Thanks for the details. I had no idea about the pool and we use these loans often. The rate is a bit higher but the lack of monthly mortgage insuance is a definite plus.  

Indeed.  I have one closing in June.  New construction in Frederick County, MD.  Not all of our areas are elegible, but many are.  You just have to get "one county removed from D.C."

Same here in Houston! I don't believe Harris County is eligible... As I understood it, it was a way to intrigue buyer's to buy in the outskirts. Congratulations on a well deserved feature!

sounds very interesting....I will email you..thank you

Jeff - more great info on this program, we have a lot of opportunity for this loan in the counties around Athens.

I hadn't done one of those in over 16 years. Thanks for jogging my old brain and i will look into it.

The loan is used a lot in my area.  We just lost one, however, because the house was modular (not mobile) and they refused to finance it.  I wonder if this varies from county to county.

This is a great summary of USDA loan information.  Thanks Jeff!

Love those loans, bookmarking to email to clients who ask me about them .

Love the USDA loan program.  Don't forget there is a 2% "premium" tacked on to the loan instead of the MI. This is a good fit for my county and demographic.

Rural Housing is a fabulous program in Central Massachusetts! For many of my clients, it has made the difference between renting and home ownership.  Thanks for promoting awareness, Jeff!

USDA is big here in the Northwest. We have plenty of qualifying areas, and I do a lot of them! I'm excited to learn about the new income limits to be announced on the 20th. Thanks for the info on the pools - I had no idea (of course, not many folks up here in Bellingham, WA, have outside pools!) Cheers and congrats on the well-deserved gold star!

another arrow in the quiver right Jeff? Actually RD loans have been more like an RPG for me lately. I checked my pipeline recently and it's 80% of what I'm running these days.

Government loans have really become the go to source of funding for everything but plain vanilla 20+% down deals. Thanks for helping spread the word.

Gerry Suarez, Jr.

Your FHA Loan Pro!

I closed several homes with USDA financing in March, 2 already closed in April and 2 more scheduled during April......they work......you just have to be willing to work.....

Thanks for the post Jeff.  I know this exists in my area, but I haven't been using that knowledge to my advantage.  I really need to get the specifics in one place and market it.  This is a good start.

Jeff, why don't lenders talk about this more? It's a great program and we have areas where it can be used. It's mind-boggling to me. In fact, you are jogging my memory that a buyer I was working with might work perfectly for this program. Thanks and I'm bookmarking this. ~ Sharon

Jeff: Great information.. I was actually suprised to hear some areas here in Clarksville-Montgomery County that qualifies for Rual Housing Loans.

Thanks Jeff!

"Just because it says rural development doesn't mean farm land or properties that are miles apart from each other. Ask your loan officer if your property that you are looking to purchase might fit into the property location guidelines."

Could use some clarification. The requirements might surprise many.

Excellent information.

Bill

I have a great loan officer who can work these USDA loans. They fix perfectly for the areas of Divide, Florissant, Cripple Creek, Lake George and sometimes Woodland Park also.

Jeff...

We use these a lot in Coweta County Ga. It's a strange plan, but very often it's the way to go!

The only thing I'd add is that due to the stimulus, the funds the USDA will have available to disperse in 2009 will be around 17 Billion, I believe.  Chances are dim that they will run out of money this year.

Nice post.  I have had several clients use a Rural Development Loan to get a home.  With the new income limits coming tomorrow, I can recommend it to more people.  Thanks for the itemized explanation.

Jeff: Thanks for the post. My underwriter thinks USDA loans are the coolest loans out there. One correction to your post. Yous state that FHA loans are often recommended by loan officers before USDA loans. Although that's probably true, the other piece of the puzzle is that USDA won't always work. USDA loans only work in areas with 10-25,000 population meaning in our metropolitan area, most of the Eastside wouldn't work. Also, USDA loans only allow income of up to $73,800 in our area whereas FHA has no income limit. Thanks again!

