an affordable interest rate.  The payment is subsidized based on the buyer's adjusted gross income and number of household members.  Payments can be reduced to a level that would be equal to a Principal and Interest payment at 1% interest rate, plus property taxes and home owners insurance. These loans have no Mortgage Insurance.  Up to the full subsidy amount can be recovered at closing by the USDA Rural Development program though.

Once a buyer submits their application to their local USDA Rural Development office, it will take approximately 30 days to find out if they have been approved.  Unfortunately, funding isn't always available for these loans, so sometimes buyers have to wait until funding is available.  Once funding becomes available you have to move quickly to find a home that is located in an eligible area for this program.  In my experience, closing usually takes 45 days once funding is available and a contract is submitted.

I've helped several families purchase a home through this program...if you have any questions or would like my help just let me know.

Cheryl Powell- Remax Executive Realty

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. The Powell Team- Remax Executive Realty 09/08/2008 02:03 PM
  2. Randy Powell 09/12/2008 04:30 PM
  3. Kevin Sandridge 09/19/2008 05:26 PM
Topic:
Lending / Financial
Location:
North Carolina Cabarrus County
Groups:
Special Mortgage Programs & Down Payment Assistance Programs
USDA Rural Development Loan Group
Posts to Localism
Realtors®
Dedicated Bloggers
Tags:
usda
rural development
mortgage information
north carolina
real estate
nc
100 financing
special mortgage programs

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Anonymous
Shelby

Does this loan help pay with the house payments? And if I do get this loan and I buy a house for less than I got approved for can I have the left over money to fix up the house? Ie buy appliances and new carpet paint etc

Jul 18, 2014 12:03 PM #177
Anonymous
Shelby

Also how does closing cost work with this loan?

Jul 18, 2014 12:07 PM #178
Anonymous
Melissa Dix

If my aunt has gotten this type assistance and had her house built, then passed away, can I take over her payments? Its still in her name and she has been dead a year. My dad, (her brother) told me to move into the house... and just start making the payments. Is this safe? Thanks

Aug 06, 2014 08:43 PM #179
Rainmaker
297,296
Cheryl Powell - The Powell Team
RE/MAX Executive Realty - The Powell Team - Harrisburg, NC
Concord,Harrisburg & Charlotte NC Area Real Estate

Hello Shelby, The USDA Rural Development Direct Loan program provides payment subsidies to qualified borrowers, which does reduce your monthly loan payment.  This loan program can provide funds for improvements to be completed after closing, however the work must be done by licensed contractors, bids must be obtained as part of the loan approval, and work must be completed within a specific time frame. You don't get the cash from USDA, the money is paid to the contractors when the work has been verified by USDA. Closing costs are low with this loan program, typically buyers request closing cost assistance from the seller as part of their offer to purchase.  Contact me anytime if you have more questions.  Best of luck!

Aug 06, 2014 08:54 PM #180
Rainmaker
297,296
Cheryl Powell - The Powell Team
RE/MAX Executive Realty - The Powell Team - Harrisburg, NC
Concord,Harrisburg & Charlotte NC Area Real Estate

Hello Melissa, It is my understanding that the mortgage must be refinanced when the owner passes away.  I believe that moving in the house and making the payments like you were your aunt may be fraud, so could be illega.  This program requires the borrower to verify income annually to determine if they are still eligible for a payment subsidy.  The executor of your aunt's estate should contact USDA Rural Development Direct and determine the correct course of action.  If I can help in any other way. Good luck with everything.

Aug 06, 2014 08:56 PM #181
Anonymous
Ruth Masters

hello,
I am currently living in my home, but was wanting to sell to move out of town, I know that I have a subsidy but was not sure how it works? ive called plenty of times to USDA and have not gotten consistent answers so I am confused on how I can sell the house. Who should I speak to that can check on my current payment of subsidy and how to sell my home? Also would I be able to sell my home even if I don't get anything in return just enough to pay off the subsidy? Your help is very very much greatly appreciated!!! thank you!!!

Aug 15, 2014 05:11 PM #182
Anonymous
Danielle

Hello,
I have been living in my current home for 5 years. I live the NC area near Charlotte. I have 502 direct loan with subsidy. It is a 3 bedroom, 2 1/2 baths less than 1500 square feet small kitchen and living area. I have a 10 year old, a 6 year old, and a 3 year old. My fiance and I are planning to get married later this year. We have outgrown this house. I am 31. I purchased this house by myself when I was 26. Is it possible to sell and apply for another loan through USDA since this house is currently not big enough for us because we are literally on top of one another? I have made some improvements on the house but I did not think to keep the receipts. I have been reading through all the comments and find some of them very helpful. I greatly appreciate your response.

Oct 03, 2014 04:48 PM #183
Anonymous
Angie

Hi. I currently have a USDA home and was receiving subsidy until January 2014. Our house payment has went up $400 and we are having a very hard time paying our mortgage. When we first got in the house our payment was $731 but then I started working and brought an additional $25,000-$30,000 extra income into the house which totals about $60,000/year. My husband and I both have student loans we are trying to repay and with the mortgage increase, student loan debt and our water bill going up $100 on top of having a 12 year old, 11 year old, and a 7 year old, we are really really struggling. But the USDA says we make to much now so we don't qualify for anymore subsidy. Oh and not to mention health care expenses on a family with 2 kids with learning disabilities. I am afraid we are going to lose our home. Is there any help for us now or no?

