USDA Rural Development DIRECT Loans - Subsidized Payment Loan Program

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

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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
Topic:
Lending / Financial
Location:
North Carolina Cabarrus County
Groups:
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Posts to Localism
Realtors®
Special Mortgage Programs & Down Payment Assistance Programs
USDA Rural Development Loan Group
Tags:
mortgage information
real estate
north carolina
nc
rural development
usda
special mortgage programs
100 financing

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Anonymous
Anonymous
Linda

I have been in my home just short of 20 yrs. My loan is for 33 years, I owe 55k, my payments have always been subsidized. I am thinking of selling in the next yr, Do you have any idea of the amount of recapture I would pay? I am in Wa st. The house may sell for 170k. Thanks!

Mar 26, 2013 07:08 PM #162
Anonymous
Anonymous
Ben

Call the USDA CSC number on your mortgage statement. You will provide your loan/account number. Ask them for your current subsidy balance. They will tell you down to the last cent what you currently owe.

Mar 26, 2013 07:21 PM #163
Rainmaker
274,533
Cheryl Powell
RE/MAX Executive Realty - The Powell Team - Harrisburg, NC
The Powell Team- Helping YOU make the right move!

Linda, you do need to contact USDA to get your payoff information, which will include the subsidy recapture amount.  However, make sure to speak with someone directly and tell them about any capital improvements you made to the house during the past 20 years.  This can decrease the subsidy recapture amount.  Best of luck!

Mar 27, 2013 10:38 AM #164
Anonymous
Anonymous
Tena

I have a quick question for you: will the USDA RD loan cover the payoff of the home we are currently residing in? I was locked into a 30year mortgage for a 3bd 2bath singlewide home. I am in the process of completeing the lenders app. The home we have looked at is 99,600 and I still owe 26,000 on the mobile home. Will they allow me to finance the amount of the current home in with the new home?

Thanks!

May 04, 2013 06:25 PM #166
Anonymous
Anonymous
Bonnie

I bought my home through USDA and after approval of the loan, Chase Bank bought my loan from them. I now pay Chase my monthly payment. If I sell my home can I keep the profit or does Chase get it or USDA? Need to know asap. Please e-mail me with answer, Thanks

May 13, 2013 01:14 PM #167
Rainmaker
274,533
Cheryl Powell
RE/MAX Executive Realty - The Powell Team - Harrisburg, NC
The Powell Team- Helping YOU make the right move!

Hello Bonnie, If your loan was sold to Chase then you didn't have a USDA Rural Development DIRECT loan, you must have a USDA Rural Development GUARANTEED loan.  The Direct loan is done directly through the USDA Rural Development agency and would never be sold, they loan the money directly for this program.  However, the Guaranteed loan is handled through traditional mortgage companies, so the USDA Rural Development Guaranteed loans could be sold to another lender.  There is no payment subsidy and therefore no subsidy recapture on USDA Rural Development Guaranteed Loans.  If you don't know what type of loan you have, call your lender or get out your closing paperwork and read though it, the loan type should be clearly stated in the paperwork.  If I can help in any other way please contact me anytime. 

May 17, 2013 03:26 PM #168
Anonymous
Anonymous
Becky

Im just wondering how many people dump these houses and file bankrupt on them and what happens if you do? worst loan ever! My hubby only one working we have 7 kids and they up our payment his monthly income is 2,600 an no child support go figure.

Jun 19, 2013 02:50 PM #169
Rainmaker
274,533
Cheryl Powell
RE/MAX Executive Realty - The Powell Team - Harrisburg, NC
The Powell Team- Helping YOU make the right move!

Hello Becky, I have to disagree with your statement that this is the "worst loan ever".  The loan isn't for everyone, but for some people it makes the dream of home ownership a reality.  Also, most of the time the house payment is lower than what you can rent a small apartment for...so it changes people's standard of living dramatically.   This loan program does require the borrower to provide income and other household situation updates, this information is used to determine if the borrower still qualifies for the payment subsidy and if so how much.  So, if your income goes up or your household size goes down, etc, the payment can go up based on that information. I'm sorry you feel you are having bad experience. 

Jun 20, 2013 11:57 AM #170
Anonymous
Anonymous
Shannon
Cheryl I live in Louisiana but what number can I maybe reach you to ask you some questions about trying to get a home?
Dec 20, 2013 11:29 AM #171
Rainmaker
274,533
Cheryl Powell
RE/MAX Executive Realty - The Powell Team - Harrisburg, NC
The Powell Team- Helping YOU make the right move!

Hello Shannon.  It was a pleasure speaking with you today.  If I can help in any other way please let me know.

Dec 20, 2013 05:41 PM #172
Anonymous
Anonymous
sadie
Does filing income tax with 1099-c Cancellation of debt of student loan affect the amount of payment subsidy? How would they look at this if you were to provide all the update information and this 1099-c is not an earn income from jobs, but just had to file the form. would this affect the payment that I've been making and would it make my payment higher? I'm scared and need help. thank you!
Feb 13, 2014 12:09 PM #173
Anonymous
Anonymous
Jane

This is so depressing to read. I have been paying for my USDA loan for 17 years with subsidy. I thought that if you sold the house before 5 years, you had to pay back the subsidy. I didn't know that you still had to pay it back after that. Stupid me!

Jun 25, 2014 06:47 PM #174
Rainmaker
274,533
Cheryl Powell
RE/MAX Executive Realty - The Powell Team - Harrisburg, NC
The Powell Team- Helping YOU make the right move!

Hello Sadie, You need to contact USDA Rural Development directly to get these questions answered.  Best of luck...Cheryl

Jun 26, 2014 04:56 AM #175
Rainmaker
274,533
Cheryl Powell
RE/MAX Executive Realty - The Powell Team - Harrisburg, NC
The Powell Team- Helping YOU make the right move!

Hello Jane,  You should contact USDA Rural Development directly to determine the specific terms of your loan, since the terms of your loan 17 years ago may be different than they are today.  There are also other factors that can affect the amount of your subsidy that will be recaptured.  Best Regards...Cheryl

Jun 26, 2014 04:59 AM #176
Anonymous
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
Anonymous
Shelby

Also how does closing cost work with this loan?

Jul 18, 2014 12:07 PM #178
Anonymous
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
274,533
Cheryl Powell
RE/MAX Executive Realty - The Powell Team - Harrisburg, NC
The Powell Team- Helping YOU make the right move!

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
274,533
Cheryl Powell
RE/MAX Executive Realty - The Powell Team - Harrisburg, NC
The Powell Team- Helping YOU make the right move!

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
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
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