I just wanted to thank everyone for their comments.  I usually try to reply to everyone, but this is just a specific mortgage program with program highlights. I will go back and answer any questions, but not reply to everyone.  I just wanted to thank everyone for leaving a comment.  thanks

I have two areas I work the qualify for this program and use it every chance I get.....

To Paul,

Sometimes I wonder where you get your info Paul. I lend heavily in a county in FL with at least 5 cities with populations over your numbers, yet the entire county is USDA eligible. Furthermore, the geographic boundaries haven't been updated in quite some time, so we are all taking advantage of that. I can find out precisely when the last update occurred tomorrow by calling my state office.

Which is what I would suggest anyone do if you are in need of accurate info regarding the USDA Rural Ddevelopment program. The USDA website can give you all the local contact info.

Regarding FHA, the sad truth is anyone who does qualify for RD that is given an FHA loan is mis-served. RD loans, by virtue of the lack of monthly mortgage insurance, are always less costly than FHA. Unfortunately Jeff is right in saying many customers are not even offered an RD alternative because so few lenders are well versed with the program. I could give you some stories about this!

Gerry Suarez, Jr.

Your FHA Loan Pro!

Have one of these closing next week. Great loan for many people.

Jeff,

Thank you for the great post.

I just subscribed to your blog, bookmarked this post, and love the value content!

Have a Profitable Day!

- Harrison

BARBARA.....  When I client tells me that they are putting an offer in a house, after I pre-qualify them, I ask them what kind of property. Or if a client comes to me for a mortgage after they have an agreement of sale, I always ask them what kind of property they have purchased.  This should have been caught upfront. How long into the process did you find this out?  Some programs have property restrictions and I feel some loan officers drop the ball here... thanks

CARRIE aka Gold Realty..... .  I left that 2% out for a reason because I think it would have confused the point that I make that you can also include some closing costs or money for repairs.  thanks

AMY....   Keep in mind, you can do these with pools, but under the USDA's normal funds, but not those funds supplied from the stimulus package.  thanks

SHARON.... .  as I tried to explain in the beginning, many loan officers don't talk about it just as they didn't about FHA 3 to 5 years ago, because many either don't know about it or just don't want to learn a new program. I fought this same notion when so many loan officers were telling me that FHA loans were just coming back and I said... hell, FHA loans never left since 1934....  but when loan officers lose other programs or lose business down the street to someone promoting something such as this, then they jump on the bus. thanks

BILL.....  you could use some clarification?  Or that you just want me to supply some?  Besides, it's not that easy to give specific details in what areas this can be done in.  There is a map for each state and counties....  but the best thing to do is to plug the address into the system to see if it comes back eligible.  thanks

JASON....  .  I agree, from what I have heard, the monies should still be available to the end of the year, which is good news.  thanks

PAUL...... Not sure if it should be a correction to my post, in regards to why these aren't good loans because of the towns and such. Sorry, but you can't make that statement, that USDA loans only work with population areas less than 20,000 people.  Here locally, there is a town called Mt. Laurel, NJ.  The population is close to 48,000 people.  That is why I made the statement above about the name rural housing, because it's not what it seems to be. Meaning, the property doesn't have to be rural... it can be done in highly dense areas with homes side by side. 

In regards to income restrictions... each state and area is different. Keep in mind, real estate and some mortgage programs our local. Our single family income is $61,000 to $64,000 for 1 person with one area being $54,000.  So again, you can't just throw out your number, because it will be different in many areas. And those areas such as Florida, where real estate is cheap, you don't need a large income to qualify for a good house.   thanks

This is great information for me.  Thanks so much.  From what I understand living in Lehigh Acres, FL, my entire area is eligible for USDA financing.  I really think that USDA loans should be tried before FHA anytime they are available.

Jeff- What a functional description, you are a great resource.  Thank you!  Is there a reference somewhere you can direct us to each state's specifics?

Jeff we're using this great loan a lot in some of our areas here in AZ. Many people had no idea it even existed.  It's a good program.  Thanks for getting the word out some more!