Oct 09, 2014 09:24 AM #184
Anonymous
Robin

My daughter has a sales contract on a HUD foreclosed home with a closing date of 12-8-14. On the contract she was going to get a conventional loan with us(her parents) as cosigners and 20% down payment. She meets the USDA direct loan prequalification requirements and has submitted forms to apply for a USDA direct loan. Can the HUD sales contract be amended from a conventional loan to USDA direct loan? USDA is not giving any indication as to when she might know about their loan. Should she just forget about trying to finance through USDA?

Oct 30, 2014 07:14 PM #185
Rainmaker
297,296
Cheryl Powell - The Powell Team
RE/MAX Executive Realty - The Powell Team - Harrisburg, NC
Concord,Harrisburg & Charlotte NC Area Real Estate

Hello Robin. The process of obtaining an Eligibility Certificate for an USDA Rural Development DIRECT loan takes considerably longer (30 to 60 days in my experience)  than obtaining a pre-qualification letter from a traditional lender (within 1 day in most cases).  USDA RD Direct Loans also usually take about 60 days to close.  You should speak with your Realtor about issues pertaining to your contract to purchase a HUD foreclosure.  I wish you and your daughter the best of luck.

Oct 31, 2014 06:52 AM #186
Anonymous
francie

Is there a calculator method I can use to find out the approximate repay of subsidized interest rate without contacting USDA-RHD? we bought our home in 1993 for 102,000. Our Interest rate is 7.5% and we pay 3% of that, so it's subsidized at 4.5%. Our loan amount has varied over the years, and we currently owe 67,000, and also have a HELOC with BoA for 60,000. Our home was just appraised at 176,500.

Dec 16, 2014 12:49 PM #187
Rainmaker
297,296
Cheryl Powell - The Powell Team
RE/MAX Executive Realty - The Powell Team - Harrisburg, NC
Concord,Harrisburg & Charlotte NC Area Real Estate

Hello Francie,  Just like with any other type of loan, your lender is the only one who can provide your payoff amount.  A 4.5% subsidy for 21 years will be a sizeable amount, I hope that this amount along with the $60,000 in equity you already pulled out of your home won't leave you owing more than your home is worth.  You should request a written total payoff, including subsidy, from USDA Rural Development to see where you stand.  Best of luck.

Dec 21, 2014 02:07 PM #188
Anonymous
Ashley Fiting

Is there anyway the USDA can look past a judgement if it is paid off in full? I am in the process of applying but my judgement was just paid off in October and my credit score is low, I have paid off 8 collection account in the past months also.

Dec 23, 2014 09:30 AM #189
Anonymous
Clifford Smith

Ashley Fiting. Call all those credit bureau and tell them to take them off your credit score. I did this with 1 collection. I told them my situation of getting a home and they obliged. You should have to wait several months for it to "fall" off your credit. You paid your debt and should be good to go with a loan.

Mar 07, 2015 07:02 AM #190
Anonymous
Sean Worley

Hello,

We are in Kentucky...we are a couple with four children and a annual income of 19500... we cant find any information about what loan amount we would qualify fo with usda directr..any idea?

Mar 23, 2015 11:19 AM #191
Anonymous
Cathleen

My question is there a limit on how much $ usda will offer for subsidy, is there a standard maximum monthly amount?Also how is your family size figured in when they determine subsidy amount you receive? We have 14 children and are eligible for 502. They have made exceptions for our house size to meet our family needs , we are just wondering how much they will subsidize our loan to get us into a house that fits those needs. Say we can afford a house payment of $750, but the house that we found to fit our family is $1200 will they subsidize the difference?

Apr 23, 2015 09:53 AM #192
Anonymous
Charles

Question, I'm considering the USDA loan. If my adjusted annual income is higher then the eligible income allow even after the allowed deductions for my area, can I deduct the repayment income, since that is how much I'm taking home after taxes to become eligible?

Sep 12, 2015 08:53 AM #193
Rainmaker
297,296
Cheryl Powell - The Powell Team
RE/MAX Executive Realty - The Powell Team - Harrisburg, NC
Concord,Harrisburg & Charlotte NC Area Real Estate

Hello Charles, I'm not sure what you mean by "repayment income". Lenders use GROSS INCOME, which is your total income after deductions, when qualifying buyers for a mortgage.  There are other great programs available with higher income limits, if you are buying anywhere in the Charlotte NC/surrounding counties I would love to help.  Give me a call!

Sep 12, 2015 03:50 PM #194
Anonymous
Julia Smith

I became disabled about a year ago, it's long term. I only make a bit over 14,000 SSI, can I get a small home still through USDA, I have spent days raking over all the material but find nothing on how much of a subsidy I would get. All the homes in the north GA area of any decent state are in the 80-110K range? My debt to income ratio is great as I have no monthly bills save couple CC I pay to keep my credit and I have 641,645,632 on my credit scores?

Sep 14, 2015 04:15 PM #195
Rainmaker
297,296
Cheryl Powell - The Powell Team
RE/MAX Executive Realty - The Powell Team - Harrisburg, NC
Concord,Harrisburg & Charlotte NC Area Real Estate

The highest subsidy amount provided through this program would make your payment equal to figuring your house payment as if the intrest rate was 1%.  I would also suggest considering Habitat for Humanity and locally avaiable programs that provide  a large amount of down payment funds.  Your first step would be findng a local Realtor who is familiar with the special financing programs available to buyers in your area. If you would like me to help you find a Realtor in your area please contact me anytime.  Best Regards...

Sep 25, 2015 10:54 AM #196
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Cheryl Powell - The Powell Team

Concord,Harrisburg & Charlotte NC Area Real Estate
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