Jeff, nice post!  I see you were trying to keep it "basic", but I would add to it that you can also do "as improved" lending within this program as  well!  However, that might a blog in itself!

Gerry, u r the MAN when it comes to USDA...so fantastic addons to Jeff blog comments!

Paul M-  Gerry is right and Jeff is also right...I would encourage you when you comment on someones blog...especially when you are "correcting someone or attempting to...to EMAIL THEM FIRST, and not post it in an open blog.  That way, you dont look like you have egg on your face, AND we can learn something behind the scenes! 

With USDA loans, the local offices are ALWAYS helpful!  They will guide you through the use of the website, the maps, the income qualifiers, as well as the property address locators!  You simply cannot generalize as Gerry S says...look it up first!@

This is an awesome program EVERYONE should be using! 

Thanks...Darin

Great information. Thanks for sharing with us!

Thanks for reminding folks about this terrific program! We have a lot of locations that qulaify. Might be worth mentioning the zip code search on USDA site...which determines if the property is in a USDA target zone.

To find out what areas are not eligible, start here:

http://www.rurdev.usda.gov/recd_map.html

I've read about these a couple of times now on AR and could have sworn one post linked where I could find if my area qualifies but can't remember.  And Ron, I followed your link but didn't get far, sorry!  Would love to know how to find out what counties qualify

Jeff,

 Question  on FHA ? Can the borrower receive the 3.5 % required as down payment from a relative as a gift ?

Hi Jeff -- Thanks for sharing, I didn't know about the 100% down.  I probably won't need it, but it's good to know if the situation arises.

Hey jeff, Thanks for the timely info. I have one that will close in a couple of weeks. So far it has been super sooth!

Hey Jeff, Thanks for the timely post. I'm doing one that will close in a couple of weeks. So far it's been 'smooth sailing'!

USDA should be a gradeing mark on steaks not loans the program sucks and their REO's do to.

Hi Jeff,

As always, very informative and I am happy to have this info.  Although we are in an area that is very high end, things are changing and this is good stuff to know.  Thanks for sharing your knowledge.  Hope you are well.

Lisa

Good point about how lenders can trump the USDA guide. It's the same darn frustration as with FHA...

Thanks for highlighting points about this loan program - I didn't know about the swimming pool regulation. USDA has experienced a revival over the past several years in my area and the loan limits were just increased.

Jeff: I took the population size for USDA loans right off their web site. It specifically states that a rural area is defined as areas with populations between 10-25,000. If there are exceptions, the lenders must be making them. Regarding income, I stated that it is $73,800 for King County, Washington. I'm aware it varies by county. Thanks!

I love this loan.  It is used a lot in my area.  I hear "I've never heard of this loan" quite a bit which is surprising to me because so much of my area qualifies for it.

Working on a contract now that the property has a pool.  We are hoping for a waiver, but are prepared to "fill it in".  Great post of a feature, permission to re-blog!  cw

This sounds very interesting.  I have never heard of it.  Options for people are important.

Just a couple of updates - April 1, the USDA released $10 Billion (with a b) in funding.  25% has already been used for "purchases" that were on hold in the "system" when the funding dried up a few months ago.  In talking the the USDA PR guy in D.C.  they they this new round a funding will only last about 18 months.

Secondly, the "income limts" changed today, April 20.  Here's the link

http://eligibility.sc.egov.usda.gov/eligibility/incomeEligibilityAction.do?pageAction=state&NavKey=income@11

Instead of adjusted income limits, it's now a two-tiered income structure.  We regularly report on USDA, Fannie, Freddie, FHA and VA updates thru www.MortgageCurrentcy.com

You might want to explain the difference in USDA RD Direct and Guaranteed.  The differences are major and some people may be mistaking one for the other.  Good comments going on this blog.

This is great info and very timely for me.  Just had a call this morning from someone that has qualified for this type of loan and she would like buyer agent representation.  I've never had a buyer use the USDA Rural Development loan before.  The caller told me she only qualified in one particular county.  She was very knowledgeable about the program.  I am happy to have this info.  Thank you.

Oh no, more rules, another type of loan I have to look into.  Thanks for the info as usual.  Too bad about not having a swimming pool.  Just seems like an odd request or exclusion.  But then, huh it's a government loan - silly me.

Karen- U r merely speaking about the USDA proper!  One thing to note to all commentors and readers...There are LENDERS/FUNDERS that will continue to FUND USDA loans, EVEN IF the USDA is out of money!!!!   Hence, when people post information like that, it is driven only toward the USDA! 

It IS possible that the lender you either work with, or for...doesnt have that ability to work with that particular funder!  For example, here in Wisconsin....we get referrals from the local banks when the USDA is out of money, because they cannot take it anywhere else!  In my case, I was able to close loans through the CHASE rural development programs, despite the USDA being out of money!

It is nice that you posted these comments for Mr. Belonger's blog, but you might want to email him before you post links! 

Barbara-  GREAT QUESTION!!!!  YOU are corect!  Huge difference!  The RD direct is a completely different program, super low rate, but is driven toward low to mod income families!  Jeff I am sure will respond to this even more! 

Best to all!  And, make sure you hang with guys like Jeff to give you CORRECT INFORMATION!  He will either know the answer to the question, or get you the right answer!!! 

Darin
One Source Mortgage, LLC

To Paul,

That's the perfect example of "knowing enough to be dangerous" and why there is no substitute for experience. As of October of last year this is what the USDA had to say about geographic eligibility:

"Has the word "Rural" in our Agency name caused an incorrectly assumed picture in your mind (of what areas are eligible for RD financing)?  Our maps have not been revised in nearly 10 years.  Therefore much of the vast Florida urban development that occurred since then is likely in the "eligible" area.  The maps will not be revised until probably 2012. "

Bear in mind changes to these maps are made nationally so don't think this info applies only to Florida. This tells us if you assume, even based on USDA's own criteria, that an area is not eligible you haven't done your customer justice. The address lookup feature and the maps themselves are easy to use. Leave no doubt and utilize these resources instead of assuming.

The income and geographic eligibility can be determined here:

http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

And to find your local offices you can use this link:

http://www.rurdev.usda.gov/recd_map.html

Paul, do know lender overlays cannot make an area acceptable to the USDA. Also regarding the income issue, I urge you to look back at the FHA loans you have closed in the last year and compare income to the new higher income thresholds. If you see what I saw, you will find most if not all of them would now fit the USDA income guidelines.

Paul the biggest danger to your comments is that you speak them with such conviction and authority, and people who don't know better would assume you are correct. I hope this shows you how important it is to be absolutely certain of your facts before reporting them. I stand ready to help you vet any information if you want.

Gerry Suarez, Jr.

Your FHA Loan Pro!

WENDY.... . here is a link .. USDA loans -  USDA state offices - Eligible areas -  thanks

DARIN....thanks for the compliment and I would agree, you just can't assume or even rely on certain web sites. EVen HUD doesn't always have the right answers for FHA loans when calling them.

ELENA....  yes, you can get a full gift, 100%, that can also be used for the down payment of the 3.5%.

ANONYMOUS commenter....  why do USDA loans suck?  Would you say FHA loans suck also?  In any case, you apparently know nothing about USDA loans then. It's great when you don't put any money down and don't have any monthly mortgage insurance.  

DANELL.... .  people need to be aware that lender overlays can be dangerous if not known. You just can't assume that what the USDA puts out there can happen, not until you double check with your investor or that lender that is buying the loan.  thanks

PAUL...  then USDA hasn't updated their site then.  Besides, can you send me the exact link to where you read this, because I can't seem to find that.  thanks

CHERYL.... from my understanding, you can't do a waiver on the pool if that USDA money came from the stimulus bill.  Who said they are looking into the waiver?  thanks for the compliment and yes, you can reblog this.  thanks

KAREN... thanks for the links...

BARBARA.... .  I will fill this part in later.  There are only a few differences that I know of... 

GERRY....  we commented about the same time...  So I appreciate your follow up on the property location issue amd for the links.  thanks

We are working with a couple right now that are using this loan. It can be a bit of hassle looking up each individual address on the USDA website to see if the home qualifies though.

Thanks for these details. I'm showing houses today to a gal who plans on using this program. Good stuff.

www.usda.org. That's their website, Jeff. Within that, you should be able to reference current guidelines. Either that, or google USDA home loan guidelines and it will pop up. If you find something contrary to what I found, let me know. Otherwise, you may want to clarify your post. Thanks!

PATTY... yea, it can be a hassel looking up each address, but better to be 100% certain than assume by looking at the map.

PAUL.... .  semi confused...  even if it says it on their web site, why would I want to clarify this on my post. I gave you an example of a town here locally that you can do parts of the town with the USDA loan and that town has over 45,000 people in it. And Gerry gave a few examples that he says he has done many loans in areas in Florida with a much larger population. Besides, Gerry even mentioned that USDA hasn't updated some of their sites. As many of us have talked before, you can always believe what you read, no matter what the source.  thanks

HI Jeff

We have been using these programs for about a year now and noticed they take about 45-60 days to process and the only other downfall is the seller can not cover the 2% fee. Thanks for posting this very informative.

DEBBIE......  the lenders that you are using then are either just too busy with not enough internal help or that they just don't know what they are doing. It only takes the USDA about 48 hours, maybe 72 hours to approve it themselves. Each office is different though.  But from our side of things, it shouldn't take more than 3 weeks to fully process the loan, and in many cases, even sooner. Sooner if the loan officer did their job upfront and taking a complete application and got the majority of the documents. Have you found out any reasons to what the lenders are saying, why it takes 45 to 60 days?

In regards to the 2% funding fee.  Why worry that the seller can't cover this fee?  It can be financed into the loan. Just curious..  besides, I would rather use the seller help to pay for the other closing costs.  thanks

Gerry and Jeff: I believe what I read based on what I pulled from the USDA website. If they haven't updated, I understand. Gerry: I believe you that you have done loans for cities larger than what is indicated. Again, I'm just telling you what I read. Since I'm from Washington state that is what I'm going to reference. This is where I do almost all of my loans as I stated in my comment above regarding income.  I appreciate your knowledge on this but it's obvious that each state is slightly different on its guidelines. Believe you me I have to see if a loan is going to work so am well aware of the guidelines. Jeff: If you don't reference the USDA website in your post, maybe you should. That also is good customer information. Just a thought. Take care.

NO money down leads to foreclosure. If you don't have anything invested you are more likely to walk away. These types of loans give Real Estate agents a bad name. Sell junk I don't care. Spend weeks and weeks tranded in loan purgetory. FHA loans are great they require only 3.5% at least its something. Quality is not cheap but it can be affordable.

Paul,

And so when you read that HUD accepts FHA loans to a 500 credit score are you going to say that people can get an FHA loan with a 500 credit score? We are responsible for providing our expertise to make all these guidelines and regulations make sense to general public. There is much grey area in our business Paul, but there is also much black or white. This issue of geographic eligibility is a black and white one. It does not vary from state to state so please don't further confuse people by making that claim. You should really speak to your local USDA office and they will be happy to confirm this.

Gerry Suarez, Jr.

Your FHA Loan Pro!

Great job on talking about the basics.

jeff-great information thanks for post . i know my company offer USDA loans but i never look into it because i was thinking it is only for the rural area and farms even my co worker told me many times to check USDA guideline but i never did.But know i am thing this is great program and i also can consider this program for my clients.I will do the more search on this program .Thanks again for the knowledgeable information.

I have been heavily pushing the USDA loans and have had several closings. There are two very good mortgage brokers in my market who have experience with these programs.  It is certainly allowing more people to purchase a home.

PAUL.... .  what I don't understand is that Gerry and I actually gave you proof, what has been done, it populated areas greater than 20,000 people. It goes back to what you read on other sites. Just because it states something, doesn't mean that it's actually true. An updated site or not...  and when we actually make this statement, but someone wants to argue it because they read differently, yet USDA loans have been done in other areas with more people, to me that is the proof. Not what a web site says. It doesn't matter where you are or are from... Gerry is in Florida and I am in New Jersey, so that is proof that it actually can happen in other states. And it had nothing to do with getting a special waiver or approval.

In regards to referencing the USDA site in my blog, I have done that in my comment... and so have others. And sometimes I don't list the sites for a reason, and here is a great reason. You are getting one piece of info off of a site that is not accurate. I want people to come to me with questions and not go to the sites. That is how I work.  thanks

UNKNOWN comment ...... . how can I saw this politely....  first off, not showing your name tells me a few things. But your comment about skin in the game?  A very weak argument, because I have known many that put 20% down and who still went into foreclosure. You apparently don't understand that the economy has something to do with all of this. Sure, there are some irresponsible people that would walk away from their home, with no skin in the game. But you are just throwing false comments out there just like the media did. Do you really think 3.5% in a property would keep those same people in the house? Before 1/1/09, it was only 3%.  And what about VA loans?  They are 100% and they have done very well.

Overall, it just seems like you are one to argue true home ownership. Most people value owning their own home and would do most anything to keep it, even if they put nothing into it. I had 2 people that put 20% into the property, saying that they were upside down, can't make payments, and would just walk away from the home. Yes, I disagree with your comment 110% and many other great professionals would say the same. but you will always have people disagree. Just that your comment sounds like a basic rant without thinking it through, from both sides.

GERRY.... . excellent point... and HUD doesn't even say that, they say no credit scores.  Well, find me a lender that will go below 500, when HUD says that you can. Yes, it's call education, with the experience behind it, things that can be done and not assumed, just because one allows it. Yet you have to find who can....  to me, that's like misinformation. Yes, it is not state by state as he claimed... thanks for your input.

MIKE.... . thanks for the polite compliment.

SUKHDEV.... . my pleasure and I have always learned in this business especially, that you can't ever assume. Do your research before assuming or making statements. Just my opinion.  thanks and good luck with it...

FRAN.... .  that's good to hear about you bringing this program up to your borrowers. And even better that you have to reliable loan officers that can help with this program and that are knowledgeable.

MICHAEL.... .yes, than can be a great program.  In regards to your statement that these take more time?  That statement in my opinion is misleading though and you don't compare it to anything else. They don't take more time. If anything, 2 more days, because you need to send it to the USDA.  Now, if you are a broker, yes, it could take another 30 days... but we are a mortgage banker.  You should understand some of this, the difference. I went to your site and it seems like you are a lead generator, not a lender, hence why you should know more about this program.  thanks

Just for those following the comments, Michael did leave a comment, yet I asked him to delete his link that led to his web site, which was a lead generator site. He didn't understand why I asked him to take the link out. And then he decided to delete his comment. Here is his comment, minus the the link.

I left this comment up here for a reason. There are some false rumors that these loans take much longer. Yes, if you are a broker, because you are relying on another company, who are all backed up. Many are saying that they are taking 45 to 60 days to do a USDA loan. They are still taking us 3 to 4 weeks, because we controls 98% of the process and underwriting them in-house.  thanks

Anytime, I want answers about a loan program, I know I can count on you!  My clients have been coming to me with USDA approvals and I feel a lot of buyers in my area will do better with this type of loan.  I have found that their website is not user friendly (at least for me).

Thank you again and have a great successful day!

I love USDA!

Right now in WAshington state, USDA loans are out over 4 weeks from when then lender submits packets.  Ours was supposed to close this week, but we have to wait 2 more weeks at least!  We have our current house closing this week and have been asking the sellers of our new house if they will let us move in.  Our lender said this is the worst they have ever seen USDA backed up.  It is so frustrating that they are taking so long!  As of Friday, USDA was just processing loan packets received on July 20th!  Very Frustrating that they are taking so long!

They increased the dollar amount to fund MORE USDA loans--but they never added more staff to handle the increased loan originations.  As always, the government never thinks things "all the way thru"!  You'd think they'd learn...

All in all, this seems to be a great program for buyers, expecially with no down payment. However, USDA either laid off employees, or they all took off for vacation during the end of December, as USDA was running weeks behind, thus making us a month overdue on closing, and the buyer having to figure out where to continue living until they could move in, but making not only the listing agent, and buyers agent wait for their "payday", the surveyor, home inspector, and appraiser, where all waiting through Christmas with no money to take home either. It finally closed last week. The local lender is filing a complaint against USDA I hear. It's another great government program!

Thank you for the  great post. I know they are supposed to vote on it this weekend. I wonder if they will be able to close the loans by 30th June.

I purchased a USDA Rural Home Loan, so I can give you firsthand knowledge about it.  Purchasing and closing on the property was easy for me and my realtor. I didn't need any money down, and I didn't even have a job!  SERIOUSLY!  I said I would be doing daycare in this new location, since I had done daycare in my previous town. 

I moved to a rural town (a requirement) of 7,000 people, and could not find daycare parents to sign up.  I ended up taking a job (took me 4 months) in a town 30 miles away, so a 300-mile commute a week. 

USDA Rural home loan would not take into consideration the $2,000 I was spending yearly on gasoline to drive to work.  They subsidized my loan so they were paying part of the payment (about $300 of it.)  They figured that on my income, I could pay about 1/3 of my income in a house payment; however, they do not take into consideration the high utility bills, which ended up costing me (with house payment and utilities) over 1/2 of my income.  After my child graduated from high school, my child support ended. I was no longer able to keep the home, as I was pushing 2/3 of my income into the house payment and utilities.

USDA does not allow you to get a roommate, and they have a "recapture subsidy," so when you sell the home, that $300 a month (or whatever they have subsidized monthly) adds up for the years you stay there.  I was accumulating $3600 a year that I had to pay back.

The way the program is set up, if someone cannot afford the whole payment and has the subsidy, they never own the home.  When they move, they owe thousands of dollars in "recapture" fees.

The only way I could get out of this mess is to claim Chapter 7 bankruptcy foreclosure.  I am now losing this house after 7 years of struggling to keep it, but at least that got rid of the recapture subsidy by filing a chapter 7 bankruptcy.

People who rent subsidized housing never have a "recapture subsidy" to repay!  The USDA Rural Loan is a good way to feel like you own a home, but you never will own it.  You will be very strapped for cash and will also be responsible for repairs, of course. 

I loved my house, but had to live on a lot of rice and beans during those 7 years in order to keep it, and I prayed daily that my car wouldn't break down with my long trek to work daily.  Unless you are extremely frugal, you will never be able to save any cash for emergencies.

Heather, you had a USDA RD Direct loan which is vastly different from the USDA RD guaranteed loan as discussed in this blog.  Your payment was subsidized which is a blessing to so many people.  You only repay the subsidy IF you sell the house and make a profit from the sale.  Then the government expects you to repay part of the subsidy but not all of it.  I'd gladly part with a portion of my profit if I made a profit.

Houses with this type financing typically have to have great insulation for low utility bills.  Sounds as if you lived there for quite a while so actually the house may have been a blessing even if you did end up losing it.  I've sold a lot of them and the people are happy in them.

With a USDA RD guaranteed loan, are you allowed to get a roommate? I am looking into buying my first home. My income is just under the maximum allowed to get a USDA RD guaranteed loan on the house. But, my sister (a recent college graduate) would be moving in with me. Right now, she only has a part-time job, but I imagine that she will find a higher-paying job. If my name is on the house, but she lives with me, and our combined income is over the maximum allowed, what could happen?

Thanks,

Heather